Millions of Kenyans could soon pay significantly more for smartphones after the government proposed a 25 percent excise duty on mobile devices, a measure critics say threatens to reverse hard-won gains in digital access across the country.
The plan, contained in the Finance Bill 2026 tabled in parliament on Tuesday, targets mobile phones used on cellular and wireless networks. It would pile on top of existing charges that already include a 16 percent value-added tax, import declaration fees, and railway development levies — a cumulative tax burden that industry players warn could make smartphones unaffordable for a large segment of the population.
The timing is particularly jarring given how dramatically Kenya’s smartphone landscape has shifted. Data from the Communications Authority of Kenya shows the country had about 48.7 million smartphones in use by December 2025, compared with 29.6 million feature phones — a spread that underscores just how central internet-enabled devices have become to everyday Kenyan life.
Yet that growth has come under strain even before the proposed tax. Average smartphone selling prices climbed from roughly KSh5,955 in 2019 to nearly KSh19,000 by mid-2025, driven by exchange rate weakness, higher import costs, and tighter regulation of unofficial imports. A fresh 25 per cent excise duty could accelerate that trend sharply, analysts say.
The consequences would fall hardest on low-income consumers who rely on entry-level Android devices and instalment-based financing to get online. Companies such as M-KOPA, Watu Simu, and Safaricom’s Lipa Pole Pole programme have built their businesses around spreading smartphone costs over several months — but retailers say even those schemes are buckling under current price pressures.
“Most of our customers already struggle to afford new smartphones, so any additional tax will push more people toward second-hand phones or devices brought in through unofficial channels,” said Jeff Gichanga, a phone retailer in central Kenya. “Even customers using buy-now-pay-later plans are increasingly failing to complete payments because smartphones have become too expensive for many households,” he added.
That warning echoes a previous misstep. Kenya removed VAT exemptions on mobile phones in 2013, triggering a spike in retail prices before the flood of cheaper Chinese Android brands eventually helped revive smartphone uptake. Observers fear history could repeat itself — and that a thriving grey market would undercut the very revenue gains the government is chasing.
The irony is not lost on the industry. Kenya has spent years cultivating a reputation as one of Africa’s foremost digital economies, propelled by mobile money innovation, expanding internet coverage, and government-led pushes toward cashless payments, e-services, and artificial intelligence initiatives. Smartphones sit at the heart of that ecosystem, serving as the primary gateway for banking, online work, e-learning, and access to public services for tens of millions of citizens.
Telecom operators continue to pour investment into 4G and 5G network rollouts, but analysts caution that the benefits of those upgrades will remain out of reach for ordinary Kenyans if device affordability deteriorates.
The smartphone levy is just one piece of a broader revenue drive embedded in the Finance Bill 2026, which also proposes new taxes on cryptocurrency wallets, digital services, and card network providers. The push reflects a continent-wide pattern of governments turning to the digital economy to plug fiscal gaps amid rising debt servicing pressures — with several African nations having already expanded levies on mobile money and online transactions in recent years.
Critics, however, argue that taxing smartphones crosses a line. Once viewed as a luxury, mobile devices are today an essential instrument of economic participation for the average Kenyan — and policies that put them further out of reach risk deepening inequality at precisely the moment governments claim to be closing it.
By: Andrews Kwesi Yeboah