Retail prices for smartphones are high in developing countries relative to average income, preventing people from owning a mobile phone, according to an international report. The report said that the high cost of mobile and internet are significant barriers to digital inclusion.

According to the report entitled Strategies Towards Universal Smartphones Access, in the US and Europe, the cost of smartphones fell below 5 percent of the average monthly income, while in low-income countries, it exceeded 70 percent.

As a result, smartphones are not affordable for the majority of people in most low and middle-income countries, the report said.

Access is connected with affordability which is required for both internet and smartphone, said Santosh Sigdel, founder chairman of Digital Rights Nepal, an advocacy group to strengthen civic space and digital rights. “Lack of one of these causes a digital gap.”

As more information is being disseminated online, the government has the responsibility to ensure the accessibility of phones and the internet to reduce the digital gap, according to Sigdel.

The price of smartphones in Nepal has been increasing due to increased freight costs, the appreciation of the US dollar and the ban imposed on the import of mobile phones.

Sanjay Agrawal, vice president of the Mobile Importers Association, said that smartphone prices have increased by 10 percent in recent months.

Despite new innovations, the retail cost of mobile handsets continues to be influenced by the hardware and operating systems costs, the report said.

“The disruption of global and local logistics caused smartphone prices to rise during the early days of the pandemic only to see them fall again in response to oversupply in the face of softening demand,” the report said.

Handset affordability appears to affect women more than men in many low- and middle-income countries and is cited as the top barrier preventing women from owning a mobile phone, the report said.

The report showed that women in low- and middle-income countries are 18 percent less likely than men to own a smartphone. This exclusion is worse in the least developed countries, especially in the most rural areas, and it reinforces and exacerbates their marginalisation.

In Nepal, the government imposes an 18 percent tax on smartphones and a 15.5 percent tax on bar phones.

Markets with high duties tend to be very inefficient as the duties reduce legal imports significantly, and illegal imports then spike, the report said.

In countries where local industry is non-existent, taxes and duties on mobile phones are imposed to boost government revenue.

“Most devices purchased from parallel markets are produced from copied parts that often fail after a short time in use. Further, these devices are sold with no warranties or repair options,” the report said.

Given that retail prices for mobile phones are influenced by the features of a device, there are suggestions that rethinking the design of devices, and combining features of smartphones and feature phones can deliver affordable handsets with sufficient capabilities.

According to the report, an estimated 2.7 billion people globally remain offline. Most of these people are in low- and middle-income countries and most of them live with good internet coverage.

However, the cost of a smartphone to access the internet can exceed 70 percent of the average monthly income in low and middle-income countries, presenting a significant barrier to digital inclusion.

The Broadband Commission for Sustainable Development has set the target to reduce the price of entry-level fixed or mobile broadband services in low- and middle-income countries to less than 2 percent of monthly Gross National Income per capita by 2025.

More than 99 percent of people in high-income countries have access to mobile coverage, while only 86 percent of residents of low-income countries do.