Malawi introduces new tax measures on mobile phone services

Finance Minister Goodall Gondwe said the new tax measures means that mobile phone service providers might increase prices of airtime.

"Currently airtime is so cheap and people talk a lot of irrelevant stuff on the phone," said Gondwe. "But now people will have to rationalise use of airtime and use it economically."

When Gondwe was presenting the 2008/09 budget statement in parliament last week, he complained that customs duty in the importation of mobile phones has been hit by smuggling and evasion.

"We are emulating our neighbouring countries by removing both customs and excise duty on handsets, but introducing a domestic excise tax on airtime," he said.

Gondwe said a lot of Malawians will now acquire handsets cheaply and that the new system is working well in countries like Uganda, Mozambique, Tanzania and Zambia.

In Malawi the lowest airtime card of 25 units costs K35.

Malawi has two mobile phone service providers Celtel Malawi Limited and TNM Limited have been carrying out a campaign where they introduced subsidised handsets.

Senior Marketing Executive for Celtel, Chimango Chirwa, said government's action would achieve universal mobile access to people, which is in line with the Malawi Rural Telecommunications Policy of 2002.

"Access to effective telecom services is a fundamental human right, and not many people get this access due to cost constraints," said Chirwa, adding not many people get this access due to cost constraints and therefore one way of dealing with the issue of affordability is what government has done.

"We already started the initiative with the introduction into the market of our subsidised mobile phones which is in line with government's strategy," he said.