South African government to scrap luxury excise duty on affordable smartphones to boost digital inclusion

Dar es Salaam. The South African government will remove the luxury excise duty on smartphones priced below R2, 500 from 1 April 2025 in a bid to support digital adoption among low-income households, the National Treasury announced on Wednesday.

At present, ad valorem excise duties on smartphones are levied at a rate of 9%.

"From 1 April 2025, the government proposes that this duty rate be applied solely to smartphones with a purchase price exceeding R2, 500 at the time of export to South Africa," the Treasury stated in its budget report.

This is a move that Sub-Saharan African countries have been advised to take in order to achieve digital inclusion and unlock digital potential. The decision aligns with South Africa’s plan to phase out 2G and 3G networks by 31 December 2027, a move aimed at reallocating radio frequencies to more advanced 4G/LTE and 5G networks.

According to the Treasury, the proposal will "enhance smartphone affordability at the lower end of the market and support efforts to promote digital inclusion for low-income households."

However, critics have raised concerns that shutting down 2G and 3G networks could widen the digital divide, as many low-income consumers, particularly in remote areas, may struggle to afford newer smartphones compatible with high-speed networks.

Communications Minister Solly Malatsi previously stated that ad valorem excise duties significantly contribute to the high cost of smart devices and confirmed that he had engaged in discussions with the Treasury to reduce these levies.