Mobile penetration rates have increased significantly in Ethiopia, driven by government efforts and affordable devices.

The report, titled “Ethiopia: Unlocking the Potential of the Mobile Industry,” highlights the country’s progress in mobile penetration and the challenges it faces in expanding its mobile network coverage.

The Ethiopian Mobile Industry: A Growing Market

The Ethiopian mobile industry has experienced significant growth in recent years, with mobile penetration rates increasing from 10% in 2010 to over 50% in 2020.

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The Impact of Taxation on Mobile Money Services

The GSMA, a leading industry association, has sounded the alarm on the potential impact of taxation on mobile money services. The organization warns that the rise in transaction costs due to taxation could drive price-sensitive consumers away from these services, ultimately hindering their growth.

The Risks of Higher Transaction Costs

Higher transaction costs can have a ripple effect on the entire mobile money ecosystem. When consumers are forced to pay more for transactions, they may be less likely to use mobile money services, leading to a decline in usage and revenue for mobile money operators. This, in turn, can have a negative impact on the overall financial inclusion of the population. Key risks associated with higher transaction costs: + Reduced usage and revenue for mobile money operators + Negative impact on financial inclusion + Potential for price-sensitive consumers to switch to alternative payment methods

The GSMA’s Recommendations

In response to these risks, the GSMA recommends that governments consider reducing or exempting VAT on digital financial services.

The Impact of Excise Tax on Telecoms Operators in Ethiopia

The introduction of a five percent excise tax on mobile and wireless connections in Ethiopia has significant implications for the country’s telecoms operators. The tax, which is part of the government’s efforts to increase revenue, is expected to affect the entire value chain of the industry, from the initial connection to the final transaction.

The Excise Tax: A New Challenge for Telecoms Operators

The excise tax on mobile and wireless connections is a new challenge for telecoms operators in Ethiopia. The tax is expected to increase the cost of doing business for these operators, which could lead to higher prices for consumers.

The GSMA is pushing for a reduction in the tax burden on mobile operators and the removal of the 10 percent excise duty on mobile phones.

The GSMA’s Stance on Excise Duty and Taxes

The GSMA, a global trade association representing the interests of the mobile industry, has taken a strong stance against the 10 percent excise duty applied to smartphones. The organization believes that this tax is unfair and disproportionately affects low-income consumers who rely heavily on mobile phones for communication and access to essential services.

The Impact on Low-Income Consumers

The GSMA’s Proposal for a Temporary Suspension of Taxes

The GSMA is also advocating for a temporary suspension of taxes on digital financial services. This would provide relief to consumers and businesses that rely on digital payment systems. The GSMA believes that a temporary suspension of taxes would help to stimulate economic growth and increase access to financial services for underserved communities. The organization is pushing for a phased approach to tax relief, with the goal of reducing the tax burden on digital financial services over time.*

The GSMA’s Call for a Reduction in Tax Burden on Mobile Operators

The GSMA is also calling for a reduction in the tax burden on mobile operators. This would help to increase investment in the mobile network and improve the quality of services for consumers.

Bureaucratic hurdles and infrastructure gaps hinder growth in Ethiopia’s telecommunications sector.

The Challenges Facing the Telecommunications Sector in Ethiopia

The telecommunications sector in Ethiopia is facing numerous challenges that are hindering its growth and development. One of the major issues is the high level of bureaucracy and complicated permit procedures. This has led to a significant delay in the rollout of new services and infrastructure, resulting in a lack of investment in the sector. The permit process is lengthy and involves multiple stakeholders, including the government, regulatory bodies, and private companies. The process is often opaque, making it difficult for companies to navigate and understand the requirements. The fees associated with the permit process are high, which can be a significant burden for small and medium-sized enterprises (SMEs). Another challenge facing the telecommunications sector in Ethiopia is the lack of infrastructure.