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Digital Inclusion

MWC Kigali: GSMA's Caroline Mbugua on mobile taxes in Africa

GSMA Director of Public Policy for sub-Saharan Africa (SSA), Caroline Mbugua, spoke to Connecting Africa Editor Paula Gilbert at MWC Kigali 2023 about how high taxation on Africa's mobile sector is impacting device and service affordability for consumers.

The GSMA's Mobile Tax Policy and Digital Development report for 2023 showed that taxes make up 21% of the cost of a basic Internet-enabled handset, on average, across 36 sub-Saharan African countries.

"The report paints a clear picture that we continue to have a substantial level of high taxes on devices which is creating a high barrier for mobile broadband adoption in the region," Mbugua explained.

In sub-Saharan Africa, a basic Internet-enabled mobile phone costs an average of 44% of the monthly GDP per capita. However, for individuals in the lowest 40% income bracket, this cost amounts to 113% of their GDP per capita, soaring as high as seven times the monthly GDP per capita in a country like Burundi.

"We are calling on governments in the region to reduce or to remove some of these taxes, these are sector specific taxes like excise duties and import duty taxes on mobile devices. Because in markets like Senegal for instance, where we have seen these taxes removed there has been a significant uptick of smartphone penetration in that market," Mbugua said.

"[We are] asking governments to prioritize digitalization of their economies and without smartphones we are not able to achieve this in a sustainable manner," she added.

Mbugua also spoke about how increased levies on mobile money services can be counterproductive and reverse the progress of financial inclusion and ultimately reduce government revenues in the process.

"When we have high taxes [on mobile money], consumers react very fast, and we see a significant drop in adoption of these services. What it means is that the progress we had made by making our economies cashless is eroded overnight by these taxes, because we fall back into a cash economy," she explained.

An example of this was in Tanzania, where mobile money transactions dropped 38% per month after a levy on electronic transactions was introduced in July 2021.

— Paula Gilbert, Editor, Connecting Africa

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