Kenya is planning to introduce a 25 percent excise duty on smartphones under its Finance Bill 2026, a move that could significantly raise device prices and reshape access to mobile technology in one of Africa’s most digitally connected economies.
The proposed tax, if approved by parliament, would apply to smartphones used on cellular and wireless networks and would be charged at 25 percent of the excisable value. This comes on top of existing levies including 16 percent value added tax, import declaration fees, and other customs related charges already applied to imported devices.
The policy forms part of broader revenue raising measures contained in the Finance Bill 2026 as the government seeks to expand its tax base amid growing fiscal pressures. However, the proposal has triggered concern among industry stakeholders who warn it could slow down smartphone adoption and deepen inequality in digital access.
Kenya has built a strong reputation as one of Africa’s leading digital economies, largely driven by mobile money systems, fintech innovation, and widespread smartphone penetration. Smartphones are central to this ecosystem, enabling services such as banking, e learning, online work, and access to government platforms.
Data from the Communications Authority of Kenya shows that by late 2025, the country had nearly 48.7 million smartphones in circulation compared to 29.6 million feature phones, reflecting a major shift toward internet enabled devices.
Despite this progress, affordability remains a growing challenge. The cost of smartphones has risen sharply in recent years due to currency depreciation, import costs, and existing taxation structures. Industry estimates show average device prices have more than tripled over the past decade, placing pressure on lower income consumers.
Analysts warn that the proposed 25 percent excise duty could further widen this affordability gap, particularly for entry level devices that are essential for first time internet users. This could slow digital inclusion efforts and limit access to online services for millions of citizens.
Retailers and telecom industry players have also raised concerns that higher prices may push consumers toward second hand devices or informal import channels, reducing sales through official distribution networks. This shift could potentially undermine government revenue targets if a larger share of the market moves outside formal taxation systems.
The rise of smartphone financing schemes has helped ease access in recent years. Companies such as M KOPA and Safaricom’s instalment based payment programmes have enabled consumers to acquire devices through small periodic payments. However, industry observers say rising prices and taxes could strain these models and increase default rates.
Kenya has increasingly relied on digital taxation measures in recent fiscal reforms, including proposals targeting cryptocurrency transactions, digital services, and online platforms. The smartphone excise duty is seen as part of this broader strategy to expand tax collection in the fast growing digital economy.
However, critics argue that taxing smartphones directly could conflict with the country’s long term digital transformation goals. Mobile devices are no longer considered luxury goods but essential tools for participation in economic and social life.
Economists also caution that higher handset prices could slow internet penetration growth and reduce the effectiveness of ongoing investments in 4G and 5G infrastructure. Network expansion alone, they argue, is not enough if consumers cannot afford compatible devices.
The proposal now awaits parliamentary approval, and its outcome will likely shape both Kenya’s digital economy trajectory and the affordability of mobile technology for millions of users across the country.
