The call, which began at 8 a.m. Washington time, was the first direct exchange between the two leaders in three months.

Earlier this year, Washington threatened to shut TikTok down unless its U.S. operations are transferred from Chinese parent company ByteDance to American ownership. 

Congress set a deadline of January 2025, though Trump has so far avoided enforcing it. He has admitted that banning the app outright could trigger a backlash among its millions of American users.

“I like TikTok; it helped get me elected,” Trump said on Thursday. “TikTok has tremendous value. The United States has that value in its hand because we’re the ones that have to approve it.”

Beijing, however, must sign off on any deal before it moves forward. Sources familiar with the talks say U.S. investors would take over TikTok’s American assets, but ByteDance would continue supplying the algorithm that drives the app’s powerful content recommendations. This unsettles U.S. lawmakers who argue that algorithmic control is inseparable from political influence.

“The platform may be American-owned, but if the algorithm is Chinese, the risk remains,” warned Senator Mark Warner, chairman of the Senate Intelligence Committee.

Trade and technology disputes

The TikTok talks are unfolding against a bigger economic fight. Since returning to office, Trump has raised tariffs on Chinese goods, some to levels not seen in nearly a century. Beijing retaliated with its own restrictions, leaving both economies struggling. 

The U.S. is battling high inflation and a record trade deficit with China, while China’s growth slowed to 4.2% in the second quarter of 2025, its weakest pace since the pandemic.

Despite these pressures, Trump insists he is close to securing better terms with Beijing. “We’re pretty close to a deal,” he said on Thursday, hinting at an extension of current trade terms. Washington is pressing China to buy more U.S. soybeans and Boeing aircraft, while also demanding a crackdown on fentanyl-related chemical exports—an issue the U.S. blames for soaring overdose deaths.

TikTok as leverage

Analysts say Beijing is using TikTok as a bargaining chip while holding back exports of rare-earth materials vital for U.S. technology production. “China’s effective use of sticks (rare earths) and carrots (TikTok) has turned things heavily in their favour,” said Scott Kennedy of the Center for Strategic and International Studies.

Washington, in turn, has restricted China’s access to advanced semiconductor designs, jet engines and specialised chemicals.

Political stakes

For Trump, TikTok represents more than a trade issue. It is also a political tool. Banning the platform risks alienating young voters who use it daily. Allowing it to continue under a restructured deal, however, lets him claim a win on national security without losing a vital channel of communication.

Diplomats are already eyeing a possible face-to-face meeting between Trump and Xi at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea next month. Such a meeting could test whether personal diplomacy can ease one of the most fractious U.S.–China relationships in decades.

Liu Pengyu, spokesperson for the Chinese embassy in Washington, said: “Heads-of-state diplomacy plays an irreplaceable role in providing strategic guidance for China-U.S. relations.”

As a sign of goodwill, Beijing recently allowed Wells Fargo banker Chenyue Mao to leave China after months of travel restrictions. Yet even with gestures like this, the unresolved issues—Taiwan, the South China Sea, and competing economic interests—make it obvious that a single phone call will not erase the deep mistrust between Washington and Beijing.

In a post on his social media page, Trump stated: “With this TRUTH, I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips.”

Trump argues that DSTs are designed to harm American technology firms, while allowing Chinese competitors to avoid similar treatment. His position revives an old fault line between Washington and its allies. 

During his first term, he had also threatened countries such as Canada and France with tariffs for pursuing similar tax regimes. In February this year, he ordered U.S. trade officials to reopen investigations into countries levying DSTs against U.S. tech giants.

Over 20 nations, including France, Spain, Italy, India, Kenya, and the United Kingdom, have introduced DSTs ranging between 2% and 7.5% of gross revenue from digital advertising, marketplaces, and user data monetisation. These policies primarily affect firms such as Google, Meta, Apple, and Amazon, which dominate the global digital economy.

While proponents argue that DSTs ensure fair taxation of multinational platforms profiting from their markets, the U.S. government sees them as discriminatory. Officials believe they tilt the playing field against American companies while giving an advantage to rivals, particularly those from China.

Beyond DSTs, the United States has grown more wary of the European Union’s landmark digital regulations, the Digital Services Act (DSA) and the Digital Markets Act (DMA). The DSA, enforced in 2024, compels platforms to remove illegal content, boost transparency, and share data with regulators. 

The DMA aims to curb anti-competitive behaviour by major “gatekeepers” such as Google and Apple, forcing them to open up their platforms and reduce self-preferencing.

Washington interprets these moves as non-tariff trade barriers. Reports state that Trump’s team has even considered sanctions on EU officials responsible for enforcing the laws, a step that could further strain the $1.7 trillion transatlantic trade relationship.

Trump’s latest warning goes beyond tariffs as he also threatened to restrict exports of advanced semiconductors and artificial intelligence chips, a measure that could disrupt supply chains worldwide. Companies like Nvidia, which play a central role in AI development, could be caught in the crossfire.

The U.S. and EU conduct more than $4.2 billion in trade daily, and a recent agreement capped U.S. tariffs on most European goods at 15%. Introducing new tariffs or export controls would escalate tensions and risk retaliation from allies.

