As the adoption of digital mobile services grows exponentially, African governments face a complex economic conundrum: determining economically sound Information Communication Technology (ICT) taxation regimes. The mobile industry is committed to paying taxes in the markets from which it derives value, but it is advocating for fiscal policy reforms that enhance the affordability of mobile services and promote investments necessary to support the technological evolution critical to the digitalisation of economies.
Mobile Network Operators (MNOs) have made significant investments to address the coverage gap in Africa, which has reduced to 11%, dropping by 6% since 2020. However, the usage gap is not keeping pace. It continues to grow and is currently at 59%, the highest in the world, having increased by 2% since 2020. Despite having access to mobile broadband, approximately 610 million citizens still do not use it. Research shows that affordability is the key barrier to mobile broadband adoption in Africa and needs urgent attention. Sector-specific excise taxes on mobile services and high import duties on smart devices render mobile internet highly unaffordable in Africa, hindering the adoption of broadband services. Taxation regimes that prioritise addressing this barrier are critical to the digitalisation of African economies.
To demonstrate the potential of the digital economy, if the right investments and policy reforms are made, by 2030, mobile’s contribution to GDP is projected to reach $170 billion in Sub-Saharan Africa, primarily driven by the ongoing expansion of the mobile ecosystem and verticals that are increasingly benefiting from the improvements in productivity and efficiency introduced by the adoption of mobile services.
The United Nations Economic Commission for Africa (UNECA) recently launched a report at the Economic Commission for Africa 2025 Conference, where African Ministers of Finance, Planning, and Economic Development gathered. The report highlighted that a 10% increase in mobile broadband penetration has resulted in additional GDP growth of between 0.8% and 2.46% in various regions and groups of countries over specified periods, with Africa leading at 2.46% additional GDP growth, according to the ITU (2020) study [1]. The study further indicates that this increase in broadband penetration across Sub-Saharan Africa could yield approximately USD 43 billion in additional GDP growth and USD 8 billion in additional tax revenue at the country level. The report’s findings suggest that simplifying the tax regime and reducing ICT sector-specific taxes will not only enhance broadband penetration but also lead to a significant increase in revenues due to heightened productivity and growth, as well as an expanded tax base. In Zambia, a 15% decrease in excise duty could result in a 14.6% increase in broadband penetration, translating to a 2.4% increase in tax revenue. In Kenya, a 10% decrease in excise duty would lead to a 9.7% increase in broadband penetration, resulting in a potential 1% increase in tax revenue collection.
The value of digitalising economies is not in doubt; the GSMA digitalisation reports in Nigeria[2], Zambia[3], Kenya[4], Ethiopia[5], South Africa[6], and Benin[7] highlight the mobile sector’s economic impact and model the effects of reforms in driving digitalisation across industries such as Mining, Agriculture, Health, and others positioning the sector as a development partner for governments in the region in line with the Africa Union Agenda 2063 #AfricaWeWant.
With the necessary policy reforms on Nigeria, for example, the sector’s contribution to GDP could potentially increase by 2% by 2028. In South Africa, the usage gap could be reduced by 14%, and by 13% in Kenya. We have already seen positive developments towards achieving this, where in 2025 the:
- Through the 2025 budget, the South African government has approved a removal of the 9% ad valorem tax on smartphones priced under R2,500.
- The Kenyan government reversed a decision to increase excise duty on mobile services from 15% to 20%, prioritising affordability to achieve the commitment to driving affordable services for Kenyans as outlined in the Kenya Kwanza manifesto.
Political will among governments and policymakers serves as the foundational catalyst for unlocking the full potential of Africa’s digital economy, enabling transformative technologies like AI and cloud computing to deliver broad-based prosperity. Political commitment drives the establishment of stable, predictable, and supportive policy and regulatory environments, which are essential for attracting private sector investment, fostering innovation, and ensuring that digital transformation benefits all citizens.
To achieve this, governments in Africa can consider the following recommendations for balancing the competing objectives of raising government revenues while minimising the distortive impacts of taxation on digital development. These reform options aim to apply to the mobile sector the best practice principles of taxation recognised by international organisations such as the International Monetary Fund (IMF), World Bank, and OECD[8] to support the government’s efforts to promote fair and effective domestic revenue mobilisation while advancing the Sustainable Development Goals[9].
1. Remove tax-induced barriers to the affordability of mobile services by:
- Eliminating or decreasing the tax through a glide path sector-specific excise duty applied to mobile services, i.e. mobile internet and mobile money.
- Reducing or eliminating import duties on especially on entry-level smart devices to benefit low-income households’ devices and refraining from imposing higher VAT rates than the standard rate.
- Remove fixed-rate taxes imposed on consumers, such as activation and numbering taxes, which disproportionately affect individuals with lower incomes and contribute to making mobile services less affordable for them.
2. Create a conducive tax environment that enhances operators’ ability to invest in upgrading and expanding mobile networks by:
Removing sector-specific taxes and fees on mobile operators, particularly those imposed on operators’ revenues irrespective of profitability, to ensure the sector’s fair treatment and encourage investment in mobile infrastructure.
Remove import duties on the import of network equipment to reduce the cost of operators’ investment in network expansion and innovation.
Make telecommunication and spectrum license fees tax-deductible.
Streamline and stabilise taxes within the mobile sector to reduce operators’ compliance expenses and offer them predictability, enabling more effective investment planning.
Consider tax incentives to compensate for operators’ commitments to low-return investments, such as deploying connectivity in underserved, remote, and rural regions.
3. Expand and strengthen access and use of mobile money and digital government services by:
Avoiding the imposition of taxes on Mobile Money services, thereby improving their accessibility and use.
By integrating Mobile Money into government payment systems could potentially lead to increased transparency, improved service delivery efficiency, and enhanced revenue mobilisation.
Africa’s digital future will not happen by chance as It hinges on bold, forward-looking tax reforms that prioritise broadband affordability, infrastructure investment, and inclusive digital growth. The continent stands at a pivotal moment where the right fiscal choices can unlock the true value of the digital economy and ensure that transformative technologies, such as AI and cloud computing, benefit all Africans. The time to act is now. Delaying these reforms risks deepening the digital divide and missing out on the immense economic and social benefits that digital technologies can deliver for all Africans.
- Angela Wamola, Head of Sub-Saharan Africa, GSMA
