This was clarified by the Minister of Finance, Budget, and National Planning, Zainab Ahmed, on Sunday during a briefing for Nigerian officials in Washington, DC, which was held in conjunction with the World Bank and International Monetary Fund’s spring meetings.

She reiterated that the Federal Executive Council had negotiated and authorized the $800 million, which is now up for ratification by parliament.

“Once the parliament approves it, we roll. We have also been doing preparatory work side by side along the approval process. And that includes the building of the social register, which will be used for the electronic transfers of the funds,” she said.

“We needed to have this ready because when the government eventually removes the fuel subsidy, there will be an immediate transport palliative that will be provided to the most vulnerable members of our society who have been identified, registered, and now contained in our national social register,” she noted

According to Zainab, the initial plan is to give each household a cash transfer of N5,000 each month for a period of six months. Therefore, we are doing an assessment with the transition team to determine whether this is sufficient.

“If it is insufficient, the nation must generate more money in order to cover more people, prolong the time period, or increase the amount, depending on what is ultimately agreed upon.

“There would be additional revenue that would now accrue to the Federation account when the subsidy is removed

Ways and Means Advances is a loan facility used by the Central Bank to finance the government in periods of temporary budget shortfalls, subject to limits imposed by law.

The request was not included in the Senate’s order paper for the Wednesday plenary session, nor was it mentioned by the Senate leader, who also serves as the head of the special committee formed for that reason.

Meanwhile, the executive branch of government did not give the information that was expected regarding how the N22.7 trillion was spent over the course of ten years.

Recall that last week on Tuesday, the Senate’s president, Ahmad Lawan, stated that the Senate was prepared to support the proposal as long as the Governor of the Central Bank, Godwin Emefiele, and Finance Minister, Zainab Ahmed, supplied the necessary information regarding the spending.

He said that the Senate and, consequently, the House of Representatives would have adjourned session on Thursday of last week till after the Presidential and National Assembly elections if it weren’t for the restructuring of the N22.7 trillion Ways and Means request.

”We must have the necessary information for passage of the N22.7 trillion Ways and Means Restructuring request as time is not on our side in the Senate now given the coming general elections.

” If there is a need for the Senate to sit up until Friday (last week) for thorough consideration and passage of the request, it will be done, but the affected officials from the executive must also expedite action on the provision of the required information as regards documents authorizing approval and disbursement of the monies totaling N22.7 trillion,” he had said.

Recall that the Debt Management Office (DMO) explained in a statement, this afternoon, that the debt stock did not represent borrowings under the current administration but had built up from past administrations.

It explained further that the public debt stock was the total sum of debts owed by the federal and state governments, as well as, the Federal Capital Territory.

In that line, Nigeria faces, perhaps, its worst economic situation in recent times as reports by the National Bureau of Statistics indicate that the country’s urban inflation increased by 2.08% to 20.09% in July 2022 from 18.01% in July 2021.

In that light one may be persuaded to agree with the Zainab Ahmed, Minister of Finance, Budget and National Planning that the the proposed move to impose a 5 per cent excise duty on telecom services (calls, SMS, and data) is justified.

But, another school of thought shows the 5% Excise Duty on Telecom Services tilts more to consumer economy; an economy driven by consumer spending as a percent of its gross domestic product, as opposed to the other major components of GDP (gross private domestic investment, government spending, and imports netted against exports).

Therefore, taxing the consumers more through telecom services negates whatever good intentions the Minister may have as demonstrated in this article.

This has generated a bucket of concerns in the ICT industry too.

Zainab Ah​​med who heads the Finance Ministry, on different occasions had urged ICT stakeholders to support the implementation of the 5 per cent exercise duty as the country’s revenue can no longer take care of its needs.

Understandably, with the worsening economic challenges faced by Africa’s largest economy, the government is scavenging for a lifeline that will savage the situation.

However, the fiscal move is against the commitment of the Nigeria Communications Commission (NCC) to protecting the interests of consumers and ensuring the long-term growth and sustainability of the telecom sector.

Similarly, Professor Isa Pantami, Minister of Communications and Digital Economy, has kicked against the proposal even though the Minister was yet to be (officially) informed: “I have not been officially informed about it and we at the Ministry are not satisfied with any effort to introduce excise duty on telecommunications.”

“We will definitely challenge the decision,” Pantami said at the maiden edition of the Nigerian Telecommunications Indigenous Content Expo (NTICE), organized by the Nigerian Communications Commission in Lagos, on August 1, 2022.

The Minister’s position on the proposed excise duty on telecom services is sacrosanct to his quest for cost-effect charges to the consumers. In April 2020 he ordered the telcos to cut data, SMS and voice call tariffs.

