Mobile phone sales pick up after debilitating effects of 20% import tax

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Mobile device sales took a nose dive due to a 20 per cent import tax on all mobile devices and accessories, but industry players say they have noticed a gradual rise in sales in 2015.

The Head of Alcatel Onetouch in Ghana, Robert Oduro told Adom News “there was a significant dip in sales between 2013 and 2014 following the introduction of the import tax, but now we are recovering gradually as sales have started picking up this year.”

The 20% import tax caused a huge uproar from industry players then. Some mobile device marketing companies threatened to vacate the country, while some dealers actually closed down their shops for a day in the capital city in protest of the tax.

The argument then was that the tax was not necessary because years back it was replaced with the communication service tax (CST), so bringing it back amounted to double tax on the consumer.

Moreover, it threatened to lead to handset smuggling, a collapse of the phones dealers’ business and even lead to the return of phone theft.

Industry players petitioned government to remove it and government went into discussions with players and later gave signals of willingness to review it. But almost two years has passed and a firm action is yet to be taken on the matter.

“Beside the 20 per cent there was 17.5 per cent VAT (value added tax), 2.5 per cent ECOWAS levy and another two to three per cent Customs duty,” Mr Oduro said.

He noted that it has taken a while for consumers to adjust to the new price mark ups but they are gradually getting used to it and that is showing in the marginal rise in sales this year.

“I think it was just normal consumer behavior – once they realized the tax has come to stay they adjusted their budget in spite of the harsh economic conditions we all find ourselves in right now,” he said.

Robert Oduro however noted that it has become even more imperative for government to re-look at that import tax because there is an apparent threat from neighboring Côte d’Ivoire, where the import taxes and duties combined has been reduced from 42 per cent to six per cent.

He argued that importers are likely to take their imports to that country and find a way to get them into Ghana through unapproved roots if government does not quickly review the tax downwards. And when that happens, government will not realize the kind of revenue it expected from the new tax.

“I know this is a listening government and I know for a fact that behind the scenes they are taking a second look at it and there is a high possibility of downward review soon.

Oduro recalled that President John Mahama commented on government’s commitment to discuss a review with stakeholders during his last State of the Nation Address, and discussions have been going on since but it is still clear when actual action will be taken on it.

Affordability

Meanwhile, he said Alcatel Onetouch has taken a value decision to use affordability to win on the market, in spite of the down turn and slow growth.

He noted that the company now commands about eight per cent (8% )of the handset open market share in the country, have risen from insignificance over the past toe years.

“Two industry reports place the number of mobile devices being imported into Ghana at an average of about 2.75million every year and our brands constitute about 200,000 plus of that,” he said.

Robert Oduro thinks the performance of the Alcatel Onetouch brands on the Ghanaians market is a milestone, given the small team he heads in the country.

He attributed much of the success to their feature phone range, which he said constituted about 50 per cent of their brands in Ghana. The brands include affordable entry level smartphones, high-end smartphones, tablets and broadband devices like dongles and Mi-Fi.

Oduro also thinks believes their strategic partners like sole distributor i2, and the telecom operators have played a major role in pushing up the fortunes of the Alcatel Onetouch brands in Ghana.

“From this year we are recruiting a full complement of staff to take this market by storm with more of our affordable feature phone, entry level 4G device and many more designed to give Ghanaians a touch of prestige at affordable rates,” he said.

According to Robert Oduro, Alcatel is responsible for over 40% of the devices telcos in this country have branded and or do special packages on.

Their most recent device is the 100% reversibility 4G handset, the Idol 3, which comes with free 9GB data and a smart watch when purchased on Vodafone.

The device has speakers and microphones at both the top and bottom and the screen turns in any direction the user turns the phone so no need to look for the top or bottom of the phone.

“Currently we are working together with Surfline on an affordable entry level 4G handset that is also dual-sim so they users can get both the fast 4G data service from Surfline and voice from another 3G service provider,” Oduro said.

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