The CEO and President of MTN Group, Ralph Mupita has said that African governments and regulators need to start making concessions on taxes, fees and charges on technology industry players to make way for more private investment into Africa’s digital transformation.
Speaking in an interview with the GSMA Director-General, Vivek Badrinath, at the opening of the Mobile World Congress Africa (MWC25) in Kigali, he noted that industry regulations in Africa are largely designed for voice, which require less investment, but now the industry is migrating to data, which require heavy investment.
According to him, while Africa still struggles to catch up with the rest of the world in digitalization, regulators and governments on the continent continue to “over tax” the technology industry and that is an impediment to the level of investment needed to drive the continent’s digital transformation.
Per the GSMA Director General’s presentation, there is a yawning 64% usage gap, and 9% coverage gap in Africa, which according to the ITU Secretary-General, requires at least $900 billion investment in infrastructure, innovation and inclusion to bridge the gaps.
The main barriers to coverage in Africa is inadequate infrastructure (including power), while the huge usage gap is mainly due to lack of affordable devices and lack of digital skills.
According to Mupita, regulators on the continent need to start thinking of how to incentivize industry players via tax rebates, and then hold them to obligations to invest in the necessary infrastructure and also drive inclusion via the provision of affordable devices and digital skills bridge the coverage and usage gaps across the continent.
He said beyond tax rebates, there is also the need to provide reliable and affordable energy to help industry players thrive, particularly in driving artificial intelligence, which is now a very critical part of digital transformation.
The conversation around governments and regulators incentivising operators and obligating them to invest in areas to bridge the coverage and usage gap, has always featured in discussion on the digital transformation of Africa. But it always comes up because African governments keep taxing the technology industry heavily.
In Ghana for instance, the total tax on the mobile network operators in up to 39% and that is passed on to consumers in the form of high data prices.
Whereas some operators like MTN, Vodafone and Airtel are providing affordable smartphones priced between $5 and $17 in some jurisdictions, they are also running BNPL (by now pay later) schemes in other jurisdiction, where customers pay up to three times the cost of handsets on a payment plan.
The GSMA and ITU believe that through collaboration between governments and operators, as well as between industry players themselves, inclusion can be achieves and the huge coverage and usage gaps can be bridges.
