Facebook Committed To Investment In Uganda Despite Social Media Tax

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Written by Peter Pedroncelli

 

There have been fears that Uganda’s controversial social media tax would potentially threaten Facebook’s planned investment in the country, but the company has allayed those fears.

The social media company has confirmed its commitment to the country despite the new tax that affects users on its platform, according to ITWebAfrica.

Reports in recent days have suggested that Facebook was threatening to pull out of its planned infrastructure and connectivity investments in the East African country.

Facebook Africa public policy manager, Kojo Boakye, said that the company had revealed to the Uganda Communications Commission that it would be taking its investments elsewhere, as the model on which it based its investment plan in Uganda would be negatively affected by the tax, according to Techmoran.

The U.S. social media network was quick to deny these reports, however, reaffirming its commitment to its work in Uganda despite the recently imposed tax on social media use.

“Facebook is committed to Africa and our current connectivity work in Uganda. We continue to maintain open and active lines of communication with the Ugandan government, the private sector and members of civil society,” a spokesperson for Facebook told CNBCAfrica.

social media users - social media tax
Facebook will not pull out of their Ugandan investments due to social media tax. Photo – TheNerveAfrica

In July a controversial social media tax was introduced by government. The mobile money and social media tax was imposed on citizens who make use of those digital services, DailyNations reported.

Ugandans have had to pay $0.05 per day to use social media, while a one percent tax is being imposed on all mobile money transactions. This is forcing all SIM cards to be registered for mobile money services in order to pay the necessary taxes.

The infrastructure and connectivity investment in question is a 770 km fiber backhaul network costing $170 million that extends to northern Uganda, which was initiated in 2017, according to Telecompaper.

Social media tax for Ugandans

When introducing the concept of a social media tax to Ugandans in the past months, president Museveni explained that government would introduce taxes to discourage the use of social media, as he said that people used such platforms for lugambo, which is a Gwere word meaning gossip or the spreading of rumours, PCTechmag reported.

In addition to sites such as Facebook, Twitter and Instagram, messaging apps such as WhatsApp and Skype are considered social media platforms in this regard, and use of those applications would therefore also result in the tax needing to be paid.

Uganda has a total population of 41 million people, with 23.6 million mobile phone subscribers and 17 million using mobile devices to connect to the internet, according to Reuters. Facebook users alone in the country amount to around 2.2 million, reports Internetworldstats.

Considering these 2.2 million Facebook users alone, and with the social media tax in its current form, that would translate to around $110,000 daily for the domestic financing budget, not to mention the collections from other social media users and the one percent mobile money tax.

Facebook is in the process of offering free internet access for its sites in over 40 Africa countries as part of its Free Basics initiative, allowing mobile phone users to access Facebook without needing to pay for data, according to TheGuardian.

This will represent a significant saving for Ugandan Facebook users but, as things currently stand, they would still need to pay the daily social media tax to make use of the service.