Mobile phone prices fall after tax waiver

• Further slashes expected next week as dealers do the maths

The tax waiver on mobile handsets has changed the ball game for illegal importers as costs of original phones fell by at least 16 per cent on Friday, a day after the Government waived duty on handsets.

Earlier on Friday, tax experts had faulted Finance minister Uhuru Kenyatta’s decision to exempt phones without allowing distributors time to claim already incurred VAT costs.

But communication seen from the Kenya Revenue Authority clarified that the exemption on “telephones for cellular networks or for other wireless networks” was effective from today as per Clause 12 of the Finance Bill 2009.

Handset manufacturers and dealers were also quick to dismiss analysts, arguing that events on the ground were different.

A crosscheck by Nation revealed that low-end handsets like Nokia 1202 were retailing at Sh1900, down from Sh2150 while high-end models like E71 had dropped from Sh34,000 to Sh27,500.

Other handset makers were still deliberating by the time of going to press, with further reductions expected next week.

“Let not anyone make it seem like it will not be done. It is in our interest to do it, which is why we were lobbying. Nokia and its partners are already implementing this,” said Nokia East and Southern Africa Communications Manager, Dorothy Ooko.

Win-win

“Gray products will no longer to be brought into our country. The playing field is now level for all. The penetration rate will double and the GDP will grow. It was a win-win for everyone,” she said.

Safaricom also announced price reductions of its handset prices following the tax concessions and customers will now pay Sh1,299 for the lowest-priced phone at a Safaricom retail out, compared to previous Sh1,499.

This is the Vodafone 125 handset that comes as part of the ongoing Safaricom Magic Box promotion.

A Nokia E75 will now sell at Sh39,699, against Sh45,999 which was the price before the announcement.

Said Safaricom CEO Michael Joseph: “Inability to afford handsets has stopped many Kenyans from enjoying the benefits of modern telecommunication services offered by Safaricom. We laud the minister for this move and gladly pass it on to our customers, confident that it will drive greater penetration and spur economic takeoff.”

The phones are data-enabled and the CEO says the tax reduction has allowed more Kenyans to access data services.

Taking ICT further downstream, Treasury is expected to introduce an Electronic Project Monitoring Information system dubbed e-Promis. The portal will be open to the public to enable Wananchi to monitor performance of projects of their choice.