Facebook threatens to scrap investment over Ugandan tax
10 August 2018
Facebook has warned it will hold back plans to invest millions of dollars in infrastructure in Ugandan because of the recent introduction of social media tax, reports the EastAfrican. Kojo Boakye, Africa public policy manager at Facebook, said it has told the Uganda Communications Commission that it will be taking its investments elsewhere. Boakye said the model on which it based its investment plan in Uganda will be affected by the tax.
Ron Kawamara, managing director of Jumia Uganda, said that although the economy was reported to have grown, Jumia has seen subdued behaviour by consumers. He did not provide any numbers to back up this assertion, but the budget for the fiscal year 2018/19 shows that household expenditure has declined slightly over the past five years. Because of this, the 3,000 independent vendors, 1,010 hotels and 2,000 restaurants registered on Jumia Uganda have not been doing well.
Facebook announced its first investment in Uganda in 2017. It planned to partner with Airtel Uganda and Bandwidth and Cloud Services to extend the 770 km fibre backhaul network to northern Uganda. Extending the internet beyond Kampala is one of the reasons that the Ugandan government has given for introducing the UGX 200 per day tax. According to David Bahati, Minister of State for Planning, the government needs over UGX 200 billion million to extend internet access to rural areas.