Efforts to resolve the tax dispute at the multilateral level have also faltered. The OECD has been pushing for a global framework to replace DSTs with a uniform system for taxing multinational profits. However, the U.S. remains resistant, fearing it would lose its own taxation rights under the proposed arrangement.

With both sides unwilling to compromise, the digital tax fight appears set to intensify. Trump’s latest threat raises the prospect of a trade confrontation both with rivals, and with long-standing allies who see DSTs as a matter of fairness in the digital economy.

China’s response to escalating U.S. pressure has not been reactionary. It has been strategic. While Washington tightens tariffs and sanctions, China continues quietly entrenching itself in global supply chains, building influence through infrastructure investment, trade partnerships, and diplomatic consistency.

Unlike America’s fast-paced political cycles and headline-driven policymaking, Beijing plays the long game – centuries, not election seasons. And that’s exactly why sanctions, tariffs, or tech bans may irritate China’s rise – but they won’t stop it.

The Global Factory That Can’t Be Isolated

Over the last three decades, China has evolved from a low-cost labour hub into the beating heart of the global supply chain.

From iPhones to wind turbines, from textiles to AI chips, China produces – and increasingly innovates – everything. Even something as basic as the toothbrush in your bathroom or the fiber in your hoodie likely traces back to a Chinese plant.

Trying to isolate China economically today is like trying to remove oxygen from air travel. The world is too interconnected.

You sanction one Chinese industry, and the shock ripples across Tokyo, Nairobi, São Paulo, and yes – back to Kansas and Ohio.

Tariffs Hurt the Shopper, Not the State

When former U.S. administrations imposed tariffs on Chinese goods, the goal was to punish Beijing. But the real loser? The American consumer. Prices went up.

Local businesses paid more for inputs. And despite the political noise, the trade deficit didn’t meaningfully shrink. That’s because China isn’t just a supplier – it’s a critical buyer too, especially of American agriculture, semiconductors, and aircraft.

And let’s be clear: For every American attempt to “decouple,” China has quietly built alternative markets across Africa, Latin America, Southeast Asia, and the Middle East. That’s what Belt and Road is really about – building relationships the West neglected.

Respect Over Rhetoric

One key reason China’s approach resonates globally – especially in the Global South – is tone. China doesn’t moralize. It doesn’t arrive with “democracy lectures” or strings-attached loans. It offers ports, roads, railways, and trade. You may argue over the terms, but many nations prefer transactional pragmatism over patronizing politics.

That’s why even U.S. allies often tread carefully. While Washington talks tough, Germany still does big business with Beijing. Even Africa, once a pawn in Cold War games, is now playing its own hand – courting China not out of desperation, but by choice.

Look at regional trends too. ASEAN nations are boosting trade with China. Japan and South Korea, longtime U.S. allies, are hedging – trading with China while relying on America for security. The idea that Asia will rally against Beijing is outdated. Many countries want balance, not blocs.

Toward a Post-American Global Order?

China doesn’t need to “win” against America to succeed. It only needs to keep building, keep trading, and keep stabilizing its domestic economy. And that’s exactly what it’s doing – slowly shifting from export-led growth to a massive consumer-driven middle class. While the West bickers, Beijing plans decades ahead.

In this quiet but profound global transformation, the West wields blunt tools – sanctions, tariffs, and rhetoric. China counters with time, scale, and subtlety.

The 21st century may not belong to any one country, but the game is shifting. And those who play the long game usually win.

*Heath Muchena is the founder of Proudly Associated and author of Blockchain Applied, Tokenized Trillions and Why Emerging Markets.

The U.S.’s recent Liberation Day Tariffs, designed to reshape trade policy through reciprocal actions aimed at addressing the U.S. trade deficit, imposed varying percentages on different countries—with Nigeria hit with a 14% tariff.

This development may hinder the benefits previously enjoyed under the African Growth and Opportunity Act (AGOA), which allowed African countries to export products to the U.S. tariff-free.

AGOA covered products like agricultural goods, footwear and apparel, vehicle parts, chemicals, wine, and steel.

Tariffs on these sectors could raise costs, potentially affecting export volumes and reducing foreign capital inflow into AGOA-beneficiary countries.

Nigeria exported oil and non-oil products worth ₦5.5 trillion to the U.S. in 2024. A reduction in demand for these exports could significantly diminish foreign exchange inflows.

As if that is not enough, President Trump signed an executive order to re-evaluate and realign U.S. foreign aid, initiating a 90-day pause on all U.S. foreign development assistance.

This led to the dissolution of the U.S. Agency for International Development (USAID).

According to a recent report by PwC, Nigeria ranked fifth among African countries receiving USAID funding in 2024.

These funds support health, education, and economic development in recipient countries. As aid declines, these sectors risk disruption.

Trump also mandated stricter security screening for visa applicants and individuals currently residing in the U.S.

Recent report indicates a total of 2.75 million African-born immigrants were in the U.S. as of 2022, with Nigerians constituting 16.3% of that population.

In 2020, the U.S. expanded its visa ban to include Nigeria, Sudan, Eritrea, and Tanzania due to non-compliance.

