Balancing ICT Taxation Key to Africa’s Digital Future, Say Experts at ECA Conference

“Taxation of the ICT sector must be carefully tailored to each country’s economic structure and development goals,” Seck said.

The complex relationship between taxation of the ICT (Information and Communication Technology) sector and broader economic development was a central theme at the United Nations Economic Commission for Africa’s (ECA) 2025 Conference of African Ministers of Finance, Planning, and Economic Development. As African countries grapple with limited fiscal space, surging digital demand, and the need for job creation, policymakers are increasingly being called upon to carefully calibrate tax policies to foster growth in the digital economy.

Mactar Seck, Chief of Emerging and Frontier Technologies at the ECA’s Division of Technology, Innovation, Connectivity and Infrastructure, presented key research findings that highlighted a nuanced and sometimes contradictory landscape across African economies.

“Taxation of the ICT sector must be carefully tailored to each country’s economic structure and development goals,” Seck said. “Our data shows a mixed picture — both increases and decreases in ICT-related taxes have led to positive outcomes, depending on broader policy frameworks and market conditions.”

Case Studies: Zambia, Kenya, Ethiopia, and Nigeria

Drawing from ECA’s cross-country analysis, Seck noted that Zambia had increased ICT taxes but experienced simultaneous positive outcomes — tax receipts rose, job creation improved, and broadband penetration grew by 14.6%. Kenya demonstrated a similar pattern, with a 9.7% increase in broadband penetration following increased taxation.

Conversely, countries like Ethiopia and Nigeria had reduced ICT sector taxes and still saw growth in broadband access — 4.6% and 4.9% respectively — and significant job creation. However, these tax reductions led to lower tax revenues in the short term.

“This suggests that ICT taxation has complex multiplier effects,” Seck explained. “In countries where tax administration and digital infrastructure are well developed, increased taxes may not harm growth. In others, lowering taxes stimulates more participation, leading to eventual gains in employment and broadband access.”

He emphasized that in cases where increased taxes led to positive outcomes, it was largely attributed to broader productivity gains across the economy and a widening tax base driven by efficiencies and growth within the ICT sector.

The Economic Impact of Broadband

The ECA research further emphasized the critical role of broadband in driving economic performance. According to Seck, a 10% increase in broadband penetration can generate additional GDP growth of between 0.8% and 2.46%. These findings underscore the importance of investing in digital infrastructure and policies that enhance affordability and access.

Despite incremental progress over the past two decades, Africa remains the world’s least connected continent. Connectivity across the continent has only grown by 1% in the past five years, highlighting the urgent need for policy reforms, public-private partnerships, and regional cooperation.

Affordability and the Urban-Rural Digital Divide

Another key concern raised at the conference was the high cost of broadband in Africa. On average, internet access costs at least five times more than on other continents, further entrenching the digital divide between urban and rural areas.

“Africa’s broadband is simply too expensive,” Seck said bluntly. “Affordability remains a major barrier to access. If we don’t address this, we will continue to see unequal growth and missed opportunities.”

Other speakers echoed the concern, pointing out that rural populations, which make up a significant portion of Africa’s demographic, are often left behind in national digital development strategies. Investing in rural broadband infrastructure and creating incentives for private sector participation were among the solutions proposed.

Path Forward: Tailored Tax Frameworks and Gradual Reform

Seck concluded by advocating for country-specific tax monitoring frameworks to assess the dynamic effects of taxation on the ICT sector. “While many countries that lowered taxes saw positive results, we must proceed cautiously,” he said. “Given the fragility of our economies, any tax reforms should be gradual and closely monitored.”

The ECA projects that if Africa harnesses the full potential of its digital economy, it could be worth $712 billion by 2030 — contributing an estimated 8.2% to the continent’s GDP. However, to realize this potential, policymakers must strike a delicate balance between taxation, investment, and affordability.

The conference closed with a strong call to action for African finance ministers and development partners to collaborate in designing tax policies that unlock digital growth, improve access for underserved communities, and create millions of digital jobs across the continent.