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VAT drives down computer shipments

08 May 2014, 10:22

Nairobi - The introduction of value added tax is having a negative impact on computer shipments into the country as certain unscrupulous market players are utilising dubious means to pay less tax or evade paying it altogether.

This has resulted in increased corruption at Kenya's ports and a subsequent rise in gray market shipments.

This is according to a preliminary report released by International Data Corporation (IDC).

"The huge decline seen in Kenya is alarming,"said James Mutua, a research analyst at IDC East Africa.

"The government's intention to increase tax collection is unlikely to be fully realized as substantial shipments are now coming into the country that may not have taxes levied against them.

"The government needs to act urgently to ensure a level playing field for all market players, either by scrapping VAT altogether or by tightening the loopholes that are increasingly being exploited."

Mutua said the positive news is that the Kenya ICT Authority was now fully operational with a board of directors in place.

"This means that government IT-related projects should start to gain momentum in the second half 2014, potentially giving a much-needed boost to the country's overall ICT market."

Meanwhile, shipments of computers to Kenya and other East African countries have declined by 31,6 percent in the first quarter of 2014 as compared to the same period last year.

According to a preliminary report released by IDC, which covers Kenya, Uganda, Tanzania, and Ethiopia, the record quarterly decline saw shipments total 141,831 units for the period under review.

"Huge volumes of low-cost mini notebooks were shipped to East Africa during the corresponding period of 2013, and these devices are no longer in production," said Mutua.

"We expected the remaining vendors to take advantage of this gap by developing products specifically targeted at this market but this has so far not materialized."

 - CAJ News

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