With tighter visa regulations, the flow of Nigerian workers and students to the U.S. is expected to reduce, thereby diminishing remittance flows into the country—an important contributor to foreign exchange stability and consumer spending.

As a keen observer of Nigeria’s technology and digital economy sector, I’ve been impressed by your low-key yet effective approach to driving progress.

Despite the ministry’s robust activities, your behind-the-scenes style suggests a commitment to substance over showmanship.

Given your tenure as Chief Technology Officer at Interswitch and your entrepreneurial endeavours at Ceviant, your expertise in the digital space is undeniable. This positions you uniquely to offer strategic advice to the government.

I’m compelled to bring to your attention the precarious state of the telecom sub-sector. Nigeria’s digital economy has tremendous potential, but regulatory challenges, infrastructure deficits, and market pressures threaten the very survival of telecom operators.

The sector’s growth is hindered by issues such as multiple taxation, issues over right of way, infrastructure damage and the unsustainable pricing framework amongst others.

I think I hit the point too early. Let me provide some context; a historical perspective on the sector’s development is essential to grasp the current challenges.

When the Global Systems for Mobile Communications (GSM) was first introduced into the Nigerian market in 2001, the acquisition of a cellular device swiftly became a badge of distinction, signifying one’s immersion in the technological revolution of the 21st century.

The devices became the exclusive purview and financial burden of the elite, relegating many middle-class households to sharing a solitary device among its members. It was expected.

The cost of procuring a Subscriber Identity Module (SIM) hovered between N40,000 to N50,000 (about $384 to $480 at the time), while iconic models such as the NOKIA 3310 and Samsung series commanded prices exceeding N80,000 (about $769) to over N100,000 (about $961).

At inception, networks operated within the 900 and 1800 MHz spectrum with a billing structure set at about N50 per minute, until the introduction of the per-second billing system which revolutionised the industry. As such, barely 10% of the country’s 125-million population could afford to own a device with regular credit recharge.

Mr. Special Adviser, you’re aware that before the arrival of such devices with an unattainable luxury status for the economically disadvantaged, Nigerians had long grappled with problematic services from the oft-maligned Nigerian Telecommunications Limited (NITEL).

Until 2001, NITEL’s 16-year operation was plagued with citizen discontent over poor management as it maintained monopoly over Nigeria’s telecommunications and data services.

The arrival of GSM — spearheaded by MTN, Econet (now Airtel) and MTEL months apart in 2001, and Globacom two years later in 2003 — to relieve the troubled service provider, therefore, changed everything.

In mobile phone accessibility and internet service affordability progress since that time, the numbers have been staggering.

By 2022, two decades after GSM introduction, more than 222 million mobile phone subscribers existed in Nigeria according to the Nigerian Bureau of Statistics and the Nigerian Communications Commission (NCC), out of which over 215 million were active.

The projections for the future are just as phenomenal. A steady surge in smartphone adoption is expected across the country from 2024 to 2029, with the user base estimated to reach a new peak in the next five years.

Network subscriptions costs are also among the lowest in the continent. Mobile data subscriptions in Nigeria, today, are available for as low as N25 while call rates go as low as 9 kobo per second.

However, considering Nigeria’s business climate in recent years, providing affordable services to citizens while maintaining high-standard infrastructure presents the greatest challenge for the telecommunications industry and operators in the country.

Experts within the sector and the economy like Karl Toriola, CEO of MTN Nigeria, and Bismarck Rewane, CEO of Financial Derivatives, have postulated that the sector is at the verge of collapse, one which portends consequential risk to other sectors which rely on the critical services the Telcos provide.

Nigeria’s economy has experienced two major recessions over the last 10 years and currently faces one of its most difficult periods of uncertainty.

Recent market conditions and currency devaluation have plunged the value of Naira in the foreign exchange market, resulting in skyrocketed prices of commodities.

Unfortunately, the telecommunications sector, which contributes approximately 16% to Nigeria’s GDP, is, like other sectors, not immune to the profound repercussions of the prevailing economic upheavals.

The telecoms industry, like many others in the country, is heavily reliant on foreign exchange (FX) for the procurement of essential equipment, infrastructure, and technology.

With a significant portion of telecom equipment and services being imported from foreign markets, fluctuations in currency exchange rates directly impact the cost of operations for industry players.

As the value of the Naira fluctuates against major currencies such as the US Dollar and Euro, the cost of procuring equipment and services denominated in foreign currencies escalates, placing immense strain on the financial resources of telecom companies.

MTN Nigeria and Airtel were among 11 listed companies, including Nestle and Dangote Cement Plc, which recorded 2.02 trillion naira FX losses in H1 of 2024.

Mobile network operators in the telecommunications sector, whose tariffs are rigorously regulated by the NCC, therefore, face a dilemma in balancing investments towards sustaining quality and affordable services for their vast subscriber base with their goal of achieving profitability.

For a sector battling various environmental and infrastructural impediments including frequent fibre cuts due to road construction and vandalism, right-of-way challenges, and exploitative rent-seeking practices, maintaining operational efficiency amidst prevalent economic adversities become increasingly daunting.

