The Global System for Mobile Communications Association (GSMA) has highlighted reasons the Federal Government of Nigeria should urgently implement downward review of telecom taxes.
The body believes the reduction in telecom taxes will encourage investments and boost the country’s digital economy.
Angela Wamola, the head of Sub-Saharan Africa at GSMA, according to Punch report, said Nigeria’s complex and burdensome tax regime is hindering the telecom sector’s ability to invest in infrastructure, expand services, and contribute to the country’s economic development.
The GSMA official said on Wednesday that the rising operational costs, driven by increasing energy prices, have placed considerable strain on telecom operators.
Wamola explained that the situation was further exacerbated by the difficulty in accessing foreign currency, which is essential for importing the equipment needed to expand and maintain network infrastructure.
“These challenges are not unique to Nigeria; many African markets face similar issues. However, Nigeria’s complex and burdensome tax regime presents additional, country-specific obstacles that severely limit the sector’s potential,” the GSMA chief said.
Nigeria’s telecommunications sector has experienced a slowdown in growth and contribution to the country’s GDP in recent years. This decline is attributed to significant financial losses and deteriorating performance among telecom operators.
In 2023, telecommunications companies in Nigeria paid a total of approximately N2.4tn in taxes, a digital economy report from the Groupe Special Mobile Association indicated.
This figure represents a significant contribution to the Nigerian economy, as the telecom sector generated around N33tn, accounting for 13.5 per cent of the country’s Gross Domestic Product (GDP) during the year.
The GSMA official lamented that despite a 2020 agreement among state governors to set the RoW charge (Right of Way) at 145 naira per meter, many states have failed to comply with this rate.
According to her, this non-adherence has resulted in escalated costs for infrastructure deployment, with RoW charges now ranging from 1 per cent to 70 per cent of the additional costs of fiber optic installations, depending on the state.
The GSMA boss noted that this inconsistency not only hinders the deployment of vital infrastructure like fiber optics but also threatens the sector’s ability to finance necessary expansions.
However, if the agreed-upon rate of 145 naira per meter were uniformly applied, the GSMA official said that the cost of deploying fiber across the country could decrease by 15 per cent, making it more feasible for operators to invest in expanding their networks.
Wamola recommended that the government streamline taxes, harmonize right-of-way charges, and reduce multiple levies to encourage investment and enhance digital inclusion.
She argued that reforming telecom taxes would not only benefit the sector but also enhance economic growth, improve connectivity, and increase access to digital services for millions of Nigerians.