He understands that the consumer deserves better, which is also a concern to the Nigerian Communications Commission (NCC) led by Professor Umar Garba Danbatta, the Executive Vice Chairman.

NCC’s Consumer-Centric Campaign will be eroded

Aside from aligning with the Ministry of Communications and Digital Economy to reject the 5 percent tax on telecom services, the NCC has been consistently playing the advocacy role for consumers.

Conspicuously, the NCC over the years has rolled out different initiatives, organizing different fora to educate, sensitize, and bring together telecom consumers in the urban, semi-urben and rural areas with network providers to discuss, and proffer solutions to consumer-related issues and ensure they have value for money through effective service delivery.

In the last two decades, the industry regulator has shown itself as a consumer-oriented regulator by deploying various regulatory frameworks and initiatives to ensure a consistent reduction in the cost of telecommunications services in the country.

NCC dedicated the whole of 2017 as the “Year of Telecom Consumer“; with a campaign programme designed to give concrete expression to the centrality of the consumer in the telecom ecosystem.

Deriving life from items 2 and 6 of the NCC Management’s 8-point Agenda launched February 27 2016, the declaration of year 2017 focused on the needs and satisfaction of the Nigerian telecom consumer.

Since then, the Prof. Danbatta led telecom regulator has maintained solidarity with the consumer on matters of tariffs and matters like Quality of Service (QoS) and other complaints. On the telecom operators’ side, NCC has also waded into matters regarding Right of Way, State Governments shutting down base transmitter stations, multiple taxations, protection of critical telecom infrastructure. We are not saying it is yet uhuru in the Nigerian telecom sector, but if other regulators were NCC, probably the country wouldn’t have found itself in the current economic state.

An attestation to this is the comment credited to Professor Umar Danbatta at the recent Stakeholders Forum’ organized by the NCC on the ‘Implementation of Excise Duty on all Telecommunications Services’ held on Thursday, July 28 in Abuja:

“As the telecoms industry regulator, the Nigerian Communications Commission has engaged with the Federal Ministry of Finance, the Nigerian Customs Service, and consultants from the World Bank to get needed clarifications.”

“These engagements enabled us to better understand the objectives and proposed implementation mechanisms of the Excise Duty.” This simply means NCC has not given a nod in agreement to the proposed tax on telecom services; therefore, it is not party to the 5% excise duty.

“Nonetheless, we consider it imperative that these implementing agencies should also meet directly with telecom industry stakeholders to address areas of concern,” he stated.

Has the telecom regulator’s advice been implemented?

The NCC has been doing its part to beat tariffs down and to promote universal access to all areas where broadband and other telecommunications services are available, accessible, and affordable and where consumers derive value for the money spent on telecommunications services.

A few months ago (May), the Association of Licensed Telecommunication Operators of Nigeria (ALTON) wrote to the Nigerian Communications Commission (NCC) to approve a 40 percent increase in the cost of calls, SMS, and data.

Mobile operators wanted the sector to undergo periodic cost adjustments through the NCC’s intervention in order to minimize the impact of the challenging economy.

However, the NCC tactically stopped the proposed increment by ALTON for the sake of the consumer, saying that any such decision must be fair to the subscribers and engender healthy competition among service providers.

For the avoidance of any doubt, and contrary to MNOs’ agitation to increase tariffs for voice and Short Messaging Services (SMS) by a certain percentage, the Commission categorically informed telecoms subscribers and allay the fears of Nigerians that no tariff increase will be affected by the operators without due regulatory approval by the Commission. Will the government now stab NCC in the back?

It is noteworthy that tariff regulations and determinations are made by the Commission in line with the provisions of Sections 4, 90, and 92 of the Nigerian Communications Act (NCA) 2003, which entrusts the Commission with the protection and promotion of the interests of subscribers against unfair practices, including but not limited to; matters relating to tariffs and charges. Therefore, the Minister of Finance has a duty to work with NCC on this instead of issuing statements that sound as if it were a sealed-deal.

Multiple Taxations

Over the years, the NCC has been on the front burner in developing an engagement template to deal with issues of multiple taxation faced by the operators; urging the Nigerian government not to see the sector as a money spinner.

The proposed 5% excise duty on telecom services by the Federal Government is coming again, together with the other more than 42 taxes paid by telecom operators.

Operators have frowned at the proposal, saying they won’t be able to subsidize the tax on behalf of subscribers in addition to the 7.5 percent VAT, making it 12.5 percent payable by subscribers to the Federal Government.

From all indications, multiple-taxation is chief among reasons telecom investors’ now foot-drag in pushing more capital into broadband infrastructure, which affects the quality of service and other indices.