None of these existing challenges are alien to industry regulators and stakeholders. Operators’ advocacy for critical infrastructure protection in the ICT/telecommunications sector in recent years has especially served as a striking illustration of a cry for proactive actions to curtail the profound financial impact of such obstacles on its operations.

Yet, while these challenges persist, mobile network operators have remained unflinching in their commitments to ensuring seamless connectivity, service reliability, and pricing affordability for their subscribers.

Despite Nigeria’s headline inflation rate surging to a 27-year peak of 29.9% in December 2023 and reaching 31.7% in March 2024, the telecoms industry, compared to other sectors adeptly adapting to Nigeria’s changing market conditions, continues to find itself traversing the intricate terrain of regulatory compliance and financial viability.

In the mobile market which maintains a strong connection to the telecoms sector, for instance, prices of mobile phones, today, have nearly doubled to reflect the rising cost of production and import, while call and data tariffs largely remain the same they have been for over a decade.

A similar rise in cost has been evident in food prices which increased to over 30% in February, impacting the fast-moving consumer goods (FMCG) sector.

The sector has since adjusted, with FMCG corporations including brewing companies increasing product prices in tandem with the high cost of raw materials and production.

Companies in other sectors providing domestic consumer needs, such as Pay TV companies and Discos, have also duly followed suit by conducting price reviews in recent times.

It should also be noted that energy costs have been a significant factor in the general upward pressure on costs across the economy, particularly affecting telecom companies, for whom diesel accounts for approximately 35% of their operational expenses.

While these price adjustments may be inconvenient for consumers due to limited purchasing power, they are more than necessary for businesses to continue to meet demands, deliver value to shareholders, and contribute significantly to the Nigerian economy.

It is especially pivotal to recognise the broader socio-economic implications for Nigeria if the telecoms sector sticks with its pricing plans as other sectors adapt.

The industry is reputable for its crucial role in driving economic growth, creating employment opportunities, and improving digital inclusion efforts across the country.

Notably, over 15,000 have been directly employed by licensees in Nigeria’s $75.6 billion telecoms sector, according to a December 2022 report by the NCC.

Also, as of second quarter 2023, the Information and Telecommunications industry ranked highly among activity sectors contributing the most to the country’s GDP.

Not least of mobile service providers’ critical contributions to socio-economic issues is their position at the forefront of Nigeria’s digital inclusion ambitions, which sees them providing more than 83 million citizens with the opportunity to benefit from prompt information access and exchange necessary for increased social and business productivity.

A lack of adjustments within the sector amidst FX-dependent pressures and rising inflation will indubitably pose a threat to these transformative indicators in the next few years.

When telecom companies struggle to maintain and expand their infrastructure, there are higher chances of network congestion, dropped calls, and slow internet speeds that can undermine productivity, hinder business operations, and diminish the overall quality of communication services.

Operators’ ability to invest in infrastructure upgrades, network expansion, and technological advancements could be significantly hampered, significantly impacting coverage and service quality.

They can’t afford to test consumers’ patience in this regard.

Quality of Service (QoS) in the sector is, indeed, deemed non-negotiable among consumers. Regardless of any situation within or beyond their control, operators are expected to uphold high standards of service delivery to remain competitive and retain customer loyalty, and any compromise can have far-reaching consequences.

But maintaining and improving on progress made thus far in the sector would be impossible without access to adequate financial resources for further investments.

It is, as such, a critical time to employ new adaptive strategies for the sector to achieve profitability and survive in an increasingly competitive landscape.

Operators such as MTN Nigeria, Airtel, Globacom, and 9Mobile have, commendably, demonstrated an understanding of the grim economic situation impact on citizens’ spending power by adhering to regulators’ rules and showing restraints in pushing for higher charges.

Their show of empathy, however, could be their Archille’s nemesis in a brutal business and economic climate. Hence, the review of tariffs to reflect new economic realities, despite regulators’ reluctance, may be overdue.

At this crucial moment, the onus falls on regulators to ensure consumers are adequately enlightened on how an upward revision of tariffs is imperative for the industry’s viability, as it would provide crucial funding for network infrastructure upgrades necessary for the continued delivery of world class services.

A measured review of current tariffs, with pricing plans that are adaptive and responsive to the changing business and economic climate, would ensure the industry mitigates potential socio-economic and business risks.

Although there would be a need for regulators to strike a delicate balance between consumer protection and the sustainability of the telecom industry.

Nigeria’s leading telecoms companies, including MTN, Glo, Airtel & 9mobile, have expressed their readiness to collaborate with regulators on reasonable adjustments in call and data tariffs to mitigate the cost of running their networks.

“For a fully liberalised and deregulated sector, the current price control mechanism, which is not aligned with economic realities, threatens the industry’s sustainability and can erode investors’ confidence,” the telcos, speaking as a unit under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), explained in a recent statement.

As the economic pressures on the sector intensify, consumers would hope that the operators’ concerns are understood, and urgent actions are taken to ensure their continued access to improved quality services, before the inevitable damaging impact of a lack of it becomes more pronounced than imagined.

