By Martin Ekpeke
Despite more than 420 million people, representing 43 per cent of the population in Sub-Saharan Africa subscribing to a mobile service at the end of 2016, a whopping 700 million people in the region still lack access to mobile Internet services.
The GSMA Intelligence Report titled ‘Taxing mobile connectivity in Sub-Saharan Africa: A review of mobile sector taxation and its impact on digital inclusion’, disclosed this saying most countries in Sub-Saharan Africa face a significant digital divide.
The report attributed affordability and coverage as the main significant barrier militating against mobile Internet connectivity in the region, which contributed an estimated 7.7 per cent to its GDP and supported 3.5 million jobs in 2016.
This is worrying as mobile connectivity is a critical enabler of economic and social development, which will ultimately help to promote digital inclusion and support the delivery of essential services and key development objectives.
Meanwhile, taxation levied on mobile, especially over and above standard rates, is exacerbating affordability and coverage barriers for the underserved in the Sub-Saharan Africa region. Many cannot afford to access mobile services, especially those at the bottom of the income pyramid.
This is hindering the positive contribution of the mobile sector to the region’s economy, where the tax treatment of the sector is not always aligning with the best-practice principles of taxation. In 2015 alone, 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 data is available.
Sector-specific taxes and fees are often the driver for the high tax burden: around 26 per cent of the taxes and fees paid by the mobile industry related to sector-specific taxation rather than broad-based taxation. This results in mobile operators’ contribution to government tax revenues outweighing their size in the economy.