The steady advancement of technology in Kenya has placed the country on the global map as a tech powerhouse. Christened the Silicon Savannah in relation to the vibrant Silicon Valley in the US, Kenya’s exploits on the technological front have grabbed international attention. In 2007, Safaricom launched M-Pesa, a digital money transfer system that operates on regular cell phones.
The innovation was warmly embraced, introducing a wide population of users, including many in the rural areas, to digital banking. It went on to win international awards. Its contemporary, Ushahidi, a digital mapping and demographic tracking tool, is still hailed as a trendsetter globally.
In 2010, the government made commendable effort by launching an undersea fibre-optic cable in Mombasa, effectively increasing broadband in East Africa. Former Information, Communication and Technology Minister Bitange Ndemo enacted policies that seemed to elevate the ICT space, enabling Kenyans, primarily the youth, to become more engaged in technology.
Among other avenues, the world of content creation opened up, offering a life-line to young Kenyans, many of whom had been unable to find formal employment despite having gone to school. A huge percentage of youth remain unproductive due to the general stagnation of the country’s economic growth and high unemployment. For many, self-employment is the only path for survival.
Not too long ago, a college certificate provided definite hope for employment and personal growth, and a platform to contribute to the economic development of the country. Sports, too, offered talented Kenyans an avenue for recruitment by companies and parastatals like the Kenya Posts and Telecommunications, Kenya Breweries and Kenya Ports Authority. Many sporting personalities such as Bobby Ogolla, Douglas Mutua, Ambrose Ayoyi and Rose Tata Muya are successful products of that epoch. Today, however, such streams have run dry and many other avenues for job creation have closed, giving rise to a big population of idle youth across the country. Many parents continue to clothe and feed grown-up offspring, some of whom are still trying to figure out what career path to follow. Gradually, idleness leads them to alcohol and betting addiction.
It is in order, therefore, to salute enterprising Kenyans who have taken up digital content creation as a way of earning income. Content creation is the process of generating visual or written information and making it accessible to specific audiences in formats such as a video, blog or infographics, mainly in digital contexts. In marketing, it combines brand-specific messaging with industry educational material. With a majority of the population using cell phones, content creation has offered a ready means of entertainment and exploitation of the free democratic space (political satire has become quite popular).
Content creation has grown over the years. The creator earns a living through sponsored content, digital campaigns or advert revenue from platforms such as TikTok, YouTube and Facebook.
Monetisation of content relies on sponsorship and Cost Per 1000 Impressions (CPM), which refers to the number of views by the audience. Monetisation rates also depend on the creator’s niche. Some content creators in Kenya are said to be making good money from this pursuit. Many have formed companies, employing other citizens and making content creation a profitable venture. The bustling sector has now attracted the attention of Government, which now intends to rope content creators into the widening tax circle.
The Finance Bill of 2023 contains a raft of proposals meant to expand the tax bracket in a bid to meet a 4-5 trillion tax collection target. One controversial proposal is to subject income earned from digital content monetisation to a 15 per cent withholding tax, which has since been adjusted to 5 per cent by the Budget Committee. It remains to be seen whether this tax, together with the even more controversial proposed housing levy, were mere red-herrings before the Bill is tabled in the lower house for debate.
Withholding tax on content creation is presumptive and assumes that the profit margin earned by the creator will be higher than 50 per cent. It may actually result in a perpetual credit tax position for a big portion of the targeted group. The sometimes fake display of high-end lifestyles by some of the creators is not helping government perception either. They are to face taxation together with those citizens who purchase false beards, the latter being charged three per cent excise duty.
The Silicon Savannah is under threat. The proposed tax on content creation will be a body-blow to Kenya’s growth as a global technology hub, with Rwanda, which has created a robust environment for ICT advancement, poised to overtake us.