As I conclude, I must emphasise that your understanding of the sector is evident from your track record. Your article published on TechCabal on August 21, 2024, compellingly argued the significance of the NIMC for Nigeria’s digital future.

Building on this, the NIMC and Nigeria’s digitalization efforts rely heavily on telecom sustainability and development.

Consequently, Nigeria’s digital transformation and leveraging technology for national economic growth hinge on telecom efficiency, underscoring the imperative to address the sector’s concerns.

I acknowledge that you are neither the supervising minister for the industry nor the regulator. Incidentally, the current individuals holding these positions are doing an exemplary job, given the circumstances.

Nevertheless, your in-depth knowledge of the industry and the trust you’ve earned from the president and minister position you uniquely to intervene effectively.

You now have a critical opportunity to bring to the president’s attention the plight of this vital sector, often described as the ‘golden goose’ of Nigeria’s economy.

By advocating for strategic policy decisions, such as cost-reflective tariffs, tax harmonization, intervening in right of way issues amongst others, you can help restore investor confidence, drive infrastructure development, refocus on key objectives, and enhance network optimization for both private and public entities.

*Edidiong Samuel Akpabio is a Nigerian public commentator, researcher and academic. He can be reached via: esakpabio@yahoo.co.uk

This reduction in tariffs for Tesla EVs follows further investigations requested by the company, which prompted the European Commission to reevaluate the extent of subsidies Tesla received from the Chinese government.

The revised tariffs are part of an investigation by the European Commission into alleged high subsidies provided to Chinese EV manufacturers. While Tesla’s case has seen a reduction in the proposed duties, the Commission has maintained that Chinese EV production benefits extensively from government support. 

Consequently, other Chinese EV producers could face tariffs of up to 36.3%, slightly down from the original maximum of 37.6%.

Tesla had argued for a recalculation of its EVs tariffs based on the specific subsidies it received, claiming they were less substantial compared to those granted to local Chinese automakers. The Commission’s verification process confirmed the position of Tesla, leading to a reduction in its tariff rate.

This investigation, one of the most high-profile trade disputes between the EU and China in recent years, has drawn objections from Beijing. China’s Ministry of Commerce has asserted that the conclusions were reached unilaterally by the EU and not through mutual agreement. 

The ministry has urged the EU to seek a balanced and pragmatic solution to prevent further escalation of trade tensions.

The proposed tariffs, which would be added to the EU’s standard 10% duty on car imports, are intended to level the playing field between European automakers and their Chinese counterparts. 

The final tariffs will be determined following the conclusion of the EU’s investigation in the coming months, with interested parties allowed to submit comments on the findings until the end of August.

The European Commission’s decision will ultimately require approval from the EU’s 27 member states. A qualified majority vote, representing 65% of the EU population, would be necessary to reject the proposed tariffs, making it unlikely that the measures will be overturned.

While some Chinese automakers, such as BYD, Geely, and SAIC, may see marginal reductions in their tariff rates due to cooperation with the investigation, the majority of Chinese EV imports are still expected to face high duties. 

Added to this, Chinese firms engaged in joint ventures with European manufacturers, like Volkswagen’s SEAT and BMW’s Mini, could benefit from lower tariffs on their China-made vehicles.

The final decision on these tariffs is expected by the end of October, bringing a new chapter in EU-China trade relations and impacting the global electric vehicle market.

This move aims, according to a statement signed by Reuben Muoka, director, Public Affairs at NCC, to provide clear, easy-to-understand, and accurate information about the cost of voice, short messaging service (SMS) and data services to subscribers.

“The directive, titled ‘Guidance on the Simplification of Tariffs in the Nigerian Communications Sector,’ was issued on July 29, 2024. It mandates Mobile Network Operators (MNOs) to publish a comprehensive table showing the features of their tariff plans and bundle offers.

“The table should contain all necessary information for subscribers to make informed decisions, including details on add-ons, their prices, how consumers can opt-in or out, terms and conditions for renewal, and rollover policies”, Muoka said.

Techeconomy gathered that NCC’s guideline is the outcome of consultations with industry stakeholders, including MNOs and Consumer Focus Groups, and extensive data analysis on consumer preferences and expectations.

“The objectives of the simplification guidelines are to reduce the complexity of tariff plans and bundles, ensure transparency and fairness of promotional elements of tariff plans, protect consumers’ interests by providing clear and understandable tariff information so that they make informed decisions, and promote fair competition among licensees by standardising tariff structures.

“Service providers are also required to display all relevant information about their tariffs, such as the name of the plan, price, validity period, price-per-second for on or off-network and international calls, expected data speeds, and fair usage policies.

“Operators can maintain existing bonus-led tariff plans till 31st December 2024, within which period operators are expected to educate and migrate all subscribers to the simplified tariff plans,” the directive stated.

The guidelines further mandate that MNOs must communicate tariffs to subscribers in “clear language and a user-friendly format,” with full disclosure of a subscriber’s tariff plan via Unstructured Supplementary Service Data (USSD).

Additionally, “operators must offer stand-alone data bundles at fair prices to avoid tying consumers with products they do not need; bonuses on promotions must be stated in actual value; access fees and asymmetric fee structures must be eliminated,” among other conditions.

