Chairman of the Technology Committee of the Nigerian Bar Association Section on Business Law, Ikemesit Effiong, has raised concerns about the sustainability of Nigeria’s telecoms sector amid ongoing economic challenges.
   
In an article, titled: “The Imperative of Upholding Nigeria’s Telecoms Lifeline,” Effiong delved into the sector, emphasising its pivotal role as both an economic engine and societal enabler. He said with approximately 15,000 direct employees and a significant 16 per cent contribution to Nigeria’s GDP, the sector’s health is crucial for the nation’s well-being.”
    
He highlighted various obstacles facing the telecoms industry, including frequent fibre optic cable cuts due to road construction and vandalism, multiple taxations, and challenges in acquiring rights-of-way. He said these issues, compounded by exploitative rent-seeking practices, have persisted despite efforts to resolve them.
   
“Central to the sustenance of any industry is a conducive economic environment that allows for sustainable growth and innovation,” writes Ikemesit. However, regulatory constraints that limit tariff adjustments hinder the sector’s ability to adapt to market dynamics unlike other industries.
   
“Recent data from the National Bureau of Statistics (NBS) indicates a rise in inflation to 33.20 per cent in March 2024, up from 31.7 per cent in February 2024. This poses significant challenges for businesses striving to manage staff welfare and make necessary investments amid economic strains.
  
“The inflationary pressures have led to price increases across various sectors, including agriculture, beverages, and services. Companies such as Nigerian Breweries Plc and Netflix have adjusted prices multiple times this year to cope with rising costs,” he stated. He observed that recently, the quality of service has become a significant concern for subscribers across the country.
   
According to him, available data indicate that this issue may persist for the foreseeable future. “The 70 per cent broadband penetration target set by Nigeria’s Minister of Communication, Innovation, and Digital Economy, Dr. Bosun Tijani, was severely impacted in 2023, experiencing a decline of 14.2 per cent from a peak of 48.28 per cent in March to 41.87 per cent in November.
   
“With operators reporting financial losses in 2023 and a challenging outlook for 2024, it is evident that funding will pose a significant challenge for the necessary investments needed to transform the sector.”
 
Additionally, our members continue to bear the brunt of multiple taxation and coerced compliance with tax and levy demands that have no legal basis by sub-nationals. This threatens investment, sustainability, and industry growth.
   
“Instances include – exorbitant Right of Way fees, increases under the Finance Act 2023 (such as an upward review of Tertiary Education Trust Fund Tax from 2.5 per cent to three per cent, imposition of Value Added Tax on cell towers (Base Stations), imposition of import levy on goods, removal of capital allowance on telecommunications goods and services under Section 32 of the amended Companies Income Tax Act), amongst others.”
   
In the past 10 years, telcos have maintained the same charges for calls and data, despite inflation rising from 8.05 per cent in 2014 to 33.20 per cent in 2024, and the dollar increasing from N185 in 2014 to about 1,000 naira in 2024.
   
Considering that this sector supports Nigeria’s 221.7 million active voice subscriptions and 160.2 million data subscriptions, with immense consequential economic and social value, leaving it to resolve its challenges independently or risk collapse poses significant threats to Nigeria’s socio-economic stability.    
    
Stakeholders in the sector are urging the government to either invest in the sector as needed or adopt a cost-reflective tariff to facilitate necessary investments.