MobileActive.org

The Swedish International Development and Cooperation Agency (Sida) recently published a report that gives an overview of the current state of mobile phone applications for social and economic developments in East Africa. Drawing on successful adoption of mobile applications in the Philippines, this Sida report seeks to answer “what hinders the take off of m-applications for development in East Africa and what role donors play in the process.” While mobile phones is the one of the most widely accessible gateways for information in East Africa, with mobile penetration covering over 40% of the population, sustainable, scalable mobile services for social and economic development are limited. The report is supported by secondary data, statistics, and field work carried out in Kenya, Rwanda and Tanzania, along with numerous interviews, meetings and discussions with key stakeholders in East Africa. Major trends in mobile usage, barriers for increased use of m-applications, as well as opportunities for scaling are discussed.

Mobile phones are revolutionising the lives of millions of people in East Africa and will continue to be the primary means for the great majority to access voice, data and Internet services. But mobile consumers in East Africa are taxed at some of the highest levels world-wide. In addition to VAT, an excise duty, or luxury tax, is levied on mobile services.

Recognizing that this tax hits the poor hardest, the GSM Association, the global trade association representing the interests of over 850 GSM mobile phone operators and over 180 manufacturers and suppliers worldwide, in collaboration with GSM Africa, commissioned Deloitte to analyze the effect that lowering excise duties would have on the industry and total government receipts.

The findings are very encouraging. By lowering the excise duty on mobile services, governments can expect higher level of tax and extend the essential mobile franchise to poorer sections of society. Today mobile phones are a basic need and not a luxury. All stakeholders will benefit if mobile services are taxed accordingly. As the governments in East Africa go into their budgeting rounds, we call for an urgent review of mobile taxation policies. Restructuring mobile taxes can be a win win-win solution for government, business and consumers.