The NCC emphasised that while complying with these guidelines, operators must also meet the Key Performance Indicators (KPIs) standards set out in the Quality of Service (QoS) Regulations.

The latest industry data obtained from the Nigerian Electricity Regulatory Commission on Wednesday showed.

An analysis of figures from the power sector regulator indicated that electricity subsidies continued to increase every quarter all through last year.

It was observed that subsidies on power in the first, second, third, and fourth quarters of 2024 were N36.02bn, N135.23bn, N204.6bn, and N252.76bn respectively.

Also, during the same period, power distribution companies raked in N247.09bn, N267.86bn, N267.61bn, and N294.95bn in the first, second, third, and fourth quarters of 2023 respectively.

The rise in revenue by Discos, prompted calls for improved services from the power firms, as consumers condemned the Discos’ inability to deliver satisfactorily.

In the absence of cost-reflective tariffs, the Federal Government undertakes to cover the resultant gap between the cost-reflective and allowed tariff in the form of tariff subsidies.

For ease of administration, the subsidy is only applied to the power generation cost payable by Discos to the Nigerian Bulk Electricity Trading company, which is the power trader in the sector.

The transmission and administrative service costs payable by Discos to the Market Operator, an arm of the Transmission Company of Nigeria, are recovered 100 per cent.

However, it should be noted that the power generation cost is a major component that guarantees electricity generation and supply across the country.

Also, the share of the NBET invoice to be covered by Discos is determined by the percentage of the generation cost they can recover from the allowed tariff and set out as their Minimum Remittance Obligation in the periodic tariff orders issued by the commission.

Commenting on the amount spent on electricity subsidy in the fourth quarter of 2023 in its latest report, the NERC said,

“It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of ₦252.76bn in 2023/Q4.”

This represents an average of ₦84.25bn per month, which is an increase of ₦48.16bn (23.54 per cent), compared to the ₦204.6bn (average of ₦68.20bn per month) incurred in 2023/Q3.

“This increase is largely attributable to the government’s policy to harmonise exchange rates, while also directing that end-user customer tariffs remain at the December 2022 approved rates,” the commission stated.

Explaining the subsidy spent on power in the third quarter, NERC said, “It is important to note that due to the absence of cost-reflective tariffs across all Discos, the government incurred a subsidy obligation of ₦204.59bn in 2023/Q3 (average of ₦68.20bn per month).

“This is an increase of ₦69.37bn (51.30 per cent) compared to the ₦135.23bn (average of ₦45.08bn per month) incurred in 2023/Q2; this increase is largely attributable to the government’s policy to harmonize exchange rates.

“The rise in the government’s subsidy obligation meant that in 2023/Q3, Discos were only expected to cover 45 per cent of the total invoice received from NBET. For ease of administration of the subsidy, the MRO is limited to NBET only with the MO being allowed to recover 100 per cent of its revenue requirement from the Discos.”

“On the same subsidy issue for the second quarter of 2023, the commission stated that due to the absence of cost-reflective tariffs across all Discos, the “government incurred a subsidy obligation of ₦135.23bn in 2023/Q2.”

It added that this represents “an increase of ₦99.21bn (275 per cent) compared to the ₦36.02bn incurred in 2023/Q1.

This increase is largely attributable to the government’s policy to harmonize exchange rates. On average, the subsidy obligation incurred by the government per month was ₦45.08bn in 2023/Q2.”

Core inflation touched 33.2% in March with food inflation now an eye-watering 40% – the highest in post-1999 democratic Nigerian history.

It may sound a bit apocalyptic but we are heading towards our all-time high of 47.6% recorded in January 1996.

We have already burst past March 1996’s reading of 31.7%. In a note on future inflationary trends in Nigeria, Aaron O’Neill at Statista made two salient points:

Our inflation has been higher than the African average for more than a decade now and a significant decrease is unlikely for quite some time.

The International Monetary Fund’s expectation that annual inflation this year will average out at 22.96% is increasingly looking a tad too optimistic.

The bigger challenge though, in his view, is our inflation’s unsteadiness. Food inflation is now at levels not seen since August 2005.

Plantain prices have increased by 129%, rice by 98%, onion prices by 97%, bread by 71% and beans by 64% – between January 2023 and January 2024 alone according to the National Bureau of Statistics.

An inflation rate that is all over the place is usually a sign of an economy that is huffing and puffing, causing prices to fluctuate, and unemployment and poverty to increase.

Nigeria’s economy – a mixed economy where state participation in economic life is higher than most free-market economies – is not entirely in bad shape.

More than half of its Gross Domestic Product (GDP) is generated by the services sector – chiefly telecommunications and finances, typically a feature of advanced economies.

Notwithstanding, the private sector is teetering. The Financial Times reports that Nigerian Breweries (NB), which is part-owned by Heineken, has increased prices three times this year.

“So dire is the economic distress in Africa’s most populous nation that the brewer’s chief executive, Hans Essaadi, complained on an investor call that “customers can no longer afford Goldberg, a cheap and well-loved lager,” the London-based publication highlighted this as illustrative of the travails of some of the country’s biggest corporates.

