Heavy Tax Burden Hindering Zimbabwe’s ICT Growth

A senior government official said, Zimbabwe’s information and communication technology (ICT) sector is struggling under the weight of high taxation, which, alongside power supply challenges, is stifling growth.

Deputy Minister of Information Communication Technology and Courier Services, Dingumuzi Phuti, highlighted these concerns during the CEO Roundtable breakfast meeting in Harare last week. He noted that excessive taxation was distorting the market and forcing service providers to shift the financial burden onto consumers.

“The taxation levels in the ICT sector are alarmingly high. Operators are subjected to multiple taxes, and when they attempt to highlight how this impacts growth, their concerns often go unheard,” said Phuti. “When service providers are overtaxed, they naturally pass the costs to consumers, which disrupts the market”.

By Ruvarashe Gora

Excessive taxation on telecommunications companies (telcos) has far-reaching consequences. It raises service costs, discourages investment in network upgrades and innovation, and reduces industry profitability.

Apart from taxation, Phuti pointed to erratic power supply as another major setback for the ICT sector. Frequent and prolonged power outages have disrupted operations, forcing network providers to rely on expensive alternative energy sources.

“Power shortages have had a severe impact on ICT growth. Many businesses here can confirm that these disruptions affect every aspect of operations. Imagine mobile network providers running on generators for months because power lines are down or not connected,” he said.

Zimbabwe, like other countries in the region, faces electricity shortages due to decades of underinvestment in energy infrastructure. While recent projects, such as the expansion of Kariba South and Hwange power stations, have added capacity, the national grid still struggles to meet peak demand, forcing the country to rely on imports and load-shedding.

Despite these challenges, the ICT sector continues to grow. In the third quarter of 2024, mobile internet traffic surged by 19.22%, reaching 78.38 petabytes, and reflecting increasing consumer reliance on data services. However, traditional voice traffic dropped by 7.46% as users turned to internet-based communication platforms like WhatsApp, Messenger, and Telegram.

For Zimbabwe’s ICT sector to thrive, Phuti emphasized the need for policy adjustments. He urged authorities to review the taxation framework and prioritize power supply improvements to create a more favorable business environment.