Facebook committed to Uganda despite social media tax

Nicholas Bamulanzeki | AFP | Getty Images

Ugandan President Yoweri Museveni delivers his state of the nation address in Kampala, Uganda, on June 6, 2018.

Uganda has about 23.6 million mobile phone subscribers, 17 million of whom use the internet, Reuters reported, citing the Uganda Communications Commission.

“Facebook may well be reconsidering its investment plans, and will probably weigh the cost of additional taxes on its investment decisions,” Trupti Agrawal, Uganda analyst at Economist Intelligence Unit, told CNBC via email.

“For companies in the technology and telecommunications sectors, working with a government that is perceived to be unfairly targeting lower-income individuals or opposition and civil society groups also raises reputational risks. These concerns could prompt other companies in to re-evaluate their planned investments in the country.” Rodrigues said.

She added that the social media tax could limit innovation in Uganda’s e-commerce sector.

Museveni, 73, has been in power in Uganda since 1986. Ultimately for Agrawal, the social media tax is linked to the president’s ability to maintain his hold over the country.

“The president’s statement indicates his annoyance with increased political activism on social media, which he wants to curtail particularly ahead on the next presidential elections in 2021.”