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Africa
Economy - Development | Politics | Society | Technology

Africa's mobile industry to pay $71 billion tax by 2012

afrol News, 29 May - The mobile industry will generate $71 billion in tax revenues in Sub-Saharan Africa between 2000 and 2012, a research commissioned by the GSMA [the global trade body for the mobile industry] proved.

The research also revealed that this figure would be higher still if governments removed taxes that treat mobile phones and services as "luxury goods."

Frontier Economics' research showed that uptake of mobile services in sub-Saharan Africa is being held back by mobile-specific taxes on handsets, airtime and telecom equipment thus increasing costs for consumers as well as deter investment by mobile operators.

The removal of all mobile specific-taxes in the region in 2007 would lead to the connection of an additional 43 million people by 2012, leading to an increase in overall tax receipts of US $930 million between 2007 and 2012.

"Mobile consumers in Africa face some of the highest tax rates in the world which hit poorer members of society hardest," said Gabriel Solomon, Senior Vice President of GSMA.

"These taxes are holding back mobile adoption in Africa, curbing economic growth and, ironically, are actually lowering the total revenues collected by governments."

More than 3.5 milllion were directly or indirectly employed by the mobile industry in sub-Saharan Africa. This contributed an average of 4% to African countries' Gross Domestic Product (GDP).

In October, GSMA announced mobile operators'plan to invest approximately US $50 billion in sub-Saharan Africa over the next five years. Every dollar invested in mobile industry in Africa generates an average of US 80 cents in taxes.

Frontier Economics calculates that the mobile sector accounts for 7% of total government revenues in the region.

"We do not believe that taxation should be designed on the basis of short-term considerations - it should be designed on the basis of achieving the best long-term economic interests for the society and in a way that accelerates the extension of services to the poor," added Mohsen A. Khalil, Global Information and Communication Technologies Director at the World Bank.

"The indirect benefits to the economy of having affordable access to telecommunications services far outweigh any short-term benefit to the budget."

While Chad's tax receipts would be approximately 30% higher, that of Ghana, Cameroon and Nigeria are estimated at 20% and 15%, respectively.

The average cost owning and using a mobile phone would fall substantially in the region, with the Republic of Congo recording the highest with 25%. Sharp falls are also expected in Cameroon [24%], Malawi [22%], Democratic Republic of Congo [16%] Nigeria [14%].

This would result in an additional 43.4 million mobile subscribers in these countries, increasing the 2012 projected weighted average penetration rate from 33% to 41%



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