Taxation changes could support mobile affordability, growth and investment in Democratic Republic of Congo

November 16, 2016

 

In the Democratic Republic of Congo (DRC), mobile services connect 31% of the population and deliver widespread social and economic benefits.

 

Mobile penetration in the DRC has increased ten-fold since 2005, reaching 22 million unique subscribers in 2015. The growing mobile sector is estimated to have contributed 5.9% to GDP from 2006 to 2010 and, according to the World Bank, tax and fee payments by the mobile sector comprised 37% of total tax revenues collected by the government in 2008. In addition, mobile applications have given many Congolese people access to essential and life-changing services and experiences. Only 4% of the population have a traditional bank account and now mobile money applications are serving the unbanked. Other services include access to information for the large farming community, helping them improve their incomes and become more efficient. Apps are also helping refugees reconnect with lost loved ones.

 

There is still some way to go, as despite massive growth, the mobile sector’s development is lower compared to Sub-Saharan Africa (SSA) as a whole. Mobile penetration stands at 31% of the population, compared to the SSA average of 40%, and 3G penetration stands at 3% compared to the SSA average of 10%.

 

With the appropriate polices, including on industry taxation, the DRC has potential to follow the example of regional leaders - Kenya and Tanzania. Supportive policies by the government, including a more balanced taxation structure, are required to allow the mobile industry to develop and deliver the benefits of digital inclusion. These include:

 

-Removing the additional excise duty on top of standard VAT for mobile services

-Reducing taxation on handsets which would lead to an increase in mobile access

 

A rebalance of the taxes on mobile would support the promotion of ICT usage, as well as investment and economic growth. Let's see what the future holds.

 

 

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