Kenya is proposing a 25% excise duty on smartphones as part of its Finance Bill 2026, a policy that could significantly raise device costs and slow the country’s digital growth in one of Africa’s most mobile-driven economies.
Presented to parliament on Tuesday, the bill introduces a levy of “25% of the excisable value” on mobile phones that operate on cellular and wireless networks.
If implemented, the new charge would sit on top of several existing taxes, including 16% value-added tax, import declaration fees, railway development levies, and other charges already applied to imported smartphones.
The proposal has raised alarm among retailers, telecom firms, and digital service providers, who warn that higher prices could make smartphones unaffordable for millions of Kenyans who depend on them for mobile banking, online employment, education, and government services.
Over the years, Kenya has built a reputation as a regional digital leader, largely driven by widespread mobile money usage and expanding internet connectivity. Smartphones remain central to this ecosystem, supporting government efforts in digital service delivery, cashless transactions, artificial intelligence development, and online taxation systems.
Statistics from the Communications Authority of Kenya show that by December 2025, there were approximately 48.7 million smartphones in circulation, compared to 29.6 million feature phones, reflecting a strong shift toward internet-enabled devices.
However, a combination of rising import costs and currency depreciation has already pushed handset prices upward in recent years. Market data indicates that the average smartphone price in Kenya rose from around KSh5,955 in 2019 to nearly KSh19,000 by mid-2025, driven by exchange rate pressures, higher import duties, and tighter controls on informal imports.
Industry experts caution that the proposed excise duty could deepen affordability challenges, particularly for low-income earners who rely on budget Android phones and installment payment options.
In recent years, firms such as M-KOPA, Watu Simu, and Safaricom’s Lipa Pole Pole initiative have widened access to smartphones through pay-as-you-go financing models that allow customers to pay in instalments over time.
Players in the sector now worry that the new tax could reverse these gains.
According to phone dealer Jeff Gichanga, based in central Kenya, most customers are already struggling with current prices, and additional taxation could push many toward second-hand devices or unofficial import channels.
He also noted that even consumers using installment plans are increasingly defaulting, as smartphone costs have become too high for many households.
Policy analysts and economists caution that the move could also expand Kenya’s informal phone market, shifting demand away from licensed retailers and potentially reducing government tax efficiency.
A similar policy shift in 2013, when VAT exemptions on mobile phones were removed, led to a sharp rise in prices before cheaper Chinese smartphone brands eventually helped restore adoption rates.
The latest tax proposal comes as African governments increasingly turn to the digital economy for revenue generation amid rising debt pressures and tighter fiscal conditions. Across the continent, several countries have introduced or expanded taxes on digital platforms, mobile money services, and online transactions.
Kenya’s Finance Bill 2026 also proposes new levies targeting cryptocurrency wallets, digital services, and payment network providers as part of broader efforts to increase revenue collection.
Critics, however, argue that taxing smartphones risks undermining long-term digital inclusion, especially in a country where mobile devices are now essential tools for everyday economic participation rather than luxury items.
While telecom companies continue expanding 4G and 5G infrastructure across the country, analysts emphasize that the success of these investments depends heavily on keeping smartphones affordable for the wider population.