High taxes on mobile phones, data services crippling digital inclusion in Sub-Saharan Africa – survey

Mobile money in sub-saharan africa

By George Aine

High cost of mobile services and devices in Sub-Saharan Africa due to high taxes is hurting the uptake of mobile services in the region, a new report shows.

The GSMA Intelligence Consumer Survey 2017 indicates that countries in Sub-Saharan Africa have the highest total cost of mobile ownership (TCMO) as a proportion of income in the world.

“For the 27 countries in the region where data is available, the TCMO for purchasing a handset and 500 MB of data per month represents on average 10% of monthly income, well above the 5% threshold recommended by the UN Broadband Commission,” the report, in part, says.

In many markets across the region, handset cost and sector-specific taxes, such as SIM taxes imposed on consumers and mobile operators, affect the affordability of devices and services.

The report comes two months after the Uganda government in July introduced a 1 percent tax on mobile money deposits, withdraws and payments before it was reduced to 0.5 percent due to public outcry. Financial experts say taxing the movement of money discourages trade and commerce, it discourages the formalization of the economy and it interferes with financial intermediation.

The research suggests that a reduction in sector-specific taxes and fees on the mobile industry can expand the user base and the use of mobile services, consequently improving digital inclusion, mobile sector development, and economic growth.

Must read: Airtel Uganda registers profits in 2017 as Kenya, Tanzania units struggle

The report gives examples of governments that have reversed tax increases on mobile devices and/or services to stimulate growth.

“For example, Niger reduced two mobile-specific taxes in June 2017 having introduced them in 2011 to help fund an anticipated rise in state funding, while Ghana reversed a 20% duty on imported handsets in November 2014 to help bridge the digital divide in the country,” the report says.

The Survey also identifies a lack of digital literacy and skills as one of the biggest barriers to mobile internet adoption in Sub-Saharan Africa. It recommends that governments should partner with the private sector and the development community to improve ICT infrastructure in schools and public institutions.

In February 2017, the government of Rwanda launched the Digital Ambassador Programme to increase the number of digitally literate citizens. The digital ambassadors are expected to help other citizens acquire digital skills and boost adoption of e-services.


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