Kenya’s proposed phone tax could raise smartphone prices sharply

Kenya plans to introduce a 25% excise duty on mobile phones, a move that could raise prices in one of Africa’s most connected economies and slow smartphone adoption.

The Finance Bill 2026 proposes an excise duty of “25% of the excisable value” on “telephones for cellular networks or for other wireless networks.” The measure could significantly raise smartphone prices in Kenya, where devices already attract a 16% value-added tax (VAT), import declaration fees, and other levies before reaching retailers. 

A higher mobile phone tax risks undermining years of efforts by telecom operators, lenders and policymakers to move millions of users from basic feature phones to smartphones through buy-now-pay-later (BNPL) models and low-cost Android devices.

Data from the Communications Authority of Kenya shows the country had 48.7 million registered smartphones by December 2025, far ahead of the 29.6 million feature phones still in use, reflecting the growing role of internet-enabled devices in banking, payments, and online services.

Mobile phones entering Kenya already attract several charges, including 16% VAT, import declaration fees, and railway development levies. Depending on their origin and classification, some devices may also incur import duties under the East African Community tariff framework. 

Rising import costs have pushed up smartphone prices in Kenya over the past two years, making entry-level Android devices harder to afford for many consumers.

Kenya removed VAT exemptions on mobile phones in 2013, triggering a sharp rise in retail prices before cheaper Chinese Android brands helped restore growth in smartphone adoption. The latest proposal has already reopened debate over whether the government is taxing access to the digital economy itself.

The measure may also complicate Kenya’s broader technology ambitions. The government has aggressively pushed digital public services, including online tax filing, artificial intelligence (AI) adoption, and cashless payments.  Telecom operators continue investing in 4G and 5G expansion. Yet much of that strategy depends on affordable smartphones.

Retailers fear that higher taxes could increase demand for grey-market imports and refurbished devices while slowing sales through formal distribution channels. 

“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,” Jeff Gichanga, who runs a phone retail shop in central Kenya, told TechCabal on Wednesday. 

“Even customers using buy-now-pay-later plans are increasingly failing to complete payments because smartphones have become too expensive for many households.”