Fixed foreign currency-denominated costs, import restrictions, uncertain policy-setting, a weak Naira and insecurity in many operating areas have forced most like NB to raise prices; some like Procter & Gamble to quit manufacturing in-country or others like GSK and Bayer to contract third parties to distribute their products.

There is one sector, however, that has seen little action in this direction.

The Imperative of Telecom Tariff Revision

At the nexus of connectivity and commerce, the telecommunications industry in Nigeria plays a dual role: as an economic engine and a societal enabler.

The sector’s investment profile in the country stood at $75.6 billion as of 2021, according to the Nigerian Communications Commission (NCC).

Nigeria’s 221.7 million active voice subscriptions and 160.2 million data subscriptions now support a substantial 14% of GDP.

The country’s rising teledensity is such a critical linchpin for economic growth and infrastructural development that any disruptions exact a heavy price.

A 2021 SBM Intelligence survey found that 53% of respondents were “very” negatively impacted by an NCC-mandated shutdown of telecom services in the North-West due to regional security operations.

Moreover, the sector stands as a significant employer, empowering millions of Nigerians with opportunities for livelihood and advancement.

As such, the industry’s health is not merely a matter of corporate profit margins but a national imperative intertwined with the fabric of its progress.

Central to the sustenance of any industry is a conducive economic environment that allows for sustainable growth and innovation. However, the existing regulatory framework, which shackles tariff adjustments, undermines this fundamental principle.

While other sectors have adeptly responded to economic fluctuations by revising prices, the telecom industry remains bound by regulatory constraints, impeding its ability to adapt to changing market dynamics.

A Perfect Storm: Challenges Hinder Growth

While Nigeria’s four Mobile Network Operators (MNOs) relentlessly strive for service excellence through consistent network upgrades, their efforts are stymied by environmental and infrastructural obstacles.

Frequent fibre optic cable cuts due to road construction and vandalism; multiple taxation, coupled with the ever-present challenge of acquiring rights-of-way including charges related thereto, act as significant impediments.

These issues, further compounded by exploitative rent-seeking practices, have long plagued the industry, defying resolution despite concerted efforts.

These challenges are not lost on key stakeholders like the Nigerian Communications Commission (NCC), the Ministry of Communication, Innovation & Digital Economy, and a well-informed consortium of governmental and media entities. MNOs have proactively engaged through media platforms, highlighting these issues and advocating for urgent government intervention.

The industry’s push for Critical Infrastructure Protection for ICT/Telecommunications and the reduction of exorbitant right-of-way (RoW) charges exemplify this proactive approach.

Katsina, Nasarawa and Zamfara now lead the country in eliminating RoW charges but much of the country remains an operational nightmare for MNOs.

The Unsustainable Squeeze: Rising Costs, Stagnant Tariffs

Despite the advent of GSM technology 23 years ago, a disquieting public perception persists – that of consistently poor Quality of Service (QoS).

While this perception may have elements of truth, it’s crucial to recognise the mitigating factors beyond the control of the operators.

Economic hardship has led to an exponential increase in the cost of all consumer goods and services, with a glaring exception: telecommunication services.

The reason? Price regulation by the NCC.

This price stagnation stands in stark contrast to the reality faced by MNOs. The industry is heavily reliant on foreign exchange (FX) for crucial equipment and services.

Most telecommunication equipment are imported with the absence of local alternatives as there are primarily four to five core manufacturers of telecommunications equipment and none is situated in Nigeria, or even Africa.

The depreciation of the Naira has significantly inflated operational costs, further straining already tight profit margins. It is unsustainable to expect ever-increasing network investments in the face of frozen tariffs.

The Current State of Play

Nigeria’s approach to setting tariffs in the telecoms sector has evolved through a combination of regulatory frameworks, market dynamics, and economic considerations.

During the industry’s transformation in the early 2000s with the issuance of licenses to private operators, tariff regulation was crucial in ensuring consumer protection and promoting fair competition.

The NCC implemented tariff guidelines to prevent anti-competitive practices and safeguard consumers from excessive charges.

Tariff regulation also aimed to balance the interests of consumers with the need for MNOs to generate revenue for network expansion and improvement.

For an industry in its infancy striving to offer Nigerians access to new forms of technology and communications, it was necessary to guide pricing to enhance market adoption. Competition added extra pressure on prices, a wealth of choices ultimately benefiting the consumer. Through it all, the margins were sufficient to incentivise operators to carry out the most extensive investment rollout in Nigerian history.

The market is more mature now and the booming economy of the 2000s is a fading memory. Mobile phone, and broadband penetration are now at over 100 and 40% respectively, while the entire country is practically covered by 3G and 2G.

The digital economy with the immense success of content creators, e-commerce, software education, financial inclusion, cross-border freelancing and social connectedness has been built on the back of the telecom industry’s investment priorities.

The cost of providing existing services, the competitiveness required to sustain the continued rollout of 4G and eventually 5G technology and wider market dynamics have meant the current tariff structure is less a cushion for customers and more a shackle for operators.

