Kenya Finance Bill 2026 targets smartphones with 25% excise duty

Kenya plans to introduce a 25 per cent excise duty on smartphones under its Finance Bill 2026, a move that could sharply increase device prices and slow digital adoption in one of Africa’s most connected economies.

• Kenya’s Finance Bill 2026 proposes a 25% excise duty on smartphones.
• The new tax would come on top of VAT and existing import-related charges.
• Industry players fear higher prices could slow smartphone adoption and fuel informal imports.
• The move could complicate Kenya’s digital economy ambitions as millions rely on smartphones for banking, payments, and online services

The proposal, tabled in parliament on Tuesday, seeks to impose an excise duty of “25% of the excisable value” on mobile phones used on cellular and wireless networks.

If approved, the tax would add to the existing 16 per cent value-added tax (VAT), import declaration fees, railway development levies, and other charges already imposed on imported devices.

The planned tax has triggered concern among retailers, telecom operators, and digital finance players who fear it could make smartphones less affordable for millions of Kenyans who rely on them for banking, online work, e-learning, and access to government services.

Kenya has spent years positioning itself as one of Africa’s leading digital economies, driven largely by mobile money adoption and expanding internet access. Smartphones are central to that strategy, with the government pushing digital public services, cashless payments, artificial intelligence initiatives, and online tax systems.

According to data from the Communications Authority of Kenya, the country had about 48.7 million smartphones in use by December 2025, compared with 29.6 million feature phones, highlighting the rapid shift toward internet-enabled devices.

But rising import costs and currency pressures have already pushed smartphone prices significantly higher in recent years. Industry data shows the average smartphone selling price in Kenya climbed from about KSh5,955 in 2019 to nearly KSh19,000 by mid-2025, largely due to exchange rate weakness, higher import costs, and tighter regulation of unofficial imports.

Analysts say the new excise duty could worsen affordability challenges, especially for lower-income consumers who depend on entry-level Android devices and financing schemes to buy smartphones.

Over the past few years, companies such as M-KOPA, Watu Simu, and Safaricom’s Lipa Pole Pole programme have helped expand smartphone access through buy-now-pay-later plans, allowing consumers to spread payments over several months.

Industry players now fear the proposed tax could undermine those efforts.

“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, a phone retailer in central Kenya, told TechCabal.

“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.

Economists and industry observers also warn the move could strengthen Kenya’s grey market for phones, reducing sales through official retail channels and potentially weakening the government’s own tax collection goals.

Kenya previously experienced a similar backlash after removing VAT exemptions on mobile phones in 2013, a decision that contributed to a spike in retail prices before the entry of cheaper Chinese Android brands helped restore growth in smartphone adoption.

The latest proposal comes as African governments increasingly look to the digital economy for new revenue sources amid mounting fiscal pressures and rising debt servicing costs. Several countries across the continent have introduced or expanded taxes on digital services, mobile money, and online transactions in recent years.

Kenya’s Finance Bill 2026 also includes proposed taxes targeting cryptocurrency wallets, digital services, and card network providers as the government seeks to boost revenue collection.

However, critics argue that taxing smartphones could hurt long-term digital inclusion goals in a country where mobile devices are no longer considered luxury products but essential tools for economic participation.

Telecom operators continue to invest heavily in 4G and 5G network expansion across Kenya, but analysts say widespread adoption of those services depends largely on affordable smartphones remaining within reach for ordinary consumers.