Uganda’s social media tax will harm business

KAMPALA: Uganda’s new social media tax will damage business and the economy and cool investor interest in its new IT sector that has wooed global giants Facebook and Google, industry executives said on Monday.

Long-ruling President Yoweri Museveni, 73, has touted the levy as necessary to deter Ugandans from using social media for “lying” and squandering the nation’s hard currency on fees paid to foreignowned telecoms.

Critics say Museveni’s complaint about “lying” is code for his aversion to political dissent spread online.

Local and international rights groups accuse him of increasingly trying to stifle opposition, in part with clampdowns by security forces.

From July 1, a tax has been charged on transactions involving dozens of popular social media sites including Whatsapp, Facebook, Twitter, Youtube, Instagram, Google Hangouts, Yahoo Messenger, Skype and others.

Described by some as the first of its kind in the world, the tax has stoked widespread anger among Ugandans and triggered a street protest.

Sefik Bagdadioglu, regional director for online retailer Jumia, said he worried the tax measure would curb Internet use by lowerincome Ugandans, potentially putting them beyond the firm’s reach.

“A significant portion of Jumia customers use social media to log into their accounts, see what we do, share our deals and events,” Bagdadioglu said. “A decline in social media use is likely to have an adverse impact on our business.”

Jumia, which describes itself as Africa’s leading online shopping destination, launched in Uganda in 2014 betting on the East African country’s young population and a fast-growing online community.

“My real worry is that it (tax) has the potential to exclude lowerincome groups from accessing Internet and hence our services,” said Bagdadioglu.

The social media sites in question are blocked by Internet service providers including a unit of South Africa’s MTN Group and India’s Bharti Airtel until access is granted upon payment of the tax.

Payment of the 200 shillings ($0.0541) per-user-per-day levy is made via the telecoms’ mobile money platforms.