The Path Forward: Rethinking Tariffs 

In advocating for tariff revision, it is imperative to contextualise the industry’s plight within the broader narrative of economic sustainability and national progress. Urgent measures must be taken to safeguard an industry that serves as a catalyst for economic growth and societal empowerment.

Tariff revision is not merely a corporate prerogative but a strategic imperative essential for the industry’s survival and a calculated investment in Nigeria’s future.

The additional revenue generated will directly translate into network infrastructure upgrades and modernisation. This translates to tangible benefits for all stakeholders.

A conducive regulatory environment is important in fostering the telecom industry’s resilience and vitality.

Responsible government policies that prioritise infrastructure protection and investment incentives are indispensable in fortifying the industry’s foundations. Moreover, enhancing the operating environment for telecoms is not only in the national interest but also a catalyst for attracting Foreign Direct Investment (FDI) essential for sustainable growth.

Many may argue that reviewing tariffs at a time of stagnant wages, decreasing investments and rising prices is unreasonable but ensuring the long-term viability of a critical industry requires a collaborative effort.

Regulators need to consider a data-driven and transparent tariff review that reflects the economic realities faced by the sector. Aminu Maida, the NCC’s Executive Vice-Chairman rightly told the Nigerian Information Technology Reporters Association (NITRA) in February that customers expect excellent quality of service and operators will be held accountable for poor service delivery.

Indeed, customers deserve the best possible service, and operators, going by the billions of dollars in present and future investment commitments, appear dedicated to delivering it. A sustainable and well-regulated telecoms sector is the cornerstone of achieving this shared vision. It starts with rethinking how much operators are allowed to charge their clients.

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The Writer: Ikemesit Effiong is a legal practitioner, Partner and Head of Research at SBM Intelligence and Chairman of the Technology Committee of the Nigerian Bar Association Section on Business Law.

Sanusi Garba, NERC chairman, who made this known at a media interaction on Wednesday, however assured that customers will continue to pay the current tariffs as the federal government is to subsidise the increased tariffs to the tune of N1.6 trillion this year.

Garba said the federal government will continue to subsidise electricity to ease the financial burden on Nigerians due to economic challenges in the country.

NERC also approved a monthly tariff review of the DisCos going forward arising from changes in exogenous indices, which include changes in the inflation rates, Naira/USS exchange rates, and gas-to-power prices.

Recall that before now the Multi Year Tariff Order (MYTO) allowed for bi-annual minor tariff reviews while major tariff reviews were planned for every five years.

“Government has decided for now, arising from the cost of living crisis and so many others, to in the meantime continue to subsidise electricity.

“In the new tariff order just published by the commission, you will discover that tariff is not going up but you will see what the Electricity Distribution Companies (DisCos) should be charging.

“You will also see in the tariff order the amount of subsidy the government will be providing to cover the gap between what they will charge and what they are allowed to charge,” he said.

According to him, the new tariff contains what the DisCos are allowed to charge based on government policy, if they are to remain in service.

He said that in the tariff, NERC included some provision that would ensure that the DisCos pay what they are obligated to pay.

A breakdown of the approved tariffs indicates that cost-reflective tariff for Abuja Electricity Distribution Company is N120.88 per kilowatt hour (kwh), however, a tariff of N63.24/kwh is allowed by NERC, indicating a shortfall  of N58.12/kwh which subsidised by the federal government.

The commission said that in line with the policy direction of the federal government policy on electricity subsidy, the allowed tariffs are frozen for all customers at the rates payable since December 2022.

With this policy, the estimated subsidy benefit for customers under AEDC franchise in 2024 is approximately N233.26bn which translates to N19.44 billion monthly

“The allowed tariff is with effect from 1″ January 2024 and shall remain in force, subject to further policy direction of the FGN,” the commission stated.

For Ikeja Electric, the Cost reflective tariff is N128.18 While approved tariff is N56.6 leaving a shortfall of N53.5/kwh.

With this policy, the estimated subsidy benefit for customers under Ikeja Electric franchise in 2024 is approximately N238.201 billion (i.e. N19.85 billion monthly) also effective from tariff is with effect from 1″ January 2024.

The estimated subsidy benefit for customers under Ibadan DisCo franchise in 2024 is approximately N199.841 billion (i.e., N16.65 billion monthly).

Garba said that the Electricity Act that was signed by President Bola Tinubu in 2023 presented an opportunity for states to make laws and take charge of providing electricity in their franchise areas.

He said that the commission remained committed to working with the states in such a manner that the existing public utilities were nurtured to provide services to Nigerians and were utilised for what they were intended for.

On metering, the chairman said that the commission had identified that the Electricity Distribution Companies had challenges with finances to meter their customers.

He said that the rate of metering had been adversely impacted by the inability of DisCos to raise the required capital from the banks.

“To reduce the rate of estimated billing, the commission created a framework under which the distribution companies can raise some amount of money to meter customers.

“So we decided that from the market revenues, we set aside a fixed amount that is dedicated for the provision of metering.

“We are not saying that the money from the market on a monthly basis is the money to buy a meter.

“It is a potential lender to raise a pathway to pay whatever loan DisCos are going to get to provide meters,” he said.