Taxes ‘hamper African mobile telecoms growth’

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Sub-Saharan Africa is the fastest-growing mobile market in the world but growth is being held back by inadequate spectrum allocation and high taxation, according to a report by the GSMA, an organisation that represents the interests of mobile network operators across the world.

The region has experienced an average annual growth rate of 44% since 2000. Mobile connections have leapt to 475-million, compared with just 12.3-million fixed-line connections, representing the highest ratio of mobile to fixed-line connections in the world.

According to the report, with the necessary spectrum allocations and transparent regulation, the mobile industry could fuel the creation of 14.9-million new jobs in sub-Saharan Africa between 2015 and 2020.

"To create an environment that supports and encourages this immense growth, it is imperative that governments work in partnership with mobile operators to enable the industry to thrive throughout the region, ultimately providing affordable options to connect its citizens," says Tom Phillips, Chief Government and Regulatory Affairs Officer at the GSMA.

The rapid pace of mobile adoption has delivered huge economic benefits for the region, directly contributing $32bn to the sub-Saharan African economy, or 4.4% of gross domestic product. About 3.5-million full-time jobs are attributed to the industry, which has also spurred a wave of technology and content innovation.

But the report warns that, despite investments of $16.5bn over the past five years — across the five key markets in the region, including South Africa, and mainly directed towards the expansion of network capacity — sub-Saharan Africa faces a looming "capacity and coverage crunch" in terms of its available mobile spectrum.

The current spectrum allocated to mobile services in the region is among the lowest worldwide.

High levels of government taxation and new regulation also threaten to limit the growth of mobile services. Africa has the highest taxation, as a proportion of the cost of mobile ownership, of developing regions worldwide, with taxes on handsets and other mobile devices much higher than elsewhere.

Chris Williams, telecommunications partner at professional services firm Deloitte, said that in many sub-Saharan African countries, mobile broadband was the only way of allowing consumers to access the internet.

"However, to maximise the potential gains, governments need to continue to support the development of mobile broadband, notably through the provision of appropriate spectrum," he said.

"The current spectrum allocations across the region lag behind those of developed countries and, unless increased, seem likely to raise costs of provision, challenge investment decisions and increase network congestion."