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Termination surcharges a worrying trend in Africa

A new type of tax is emerging in Africa according to new research conducted by Deloitte and the GSMA. Operators are increasingly introducing a surtax on international inbound call termination (SIIT), which centrally standardises the charge for terminating such calls. The SIIT distorts price competition, which has a negative impact on business and consumers.

Several countries across Africa have implemented this surtax - including Ghana, Senegal, Gabon and Congo Brazzaville – and the findings show that the introduction of a SIIT pushes up charges for outbound calls, as inbound international traffic is significantly reduced:

·         In Congo Brazzaville, the price of inbound traffic has risen by 111 per cent and operators report that inbound traffic fell by 36 per cent between May 2009, when the tax was introduced, and May 2011;

·         In Gabon, prices rose by 82 per cent when the SIIT was imposed in August 2011;

·         In Senegal, prices rose by 50 per cent and operators report that the number of international call minutes terminated on its network decreased by 14 per cent in the first five months; and

·         In Ghana, prices rose by 58 per cent and operators report a 35 per cent decrease in international call minutes terminated on its network in the month after the imposition of SIIT compared to the month prior to its introduction, and an 18 per cent fall in call minutes in the six months after its introduction compared to the six months prior.

Commenting on how a SIIT can negatively affect markets, Gabriel Solomon of the GSMA added: “The SIIT is an unfortunate and opportunistic move by some governments. The African continent is now connected to the global information economy by fibre optic cables which can herald a new wave of development but the SIIT threatens to damage this. The mobile industry is typically one of the top tax payers in most African countries and we have seen its importance for economic development but the SIIT is one tax too many; it carries the risk of significant collateral damage and should be abolished.”

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