Home Lifestyle Mobile Phones Are Not A Luxury. Make Them Affordable By Lowering Taxation

Mobile Phones Are Not A Luxury. Make Them Affordable By Lowering Taxation

by Femme Staff

If there’s one thing that the effects of COVID-19 have highlighted throughout the world, it is the importance of connectivity. A quick example that comes to mind for me for example is that as I type this, part of my family is in other countries and they do not have the immediate option to come home. What I cannot fathom and thankfully I do not have to is if we were all in the dark about one another’s wellbeing. Like I’d just be here and they’d be wherever they are without any of us knowing how the other is fairing on.

My family does not have to be outside for me to feel the positive effects of mobile telephony though. Even for those with whom we’re within the same boundaries, social distancing and restricted movements mean that we cannot meet as much as we would want to. This is a scenario that applies to just about every family, group of friends, or work colleagues.

The benefits of connectivity does not end at family and friends. Governments are able to communicate to each other and to their citizens, organizations are able to communicate to their employees, suppliers and customers, media is able to share truthful information to more people, and experts are able to educate on the true position of things.

Now that I think about it, I can even get to do a work out with none other than the president of the neighboring country as the instructor 😀

What we’re saying is that phones, and especially smartphones cannot be underestimated. If anyone doubted the importance of these gadgets, time for a change of mind is now. The mobile phone has enabled us to stay sane, to check on our loved ones and to spread much needed cheer.

But even as we celebrate the mobile phone and internet adoption, we have to consider that cost implications mean that it is not everyone is able to hop onto the bandwagon. And part of this has nothing to do with COVID-19 even.

Seeing that smartphones may become even more crucial post pandemic, it is important for businesses to develop models that ensure that those who cannot easily afford gadgets are enabled to. And that means being able to afford them without compromising on the little incomes they have that is already taken up by other needs like food and other basic needs. However low-cost a phone may be, nobody will buy one if they’ve not afforded to put food on the table in the first place. And yet a device may contribute towards escaping poverty.

It is easy to leave the bulk of the work of availing budget smart phones to manufacturers but we also have to remember that these companies have overheads to deal with. So what’s the way forward?

A major factor in expensive pricing for mobile phones and indeed just about everything else is taxation. In fact, import taxes and duties can reach as high as 50% of the total device cost in some African countries.

Smartphones are no longer a symbol of luxury and a simple way to make them affordable for all is for the taxman to stop viewing them as such and reduce taxes. They’re now a crucial part of life in terms of information gathering and sharing and not having one means not only being out of the loop, but also missing out on economic opportunities. There is also the idea of applying zero taxes and duties on smartphones below a certain value.

If luxury tariffs were no longer due on smartphones, it would make it possible to slash smartphone prices considerably and make them more accessible to more African citizens. This would result in citizens being able to purchase these cheap smartphones, while still boosting government revenue through airtime and data bundles, as well as income from other mobile income streams.

It is not only taxation that can be used to lower the cost of mobile devices. Other strategies could be Governments getting involved in parts of value chain, including marketing, distribution, and retail. This would significantly boost local manufacture of gadgets, which would then ripple into economic growth.

Pay-as-you-go plans and subsidized pricing would also be very good strategies in making smartphone penetration easier and this could be through NGOs, Governments and telcos.

Some examples of how governments can assist through subsidies or other means include:

  • Argentina – Provided asset financing to 8 million citizens to switch from 2G feature phones to 4G smartphones.
  • Columbia – Allocated $90 million over three years to a policy which included subsidies for low-income citizens for data and smartphones.
  • Malaysia – Launched a national program to encourage youth to purchase 3G-enabled smartphones with a rebate on certain phones – reducing the cost by 40%.
  • Pakistan government – used funds to give smartphones to 30,000 low-income women.

In conclusion, the COVID-19 pandemic provides an opportunity to develop and implement long-term solutions to the digital divide in Africa. Making smartphones more accessible to a larger number of Africans is key to this, as it could help to alleviate poverty and improve the lives of these citizens.

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