Taxing times for smartphone adoption in Africa

CAPE TOWN--The cost of smartphones in Africa remains a barrier to bringing more people online in many countries even though unit prices have come down, in large part due to the high taxes levied on devices by some governments.

Taxation on devices was a recurring theme at AfricaCom here this week, as operators, content providers and mobile phone retailers called on governments to take a longer-term view of the benefits of wider smartphone take-up, with mobile access likely to be the only way for many people in Africa to get online because of poor fixed infrastructure.

The tax levied on smartphones can be as much as 40 per cent in some African markets, and such costs are invariably passed on to the consumer, making even a $50 (€40) smartphone a less affordable option that it could be.

During a panel session on Tuesday, Arthur Bastings, executive vice president for Africa at Millicom, said taxation on smartphones, and other communications and IT services, is one of the issues his company regularly discusses with ministers in the region. "Many governments misunderstand the potential of the ICT sector," he noted.

Chris Daniels, Facebook's vice president of Internet.org, commented that one of the main barriers to people being online across the continent was the high cost of smartphones and mobile data services. He noted that 80 per cent of Africa's population is not connected to the Internet.

While taxation levels in some markets remain high, smartphone prices are coming down. Marc Rennard, executive vice president of Africa, the Middle East and Asia at Orange, predicted that Orange will sell 900,000 smartphones this year--more than double the original target of 400,000--primarily due to the drop in prices.

Market players believe smartphone prices in Africa need to come down further still. Rick Fant, vice president of planning and ecosystem at Mozilla, said price points for 3G smartphones need to come down closer to $30.

Feature phones are still prevalent in Africa because of the cost of smartphones, and Bastings said these lower-cost devices are still important to get people online. However, he stressed that it is also important to provide more content that is targeted at local markets and in local languages, and that smartphones are better suited for this strategy.

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