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Facebook holds back multi-billion dollar projects planned for Uganda over social media tax

Facebook threatened to divert its infrastructure investments it was planning for Uganda over the recently imposed social media tax. (FILE PHOTO)

KAMPALA- Global social networking site, Facebook, has warned that they will be taking their investments elsewhere after falling out over Uganda’s recently introduced social media tax.

Mr Kojo Boakye, Facebook’s public policy manager for Africa, said they have informed the Uganda Communications Commission (UCC) that the company will hold back infrastructure investments worth millions of dollars it was planning for Uganda.

The communications regulator last week in their weekly updates confirmed that it met with Facebook Policy Team over a possible taxation deal but declined to give details of the meeting.

Boakye also said that contrary to what the government says, their company isn’t collecting a lot of revenue from Uganda explaining that Facebook makes money based on the number of people who advertise on the platform.

According to Boakye, the Facebook user base in Uganda is still very low, compared to other countries.

Current statistics indicate that India, U.S., Brazil, Indonesia in that order have the highest number of Facebook users in the world.

Facebook announced its first investment in Uganda in 2017. The social networking site planned to partner with Airtel Uganda, Bandwidth and Cloud Services to extend the 770km fibre backhaul network to northern Uganda.

Extending Internet beyond Kampala is one of the reasons that Uganda has given for introducing the tax.

UCC Executive Director, Godfrey Mutabazi, in an interview earlier in July, said OTT service taxes, is meant to enhance social development like promotion of infrastructure.’

“This is not something new in the world, it has been done before in the US, UK and Germany, and I hope none of such people are complaining, so we must pay to access internet services,” Mr Mutabazi said at his offices in Bugolobi, Kampala.

He further stated that social media should be taxed since it is used by over 31% of Uganda’s 44 million population and posed a challenge to the youths to develop more and better applications and systems to compete with the western world.

According to David Bahati, Minister of State for Planning, the government needs over Ush200 billion ($536.3 million) to extend Internet access to rural areas.

Mr Bahati argued that since the government had previously borrowed to invest in affordable Internet, it was time Ugandans contributed to this effort through the tax.

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