Designer handbags, high-end motor vehicles, sleek yachts, imported perfumery and smartphones — one of these things is the odd-one-out of the luxury goods category, and it isn’t yachts.
I read with interest this week a TechCentral article that reported GNU-ly appointed communications minister Solly Malatsi is planning to engage the National Treasury over the classification (for tax purposes) of smartphones (“particularly 4G devices”) as luxury goods. Smartphones are subject to VAT and import duties, but also a certain ad valorem duty that applies to luxury goods, costs that are invariably passed on to the consumer.
Earlier this month Malatsi told eNCA in an interview that he’d be appealing to Treasury in this regard, and that smartphones should be considered a necessity “without which” as TechCentral reporter Nkosinathi Ndlovu put it, “citizens cannot participate in an increasingly digital economy”.
This is not lip-service to all things digital, or peppering your talking points with something buzzworthy. Those who are seeking work (skilled or unskilled) and those who have yet to enter the labour force are potential participants in the digital economy. Furthermore, the broader economy is facilitated by digital communications. A reliable means of communication is, simply, required in 2024. This is even more important if your home doesn’t have a formal address, let alone a landline.
We know the most recent census is riddled with holes, but purely as an indication, 92% of households in 2022 reported owning at least one cellphone in working order, more than televisions (79%) and fridges (83%). Data from the GSMA, a global mobile network operators’ industry body, shows there were 113-million active cellular mobile connections in SA in 2023, and smartphone adoption (excluding licensed internet of things cellular) sat at about 70%.
Went hunting
These statistics show that about three-quarters of South Africans do in fact have smartphones. So job done, yes? No. I see this figure as indicative of how essential South Africans view their smartphones, despite the price tags.
And what of those price tags? Local tech-focused news source MyBroadband went hunting for the most affordable 4G smartphones in the country just last month, finding 10 devices at R599 or R699. If dropping R700 on a single item sounds like nothing to you, rest assured you’re not the target market.
“Feature phones” (those that can connect to the internet but don’t meet the threshold of “smart”) can and will continue to play a role, but touch screens, graphic interfaces and simplicity of smartphone apps make them far more intuitive to use for anything beyond making a call. This creates a kind of (excuse the pun) disconnect in which smartphone devices — which arguably require less technological experience and sophistication from their users — are priced out of reach of many of our least tech-experienced people.
Switching to a “dumb phone” to overcome your doom-scrolling habits is only trendy when that device is not your primary gateway to the world. The Instagurus advocating for such measures are filming on digital cameras and editing on their Macbooks, and preaching to people who have more money than they have time.
When my father got his first cellphone in the mid-90s he was an early adopter. By 2000 we were sending the nation’s privileged youth off to tertiary education with it “just in case”. When the iPhone changed the game in 2007 it was still a flashy exception for the in-crowd and middle management. An upgrade or two later the graduate intake came with their Blackberry’s ostensibly pre-installed in their newly pressed suits.
Advertise business
Now, we debate what age is appropriate for children to have access, and a functional smartphone can be yours for less than R1,000, hardly luxurious compared with the cost of a basket of food in 2024. Show me the Louis Vuitton Neverfull or Rolex “timepiece” that has undergone a similar integration trajectory across society.
Just as we don’t all need a Mercedes-Benz to get to work, we need to differentiate between a flagship device and a fit-for-purpose smartphone, their users, and the core role these devices can play in people’s lives. Are they your shiny distraction engine for delivering TikTok and ordering takeout, or the only means for you to apply for jobs and advertise your small business on Facebook marketplace?
In those terms, and in the context of our world-leading unemployment performance, a smartphone starts to look less like an accessory than a human right.
I am not naive enough to think any government, let alone our cash-constrained one, can completely shrug off a tax stream of billions. Deloitte SA tax expert Olebogeng Ramatlhodi told TechCentral that ad valorem taxes on cellphones alone netted he SA Revenue Service R3.2bn in 2023.
I do think though that the clever folks at the Treasury should get creative here. Is there a two-tier model to be implemented? A subsidy scheme for indigent people and learners? And what about the millions of serviceable devices not just in our personal junk drawers but in corporate storerooms?
Built-in obsolescence is a threat, sure, but there’s a space between cutting-edge and useless brick. In fact, that is one way to make the upgrade roundabout work for us. Certified refurb centres could get a boost while we’re at it. E-waste could be reduced. A supply chain is ready to blossom into about 100-plus percent smartphone penetration that can happen in parallel to tackling the cost of data.
When Malatsi makes his appeal to the holders of the purse strings everyone at the table would do well to remember that long-established link between internet adoption and GDP growth. To my mind, the quickest way to connect South Africans to opportunity is to hand them a functioning smartphone. With that and affordable data we allow people to access education, networks, job opportunities and more.
• Thompson Davy, a freelance journalist, is an impactAFRICA fellow and WanaData member.
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