Tax cuts to boost Kenya broadband

Some 17.5m Kenyans own a mobile phone handset

Tax cuts and incentives have been announced in Kenya intended to boost broadband and mobile take-up as a new fibre optic cable is launched.

Kenya's Finance Minister Uhuru Kenyatta cut the 16% VAT on new phone handsets.

He also allowed internet providers to offset the cost of purchasing new fibre optic bandwidth for 20 years.

The first of three submarine cables connecting Mombasa port to Fujairah in the United Arab Emirates has been inaugurated by the president.

Kenyans rely on slow and expensive satellite connections to the internet, but will not benefit from high-speed access until all three of The East African Marine Systems (Teams) cables are in place.

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The project is a joint venture between the Kenyan government, Emirates Telecommunication Technology and a consortium of local investors.

It costs one Kenyan shilling (one cent) a minute to surf the net in internet cafes in the capital, Nairobi.

"It's not good, it's hanging and it keeps wasting time," a man in an internet cafe in the city told the BBC's Network Africa programme.

"It's frustrating, I've spent more than 16 minutes instead of [my usual] 10 minutes," he said.

Correspondents say Mr Kenyatta's concession to Internet Service Providers is intended to cut the cost of bandwidth for consumers drastically.

The finance minister also wants to make it more affordable for people to buy mobile phones.

"Mobile telephones have become essential aspects of our daily communication and transaction system and I do hope the dealers in these products will pass this benefit to ordinary wananchi (people) by lowering prices," he said, the Daily Nation reports.

According to the paper, some 17.5m people own a mobile handset, a sharp rise from 200,000 in 2000.

But a 10% tax on airtime vouchers remains in place, so the calls themselves remain the same price.