Malawi moves to cut smartphone taxes to boost internet access and close the digital usage gap
Malawi has signalled a major shift in how it plans to tackle one of Africa’s most stubborn digital problems: a country with widespread mobile network coverage but a population that largely isn’t online. Speaking at the GSMA Digital Africa Summit in Lilongwe, Information and Communications Technology Minister Shadric Namalomba called for the removal of the country’s 10 percent surtax on internet services and a review of the 17.5 percent VAT currently applied to smartphones. Days later, Finance Minister Simplex Chithyola Banda’s ministry, represented by Minister Mwanamvekha, responded directly to that appeal, hinting that some of these “temporary” levies on smartphones and internet data could be up for review.
The exchange, playing out publicly at the Bingu International Convention Centre, is more than routine political theatre. It reflects a growing recognition inside government that Malawi has largely finished the expensive, difficult part of digital infrastructure building, expanding towers and signal coverage, only to discover that coverage alone isn’t converting into actual internet use. According to data presented at the summit, roughly 87 percent of Malawi’s population now lives within range of a 4G signal, and 92 percent has 3G coverage. Yet only about 12.5 percent of the population actually uses mobile internet. That gap between people who can connect and people who do connect is one of the widest of its kind on the continent, sitting well above the regional average of around 65 percent.
Namalomba framed the problem plainly: building more network capacity will not solve Malawi’s digital divide if the phones and data needed to use that network remain out of reach for ordinary citizens. The government has set a target of pushing internet usage to at least 30 percent by 2030, more than doubling current levels, and it wants digitalisation’s contribution to GDP to grow from roughly 6.5 percent today to around 13 percent within the same timeframe. Namalomba also warned that conversations about artificial intelligence and other emerging technologies will remain largely theoretical for most Malawians as long as basic internet access stays unaffordable.
The numbers behind that warning come from a new report GSMA released at the summit, titled Driving Digital Transformation of the Economy in Malawi. The report estimates that closing Malawi’s mobile usage gap could generate an additional 1.1 trillion Malawian kwacha in economic value and create around 490,000 jobs by 2030. It also suggests digital reforms could deliver a net positive fiscal impact of 179 billion kwacha through increased adoption and improved tax compliance, an argument aimed squarely at finance officials who might otherwise worry that cutting smartphone and internet taxes means simply forfeiting revenue. Caroline Mbugua, GSMA Africa’s Senior Director for Public Policy, put it directly at the summit, saying that with the vast majority of the population still offline despite existing coverage, the priority now has to shift from expanding access to encouraging people to actually use it.
Malawi’s situation captures a pattern playing out across much of the continent. GSMA has separately found that around 961 million Africans live within areas covered by mobile broadband but remain offline, mainly because the cost of an internet-capable smartphone and the data plans needed to use it are simply unaffordable for many households. In low and middle income countries, GSMA estimates the cost of an entry-level internet-enabled handset can eat up nearly a quarter of average monthly income, and in some regions that figure climbs as high as 80 percent. That affordability barrier, rather than a lack of physical network coverage, is increasingly seen as the primary obstacle standing between hundreds of millions of Africans and meaningful digital participation.
It’s worth noting the fiscal politics at play here too. Minister Mwanamvekha acknowledged that some of the taxes now under scrutiny were introduced specifically to help stabilise Malawi’s economy during a difficult period, and he pointed to the challenging circumstances the current government inherited when it took office. Without those taxes, he suggested, the country might have struggled to fund services in health, education and other essential areas. That tension, between short-term revenue needs and long-term digital growth, is exactly the kind of trade-off GSMA’s economic modelling is designed to challenge, by arguing that lower taxes today can produce a larger, more formalised tax base tomorrow as more people and businesses move into the digital economy.
Beyond taxation, Malawi is also looking at how to get devices directly into people’s hands. The Malawi Communications Regulatory Authority has said it’s exploring ways to use the country’s Universal Service Fund, typically used to subsidise network expansion into underserved areas, to instead help subsidise smartphones and other consumer devices. Proposed initiatives floated at the summit include a “Connect a School” programme and a “one tablet, one student” scheme aimed at getting devices into the hands of students who might otherwise never own one. The thinking here is straightforward: expanding towers matters less at this stage than expanding who can actually afford a device once the signal reaches them.
The GSMA’s broader recommendations for Malawi go beyond just tax relief. Its report calls for improving the investment environment for telecom operators by easing access to foreign currency, extending spectrum licence periods and reducing energy costs, three factors that have made it more expensive for operators to maintain and upgrade their networks. It also urges stronger Universal Service Fund mechanisms, expanded digital skills training, modernised digital legislation, and the development of a coordinated national digital economy strategy alongside a national AI strategy aligned with wider African frameworks. Ten of the underlying indicators used in GSMA’s diagnostic reportedly scored zero for Malawi currently, a stark starting point that the report frames not as a failure but as a checklist of specific, fixable gaps.
Malawi’s mobile money sector offers a glimpse of what’s possible when adoption does take hold. Roughly 75 percent of adults in the country already actively use mobile money services, with more than 576 million transactions worth 8.6 trillion kwacha processed in 2025 alone. That level of financial inclusion through mobile channels suggests Malawians are perfectly capable of adopting digital services at scale when the right conditions exist. The challenge now is replicating that success with mobile internet more broadly, and tax reform appears to be the lever officials are most seriously considering pulling first.
That is why the government is increasingly looking beyond towers and fibre. The Malawi Communications Regulatory Authority (MACRA) says it is exploring ways to use the Universal Service Fund to subsidise smartphones and other consumer devices, alongside digital-literacy programmes. Proposed initiatives include Connect a School and a “one tablet, one student” programme. The thinking is that getting devices into people’s hands could be just as important as expanding network coverage, especially for students and low-income households.
Whether Malawi follows through on Namalomba’s appeal will likely become clearer in the coming months as the finance ministry works through its formal budget and policy review process. But the fact that the idea is being discussed openly by both the communications and finance ministries, at a summit where the economic case was laid out in explicit terms, suggests smartphone and internet tax relief has moved from advocacy talking point to a live policy option under real consideration in Lilongwe.
