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Taxation and the growth of mobile services in sub-Saharan Africa

Introduction from the GSMA
Introduction from the GSMA
The mobile industry in sub-Saharan Africa has pledged to invest some $50 billion over the next five years to extend coverage to rural areas and roll out mobile broadband services. This represents about a five-fold average increase in annual investment since the beginning of the decade. This private sector commitment is something of a windfall for governments. Not only will it achieve national connectivity goals and ICT application targets in a timeframe unimaginable only a few years ago but also it will produce substantial levels of tax income. Based on this report, between 2000 to 2012, for every dollar invested by the mobile industry, around $0.80 will be earned in tax revenues by governments. For the same period more than $70 billion in tax revenue will be generated by the mobile industry. But the potential tax revenues could be even greater. President Kagame says mobile phones are no longer a luxury but a necessity for Africans. Yet the majority of African governments levy luxury taxes on air time, handsets and equipment. These taxes are borne by consumers and have a negative impact on affordability. They are also regressive in nature, penalising poorer sections of society. This report demonstrates why governments can afford to tax mobile phones as a common good and not a luxury. By lowering and removing mobile-specific taxes from the mobile sector, governments will see an incremental increase in tax receipts as millions more people will be able to afford to connect to and use mobile services. Two thirds of sub-Saharan Africans who have mobile coverage are not yet connected; by lowering mobile specific taxes, governments will make mobile services more affordable for many of these 272 million people. The GSMA calls on governments to urgently review their mobile sector taxation strategies in consultation with the industry and other