Welcome!

News Feed Item

GSMA Calls for Re-Evaluation and Reduction of Mobile-Specific Taxation across Sub-Saharan Africa

The GSMA today called upon governments in Sub-Saharan Africa (SSA) to review their approach to the increasing tax burden imposed on the mobile industry. The GSMA released two studies that explore various aspects of mobile-specific taxation in Africa and show that this burden is stifling economic growth in those countries that have introduced mobile-specific taxation. The first report, ‘Surtax on International Incoming Traffic (SIIT) in Africa’, examines the impact of SIIT in Sub-Saharan Africa and concludes that the introduction of SIIT can lead to less revenue for mobile operators and governments and higher prices for consumers. A second report, ‘Sub-Saharan Africa Universal Service Fund (USF) Study’, found that most of these funds are not succeeding in delivering their stated goal of widening access to telecommunication services and that alternative market-based solutions are more effective.

“Sub-Saharan Africa is the fastest-growing region globally, with 328 million unique mobile subscribers and an annual growth rate of 18 per cent over the last five years. However, with subscriber penetration of just 37 per cent, there is clearly still huge potential for greater growth ahead,” said Tom Phillips, Chief Regulatory Officer, GSMA. “Beyond further adoption of basic voice services, the region is starting to see an explosion in the uptake of mobile data. However, a short-term focus by some countries on generating revenue through increasing the SIIT, combined with the continued imposition of USF levies despite accumulated funds that are not being effectively employed, will clearly have a negative impact on the domestic mobile sector and other businesses in the region.”

Report Highlights Negative Economic Impact of SIIT in Africa

The report Surtax on International Incoming Traffic (SIIT) in Africa studies the effects of the SIIT in six countries in Sub-Saharan Africa and on regional integration. The report’s findings are in line with a recent publication from the Organisation for Economic Co-operation and Development (OECD)1 that shows that imposing higher charges for the termination of international inbound traffic suppresses demand. Similar to the GSMA’s study, the OECD report concludes that those governments that impose higher termination charges do not see their revenues increase proportionately. The report outlines the impact for consumers, governments and businesses:

  • Consumers - SIIT effectively fixes prices for international traffic termination and in these countries where it is imposed, the SIIT has caused the price of terminating international incoming calls to increase by an average 97 per cent, with an increase of up to 247 per cent in Burundi;
  • Governments - SIIT has already shown its potential to create economic losses to governments that impose it. The report estimates that, in the absence of the SIIT, mobile operators could have terminated an extra 1.2 billion international minutes and generating $86 million in revenues from June 2010 to March 2014, indicating that governments could have gained an extra $27.5 million across the period had the SIIT not been introduced; and
  • Businesses - SIIT creates significant extra costs to African businesses that trade with, and therefore call, businesses in countries where the SIIT has been imposed, negatively affecting regional integration. Evidence from mobile operators indicates that nearly 40 per cent of all international incoming traffic is from countries in the region, and in some countries, such as Tanzania, over 50 per cent of calls originate within Africa.

USF Report Highlights Need For Alternative Methods to Achieve Universal Service

The Sub-Saharan Africa Universal Service Fund Study finds that USFs in the region do not appear to be the most appropriate mechanism for providing universal access and service, and to furthering social and economic improvement in a proactive, cost-effective and transparent manner. Generally, the report found significant deficiencies in fund structure, management and operation throughout the SSA region. The report concludes that consideration must be given to disbanding inactive funds and returning the remaining monies to the operators who paid the levies in the first place and, where this is not feasible, gradually reducing the levy collected for either inactive or low activity funds and gradually phasing out the funds. The study found that alternative approaches to achieving universal service, such as license obligations, are often more effective than USFs.

Both reports have identified countries within the region that have recognised the negative impact of both the SIIT and USFs on trade and regional integration. The two studies conclude that in light of these negative consequences, other governments should re-consider the SIIT and USF and assess the specific impact on their economies and on economic development for the region as a whole.

“Mobile is an important contributor to the economy of Sub-Saharan Africa, accounting for more than six per cent of the region’s GDP, more than any other comparable region globally,” continued Phillips. “As our research has shown, taxation as a proportion of the total cost of mobile ownership in the region is also higher than the global average, a factor that makes mobile services less affordable for end users. The SIIT is clearly being used as an opportunistic short-term revenue tool by some governments and, in reality, USFs have become an unnecessary levy on the telecommunications industry. We strongly feel that eliminating harmful mobile-specific taxation would benefit consumers, businesses and governments by encouraging the take-up of new mobile services, improving productivity and boosting GDP and overall tax revenues in the longer term.”

Notes to Editors

OECD (2014), "International Traffic Termination", OECD Digital Economy Papers, No. 238, OECD Publishing 10.1787/5jz2m5mnlvkc-en.

The GSMA reports can be found at: www.gsma.com/publicpolicy/tax/research-and-resources

About the GSMA

The GSMA represents the interests of mobile operators worldwide. Spanning more than 220 countries, the GSMA unites nearly 800 of the world’s mobile operators with 250 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and Internet companies, as well as organisations in industry sectors such as financial services, healthcare, media, transport and utilities. The GSMA also produces industry-leading events such as Mobile World Congress and Mobile Asia Expo.

For more information, please visit the GSMA corporate website at www.gsma.com. Follow the GSMA on Twitter: @GSMA.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
“We're a global managed hosting provider. Our core customer set is a U.S.-based customer that is looking to go global,” explained Adam Rogers, Managing Director at ANEXIA, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develo...
SYS-CON Events announced today that MangoApps will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides modern company intranets and team collaboration software, allowing workers to stay connected and productive from anywhere in the world and from any device.
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effi...
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, explained how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
In today's uber-connected, consumer-centric, cloud-enabled, insights-driven, multi-device, global world, the focus of solutions has shifted from the product that is sold to the person who is buying the product or service. Enterprises have rebranded their business around the consumers of their products. The buyer is the person and the focus is not on the offering. The person is connected through multiple devices, wearables, at home, on the road, and in multiple locations, sometimes simultaneously...
“delaPlex Software provides software outsourcing services. We have a hybrid model where we have onshore developers and project managers that we can place anywhere in the U.S. or in Europe,” explained Manish Sachdeva, CEO at delaPlex Software, in this SYS-CON.tv interview at @ThingsExpo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, discussed how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved efficienc...
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
"We've discovered that after shows 80% if leads that people get, 80% of the conversations end up on the show floor, meaning people forget about it, people forget who they talk to, people forget that there are actual business opportunities to be had here so we try to help out and keep the conversations going," explained Jeff Mesnik, Founder and President of ContentMX, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
"When you think about the data center today, there's constant evolution, The evolution of the data center and the needs of the consumer of technology change, and they change constantly," stated Matt Kalmenson, VP of Sales, Service and Cloud Providers at Veeam Software, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 19th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo Silicon Valley Call for Papers is now open.
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discussed how businesses can gain an edge over competitors by empowering consumers to take control through IoT. He cited examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He also highlighted how IoT can revitalize and restore outdated business models, making them profitable ...
In his session at @DevOpsSummit at 19th Cloud Expo, Yoseph Reuveni, Director of Software Engineering at Jet.com, will discuss Jet.com's journey into containerizing Microsoft-based technologies like C# and F# into Docker. He will talk about lessons learned and challenges faced, the Mono framework tryout and how they deployed everything into Azure cloud. Yoseph Reuveni is a technology leader with unique experience developing and running high throughput (over 1M tps) distributed systems with extre...