Mobile Phone Prices Set To Rise By 35 percent Over Taxes

But more than ten years later, the industry is experiencing its first slowdown as a result of the government's decision to reap the benefits of its prior position by raising levies and taxes on imported phones by up to 41%. 

The 2008 decision to eliminate all taxes imposed on imported computer components and accessories was one of the main factors contributing to the information sector’s explosive growth under President Kibaki’s administration. Due to this and improved mobile connectivity, Kenya became known as the Silicon Valley of Africa as appliance and technology wholesalers competed for market share.

But more than ten years later, the industry is experiencing its first slowdown as a result of the government’s decision to reap the benefits of its prior position by raising levies and taxes on imported phones by up to 41%. 

As dealers pass on the new 25 percent import tariff and the 10 percent excise tax, phone costs are already anticipated to rise by at least 35 percent, which has licensed operators worried that the increased pricing may resurrect the black market. 

For instance, the cost of a high-end Samsung phone, the S22, has jumped from Sh150,000 to Sh185,000, while the cost of an iPhone Promax has increased from Sh225,000 to Sh235,000.

Mr Kimari believes the price increase will promote parallel imports of phones destined for other markets such as Dubai, which may be flown in a briefcase or smuggled via neighboring nations. 

He claimed that the increased taxes will also harm Kenya’s rapid expansion in digital inclusion and adoption of 4G technology via smartphone devices.

“The price increase will definitely affect demand, but will also encourage parallel imports for gadgets that are not for this market but will be cheaper without the higher taxes,” Mr Kimari said.