Budget: The prioritisation of telecoms and digital is welcome
The Association of Comms and Technology (ACT), like many South Africans, waited three weeks for the 2025 budget speech to understand the government’s priorities and its effect on our sector.
During Human Rights Month, we reaffirm our commitment to fostering universal access to essential services, including digital connectivity — a modern extension of human rights.
We commend Communications and Digital Technologies Minister Solly Malatsi for his collaboration with the telecommunications industry, as this ensured the duty removal on entry-level smartphones.
The significant policy shift — exempting smartphones priced at R2,500 or less from the 9% ad valorem excise duty starting 1 April 2025 — was a welcome development.
By reducing the financial barrier to smartphone ownership, this policy aligns with broader efforts to bridge the digital divide and foster greater connectivity across underserved communities. Affordable access to smartphones is essential for enabling participation in the digital economy, improving access to e-government services and enhancing educational opportunities through technology.
Over and above this initiative, we still urge the government to implement additional mechanisms and legislative reforms aimed at narrowing the digital divide. These could include:
- Reducing the cost of entry-level smartphones: Beyond tax exemptions, direct subsidies or incentives for manufacturers could further lower smartphone prices, making them more accessible to low-income households.
- Removing VAT on smartphones: Eliminating VAT on all smartphones would significantly reduce costs and encourage greater adoption of mobile technology, as suggested by advocacy groups like the GSM Association.
- Incentives for digital integration: To foster public buy-in, the government could introduce incentives such as free data packages for first-time smartphone users or subsidised internet services in underserved communities. Public-private partnerships could also play a critical role in expanding affordable connectivity.
In this digital migration journey, it is crucial to ensure that no user segment is left behind. The next key step is to phase out the circulation of 2G and 3G legacy devices to ensure greater support adoption of 4G and 5G devices, which is particularly crucial as the country moves forward with efforts to phase out 2G and 3G networks.
ACT urges the regulator to swiftly intervene in withdrawing the type approval of the 2G and 3G devices, as this will further reduce the circulation of these devices. But affordability remains an important and challenging component — as we also need to ensure that networks and digital services are accessible and relevant to all South Africans.
To ensure inclusive participation in South Africa’s digital economy and align with global technological advancements, ACT advocates for an industry-led approach to phase out outdated technologies and streamline regulatory frameworks.
This includes accelerating the sunset of legacy networks by prioritising infrastructure upgrades for 4G/5G, as outlined in the National Digital and Future Skills Strategy, while partnering with telecom operators to ensure affordable transitions for low-income users.
Authorities should suspend approvals for obsolete devices (for example, halting the Independent Communications Authority of South Africa’s type approval for 2G/3G-only devices) and simplify compliance frameworks (for example, risk-based classifications) to reduce bureaucratic delays for innovative technologies.
These measures align with South Africa’s Digital Economy Master Plan, which emphasises infrastructure, skills development, and sector-specific digital transformation, ensuring the country solidifies its leadership in Africa’s digital economy while fostering equitable access to opportunities.
During his speech, Finance Minister Enoch Godongwana said that achieving South Africa’s goals of redistribution, redress and structural transformation requires much faster and more inclusive economic growth.
We are encouraged by the government’s commitment to reducing the cost and improving the quality of digital communication, as one of the key objectives of Operation Vulindlela, the joint initiative between the presidency and the treasury launched in 2020.
As highlighted by Godongwana, significant progress has been made under this initiative, including a 51% reduction in the cost of a 1.5GB data bundle. This achievement has enabled individuals and small businesses to access more affordable data, fostering greater digital inclusion and economic participation.
Godongwana is aware of the benefits of securing and bolstering the country’s digital public infrastructure, and most importantly how this will be key in driving growth and inclusion.
We are, however, greatly concerned about the proposed VAT increase and the potential effect this may have on our members’ customers. While the country will in the coming weeks watch on as MPs scrutinise the 2025 budget, we hope that the government is able to strike a balance between securing crucial economic sectors, bolstering the economy and ensuring households and businesses are able to afford the basics.
Nomvuyiso Batyi is the chief executive of the Association of Comms and Technology.