Excessive mobile taxation, hindering economic growth, investment in Sub-Saharan Africa

Recent findings by the GSM Association, a trade body that represents the interest of mobile operators worldwide, have revealed that the high mobile sector taxation in most African countries have undermined the efforts of digital inclusion in the continent and the uncertain and complex taxation regimes are affecting operators’ ability to invest in infrastructure rollout.

The GSMA report on ‘Taxing Mobile Connectivity in Sub-Saharan Africa: A review of mobile sector taxation and its impact on digital inclusion’, finds that; in Sub-Saharan Africa, more than 420 million people (43 per cent of the population) subscribed to a mobile service at the end of 2016; but the region faces a significant digital divide with only 26 per cent of the population subscribed to a mobile internet service at the end of 2016.

Experts say the digital divide and low internet service subscription is most likely as a result of multiple and unstable mobile taxation of mobile operators, who in turn pass the high costs to the subscribers at the bottom of the value chain.

“Mobile connectivity is a critical enabler of economic and social development but in many countries, particularly developing countries with large informal sectors, the mobile sector is over-taxed, relative to its economic footprint,” said Mats Granryd, Director General, GSMA.

According to Granryd, “the excessive taxation applied to the mobile sector ignores its positive economic contributions and leads to negative affordability and investment impact. In the current economic climate, it is paramount for governments to foster, not hinder, growth.”

Findings reveal that in 2015, the mobile sector paid, on average, 35 per cent of its revenues in the form of taxes, regulatory fees and other charges in the 12 Sub-Saharan African countries for which this data is available. Around 26 per cent of the taxes and fees paid by the mobile industry related to sector-specific taxation rather than broad-based taxation; mobile network…

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