South Africa’s decision to scrap the 9% ad valorem excise duty on entry-level smartphones has been singled out by the GSMA as one of the clearest examples on the continent of how tax reform can bring people online.

The plaudits for the decision, which was championed by communications minister Solly Malatsi, come in a new report from the GSMA, the global mobile telecommunications industry association, that argues that Africa’s biggest digital challenge is no longer network coverage but affordability.

In its Mobile Economy Africa 2026 report, the GSMA said mobile technologies and services contributed US$240-billion to the African economy in 2025 – 7.8% of GDP – and supported about 13 million jobs, with the contribution forecast to reach $290-billion by 2030. But it warned that roughly 63% of Africans now live within reach of a mobile broadband signal without using mobile internet, against a coverage gap of just 9%.

Affordability is the single largest barrier, the GSMA said, with the cost of an entry-level handset in sub-Saharan Africa averaging 24% of monthly income – and as much as 80% for the poorest users.

South Africa is the report’s headline policy case. Entry-level smartphones priced below R2 500 had been subject to a 9% ad valorem excise duty under the customs schedule, a classification that effectively treated basic phones as luxury goods. National treasury removed the duty entirely with effect from 1 April 2025.

The GSMA said the market response was immediate: a consumer-led rebound in entry-level smartphone sales, a parallel decline in feature phone sales as users upgraded, and a surge in 4G and 5G adoption. The country’s score on the GSMA’s Digital Nations Score Index rose from 63 to 65 and its Digital Policy and Regulatory Index score from 77 to 80 – already the highest readings on the continent.

Template

The GSMA’s Handset Affordability Coalition is now using the South African reform as the template in its call for other African governments to remove taxes on devices priced below $100.

South Africa features repeatedly elsewhere in the report. MTN’s MoMo (mobile money) unit has launched Handset Rent to Own, letting prepaid customers acquire 4G and 5G smartphones from as little as R10/day with no credit check, using an AI model that assesses affordability from mobile money usage history.

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The country is also furthest ahead on network APIs, with local banks and fintechs already using GSMA Open Gateway Sim Swap and number verification tools to cut transaction fraud, and on 5G, which is forecast to reach 42% of connections by 2030 against an African average of 21%.