Kenya’s Proposed 25% Smartphone Tax Raises Concerns Over Digital Access and Device Affordability

Kenya’s plan to introduce a new excise duty on mobile phones is raising concerns about the future cost of smartphone ownership and its potential impact on digital inclusion within one of Africa’s most connected economies.
Under the proposed Finance Bill 2026, the Kenyan government plans to impose a 25% excise duty on mobile phones used on cellular and wireless networks.

The measure would add to existing charges already applied to imported devices, including:
16% value-added tax (VAT)
Import declaration fees
Railway development levies
Additional import duties under regional tariff frameworks
Industry analysts say the combined effect could significantly increase smartphone prices across the market.
Smartphones Central to Kenya’s Digital Economy

The proposal comes at a time when smartphones have become increasingly critical to:
Mobile banking
Digital payments
E-commerce
Online public services
Internet access
According to data from the Communications Authority of Kenya, Kenya had 48.7 million registered smartphones as of December 2025, significantly higher than the 29.6 million feature phones still in use.
The figures reflect the growing role internet-enabled devices play within Kenya’s digital economy.

Tax Could Slow Smartphone Adoption
Analysts warn that higher device taxes could slow years of progress made in moving users from feature phones to smartphones.

Telecom operators, lenders, and device retailers have increasingly relied on:
Buy-now-pay-later (BNPL) financing
Affordable Android devices
Flexible payment systems
to expand smartphone penetration across lower-income segments.
Industry observers say rising import costs have already made entry-level smartphones less affordable over the past two years.

Concerns Over Digital Inclusion and Informal Markets
The proposed tax has reignited debate over whether governments risk indirectly taxing access to the digital economy itself.

Kenya has aggressively expanded digital public infrastructure in recent years, including:
Online government services
Digital tax systems
Mobile payments
AI-related initiatives However, analysts say much of that strategy depends on affordable access to smartphones.

Retailers also fear the policy could:
Increase grey-market imports
Boost demand for refurbished devices
Shift purchases away from formal distribution channels
Market participants say consumers are already struggling with rising smartphone prices amid broader economic pressure.

Affordability Pressures Continue to Rise
According to local retailers, higher taxes could further weaken purchasing power, particularly among lower-income consumers relying on financing options to acquire devices.
Industry analysts say smartphone affordability remains one of the biggest factors shaping internet adoption across African markets.
The growth of low-cost Android brands previously helped accelerate smartphone penetration after Kenya removed VAT exemptions on mobile phones in 2013, following an earlier spike in retail prices.

Digitnomics Insight
Smartphones are increasingly becoming foundational infrastructure for Africa’s digital economy. As governments expand digital services and mobile-driven commerce, higher taxation on internet-enabled devices risks slowing digital inclusion, widening affordability gaps, and weakening long-term connectivity growth.