Telecom operators in Nigeria are seemingly unaffected by the 14% tariff imposed by U.S. President Donald Trump on non-oil exports, nonetheless, the ripples of this trade policy could still lead to challenges in the industry.
The core reason is that Nigeria’s telecom sector, while heavily reliant on imported infrastructure, is not an exporter of goods but rather, an importer of equipment from countries like China, the U.S., and parts of Europe.
Tony Emoekpere, president of the Association of Telecommunication Companies of Nigeria (ATCON), said, “It won’t affect the industry much because the operators import everything they use directly. They don’t export.”
There is actually more at play than just the tariff’s direct impact. Emoekpere pointed out that the sector’s vulnerability lies in the national economic dynamics, specifically those affecting foreign exchange and inflation.
The recent 50% increase in telecom service tariffs, a decision made to counteract the high costs of operations, directly connects to the overall economic climate.
Inflation, alongside a weakened naira, has placed huge pressure on telecom operators, pushing them to make difficult pricing adjustments.
This price hike aims to stabilise operations while promoting investments in infrastructure—something that could be compromised if the U.S. tariff negatively impacts the country’s larger economic space.
Gbenga Adebayo, president of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), stresses a particular issue: “There is no hardware that we export, but there might be issues with charging international calls by local operators. If the VAT on calls in the US increases, local operators will need to adjust to the rates.”
Even with the tariff not directly targeting the telecom sector, Nigeria’s non-oil exports, which include agricultural products and industrial raw materials, are now facing a more challenging global market.
This, in turn, could shrink foreign exchange earnings, further depreciating the naira and fuelling inflation. The result could be a tougher environment for telecom operators who depend on the importation of equipment priced in foreign currencies.
The U.S. tariff’s impact on Nigeria’s exports could cost the country as much as $814.8 million annually, according to estimates. While Nigeria’s foreign exchange reserves have recently climbed to $23.11 billion, the highest in three years, these reserves remain vulnerable to external shocks.
With telecom operators fighting with rising import costs, this buffer might not be enough to shield them from the compounded effects of inflation, energy costs, and currency depreciation.
Adding to the issue, many Nigerians are venting discontent over the 50% tariff hike. Labour unions, including the Nigeria Labour Congress (NLC), have threatened industrial action, accusing telecom operators of taking advantage of the economic crisis.
The public’s annoyance comes not just from the high costs but also from ongoing issues with poor network quality despite operators’ claims of improved service.
The government’s response to these external pressures is important. Though the U.S. tariff appears to have little direct impact on the telecom sector, the cascading effects on foreign exchange and inflation may present a different story.
There’s a sense of cautious positiveness within the industry, with some hoping the government will negotiate with the U.S. to ease the stress on Nigerian exporters and, by extension, telecom operators. This could involve forging new trade agreements or diversifying markets for Nigerian goods.
However, even as the industry walks through these external trade dynamics, the challenges within Nigeria’s telecom sector are a lot. Poor service delivery, limited infrastructure development, and an increasingly price-sensitive market all contribute to the difficulties operators face in balancing profitability with customer satisfaction.
Gbenga Adebayo says, “If the VAT on calls in the US increases, local operators will need to adjust to the rates”—reiterating the challenges in global trade dynamics that could ultimately affect Nigerians on the ground.
In this environment, telecom operators will need to tread carefully, managing their costs while striving to meet customer expectations. With consumers already on edge due to the tariff hike, any further economic turbulence could push the sector closer to a tipping point.
