Seven years after its establishment, the African Continental Free Trade Area (AfCFTA) continues to face an alarmingly slow progress in its implementation. This critical issue was a central point of discussion at the 43rd Committee meeting, convened at United Nations Economic Commission to Africa (UNECA) headquarters in Addis Ababa from March 12 to 18, 2025, involving African ministers of finance, planning, and economic development, among other stakeholders.
Participants underscored the urgency of tariff reduction, the elimination of non-tariff barriers, and the harmonization of trade policies, emphasizing the need for robust national AfCFTA implementation committees and greater private sector engagement.
The AfCFTA is widely regarded as a transformational opportunity for Africa, capable of significantly enhancing intra-African trade, diversifying economies, and accelerating industrialization. UNECA data suggests that, if effectively implemented, the agreement could boost intra-African trade by 45 percent by 2045, with substantial growth in key sectors like manufacturing, agro-processing, and services.
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Among the other topics discussed during the week-long meeting was optimizing Africa’s ICT tax regimes to spur economic growth and job creation. Mactar Seck (PhD), Chief of the Section for Innovation and Technology at UNECA, highlighted the importance of digital technologies in driving economic development, noting that since 2005, Africa has made significant strides in ICT.
However, the continent remains the least connected globally, with only 38 percent of the population having internet access—57 percent in urban areas compared to just 23 percent in rural regions. The cost of internet services in Africa is notably higher than on other continents, representing 14.8 percent of the region’s Gross National Income (GNI) per capita, compared to the global average of 2.9 percent. Nevertheless, the e-commerce market in Africa is growing rapidly, with a projected half-billion users by 2025. By 2050, e-commerce penetration in Africa is expected to contribute $712 billion to the continent’s GDP, representing 8.2 percent of the total.
Despite these advancements, Seck (PhD) acknowledged that progress in internet connectivity is slow, with only a one percent growth between 2023 and 2024. One of the key obstacles to greater connectivity is the exorbitant cost of broadband internet, which is five times higher in Africa compared to other regions.
Furthermore, African governments’ high tax rates on the ICT sector are contributing to slow growth. Although taxing the sector could generate additional revenue, experts, including Seck, suggest that simplifying tax regimes and reducing taxes on ICT services could be a more effective strategy. “A streamlined tax policy could increase broadband penetration and significantly boost revenue by enhancing productivity and expanding the tax base,” he said.
Seck presented several examples to illustrate the impact of tax reforms on the ICT sector. In Ethiopia, reducing the Value Added Tax (VAT) on broadband connections could create 640,000 jobs and increase broadband penetration by 4.6 percent.
A 2024 report from the Global System for Mobile Communications Association (GSMA), a worldwide industry lobby group with close to 800 mobile operators as members, similarly indicated that levying taxes on telecom and mobile money services could reduce the volume of digital transactions by up to half.
GSMA warns that increased taxation and the resulting rise in transaction costs could drive price-sensitive consumers away from mobile money services, which are essential for promoting financial inclusion in areas lacking traditional banking services.
On the other hand, in neighboring Kenya, cutting the excise duty on ICT by 10 percent would add 580,000 jobs and improve internet accessibility by 9.7 percent, according to UNECA’s report presented by Seck. Similarly, in Tanzania, reducing excise duties by 10 percent could increase sector revenue by nearly USD 100 million and boost broadband penetration by 9.69 percent, resulting in the creation of 700,000 jobs.
The arrival of submarine cables in Africa has already had a profound impact on job creation. In Kenya, the sector has expanded from 700,000 to 3 million jobs, while Nigeria could see up to 7 million new jobs in ICT in the coming years.
However, concerns were raised about tax elasticity, with some countries experiencing varying tax responsiveness. A delegate from Sierra Leone noted the importance of considering these variations to ensure accurate revenue projections. Seck(PhD) acknowledged this point and emphasized ongoing efforts to refine models for more accurate tax assessments.
Another significant challenge is tax evasion, particularly in the ICT sector, where international calls are often rerouted to avoid fees. There are also concerns about smuggled mobile devices, with proposals to track mobile devices via IMEI numbers to help close the gap in taxation. Dr. Seck agreed that technology could play a crucial role in improving tax enforcement and called for stronger regulatory frameworks.
The taxation of digital content and online transactions also sparked extensive discussions. Participants called for strategies to tax earnings from platforms like YouTube and Facebook. Some delegates raised the need for a continental framework to capture these new revenue streams, with an emphasis on the African Union’s role in addressing this challenge.
The rise of crypto assets was another topic of concern at the UNECA meeting. A Ugandan representative pointed out that these unregulated online assets pose a significant challenge to national tax laws and regulations. As more people invest in crypto assets, countries risk losing valuable tax revenue from online transactions. He also highlighted the increasing threat of fraud in the sector, which often represents about 10 percent of GDP in some African countries.
Despite these concerns, there was a general agreement that digital jobs would continue to grow, with projections that 90 percent of new jobs in Africa by 2030 would require digital skills. Seck emphasized the importance of training the youth to equip them with the necessary skills for the emerging digital economy.
Claver Gatete, Executive Secretary of UNECA, stressed the need for infrastructure investments to scale up internet penetration. Given the high costs of installation, he suggested that Public-Private Partnerships (PPP) could help accelerate the development of digital infrastructure across the continent.
Participants also raised the need for greater collaboration with key telecom operators—the so-called “G6” (MTN, Orange, Vodacom, Airtel, Ethio Telecom, and Axian)—to improve data accuracy and build trust between governments and private operators. They also emphasized the importance of establishing a comprehensive national strategy for taxation optimization to support broader economic development goals.
Seck warned that while taxation plays a vital role in funding infrastructure development, excessive taxes could stifle innovation and hinder the growth of the ICT sector. He called on policymakers to strike the right balance based on national priorities, ensuring that tax policies support both economic development and the expansion of digital connectivity.
Seck (PhD) also highlighted the critical role of digital technologies in Africa’s future, and the need for tax reforms, infrastructure investments, and strategic planning to unlock the potential of AfCFTA.
