Zambian Vice President Lupiah Banda announced the government will provide tax incentives to domestic and international ICT investors to encourage them to expand their services in rural areas.

Banda said foreign investment would result in increased technology transfer, financial inflow and internationalization of knowledge in the country.

Early this month, the Zambian government asked Internet service providers and mobile phone companies to help the government provide cost-effective ICTs in rural areas. However, the service providers answered that expansion to such areas is not worth the high cost of production.

The Zambian government said the extension of ICT facilities in rural areas is key to improving the livelihood of residents, breaking a barrier that hinders them from participating in the national development process.

However, Celtel Zambia CEO David Venn said the Zambian government needs to restructure the country's tax system in addition to providing incentives, as the system is responsible for the high cost of production.

"As a mobile company, the government gets 55 percent tax on all phone calls that are made from us as a company," Venn said.

The service providers are also pushing the Zambian government to reduce or scrap the Very Small Aperture Technology (VSAT) licenses charged to users in rural areas.