In South Africa, tax repeal boosted sales of affordable smartphones
In South Africa, the abolition of the 9% ad valorem excise duty on smartphones costing up to 2,500 rand from 1 April 2025 changed sales dynamics in the lower price segment. As Daily Maverick reports, before the tax decision, this segment was the only one in the smartphone market with a sustained decline in sales.
Dynamics of affordable smartphones
An empirical GSMA study covering the period from March 2025 to February 2026 recorded a change in average monthly sales dynamics for smartphones priced at up to 2,500 rand: from a 7.9% decline to 6.2% growth after the duty was abolished.
Over 11 months, sales volumes of entry-level smartphones rose by 80%, while feature phone sales fell by 87%. The publication notes that the narrowing price gap between feature phones and affordable smartphones prompted lower-income households to switch to smartphones.
South African Minister of Communications and Digital Technologies Solly Malatsi said affordable smart devices help young people look for work, pupils study online, and citizens use government services and online banking. According to him, smartphones also enable entrepreneurs to find more customers.
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Impact of rising memory costs
At the same time, smartphone manufacturers are facing rising global prices for memory chips and RAM. Honor South Africa CEO Fred Zhou, speaking at the presentation of the foldable Honor Magic V6 in Cape Town, which costs 40,000 rand, said global costs for RAM and storage had risen two- or threefold.
According to Zhou, manufacturers have to select device specifications so that their price does not exceed 2,500 rand, after which import duties apply again. He also said that Honor increased the number of models priced at up to 2,500 rand from two last year to three this year and kept the price of one of its devices below 2,000 rand.
Daily Maverick also notes that there are no feature phones with access to WhatsApp on the South African market, including KaiOS devices, support for which the messenger discontinued several years ago.