Nigeria National Broadband Plan 2020-2025 at Risk

Telecom is the only sub-sector where cost of getting services has been going down since liberalisation of the sector despite rising cost of operations incurred by the operators. This is linked to effective regulations of the sector where NCC ensures robust and healthy competition among the licensees.

The effective regulatory efforts resulted in NCC ensuring that the cost of making calls has crashed from around N70 per a minute call in 2021 to around N20 per minute presently.

Therefore, if the Ministry of Finance, Budget and National Planning should make true its ‘threat’ to implement the 5% Excise Duty on telecom services, then, NCC’s efforts towards a crash in price of data would have been futile.

Invariably, the Nigeria National Broadband Plan 2020-2025 (with a target to achieve 70% broadband penetration) would be at risk. The reasons are obvious. NCC plans to crash the cost of data to N390 per gigabyte by 2025, as contained in the NNBP; so any additional tax on the telecom operators implies that the cost of call, data and SMS would go up. There is nothing NCC can do about it at that stage.

5G and other telecom infrastructure will slow down too

Nigeria is gearing up towards the launch of the fifth generation (5G) technology. 5G comes with enormous benefits. 5G is a game-change for Nigeria’s economy. But if we fail to overcome the elementary issues like ensuring Ease-of-Doing-Business for industries like telecommunications, then, it means the government is not encouraging investors.

And to think that the Finance Minister would think about imposing fresh taxes on telecom services less than three months after President Muhammadu Buhari inaugurated 27-man Council on Digital Economy who are tasked to improve Nigeria’s ranking on Ease of Doing Business, seriously leaves a sour taste in the mouth.

Conclusively, the Ministry of Finance should help NCC to maintain its regulatory excellence. A wrong step/decision taken by the government can stall the progress of this industry with greater risks to the economy. Taxing the telecom operators to death because the industry, is seemingly booming, will boomerang as we would have eaten the seeds meant for the next farming season.

May the Digital Economy Agenda not be in vain!

There is no gainsaying Nigeria’s economy, like many others in the world, has been hit by the COVID-19 pandemic, and lately the ongoing Russia-Ukraine war.

There is impending economic recession, looming food shortage; and the perennial oil theft continues to compound the issues, leaving the somewhat mono-economy gasping for breath.

The 36 State Governors have raised the alarm that they may not be able to pay salaries in the coming months as a result of dwindling revenue from the federations account.

Following these concerns and more, the Finance Minister has seen telecommunications as a sub-sector with a magic wand to rescue the erring economy.

The Minister speaking through Mr. Tanko Abdullahi, the Special Adviser on Media cited the Finance Act 2020 as the enabling legislation for the tax on all voice calls, SMS and data services, in addition to the existing 7.5 percent Value Added Tax (VAT) paid for goods and services across all sectors of the economy.

Truly, the Ministry is empowered constitutionally to collect and disburse government revenue; formulating policies on taxation, tariffs, fiscal management etc., preparing and managing the annual budget, preparing annual accounts for ministries, departments and agencies, managing federal debt, etc. However, the present economic indices (of Nigeria) have made the duties more tasking for the Minister.

But, we strongly believe that Zainab Ahmed, the Minister of Finance, Budget and National Planning should pay close attention to Professor Isa Pantami, the Minister of Communications and Digital Economy’s submission. He has described the proposed tax as “ill-timed”.

“I have not been officially informed about it and we at the Ministry are not satisfied with any effort to introduce excise duty on telecommunications.

“We will definitely challenge the decision,” Pantami said at the maiden edition of the Nigerian Telecommunications Indigenous Content Expo (NTICE) organized by the Nigerian Communications Commission in Lagos.

Why Minister Zainab Perceives the Telecoms Sector as a Cash-Cow

The Nigerian telecommunication sector is the largest segment of the Information and Communication sector. Nigeria has one of the largest telecom markets in Africa. In less than 25 years, the telecommunications sector has seen over $75 billion in investment and a massive 250 million connected lines. This is up from NITEL’s 400,000 pre-GSM auction.

The sector includes a strong multinational presence. The leading players are MTN, a South African based multinational Company, Airtel (an Indian based multinational telecommunication), Glo (a Nigerian multinational company) and 9mobile (formerly Etisalat).

The sector over the years has contributed immensely to Nigeria’s economy and the lives of Nigerians. In fact, by the fourth quarter of 2020, telecom was one of the sectors whose performance lifted the country out of recession by contributing 12.45 percent to the country’s Gross Domestic Product (GDP).

The sector has experienced rapid growth and helps in e.g. easier banking services (bank mobile apps) and access to e-learning platforms to Nigerians, but not without multifaceted challenges.

Why proposed tax (increase) on telecom voice and data services should be dropped:

Two months back, President Muhammadu Buhari inaugurated a 27-man Council on Digital Economy tasking them on improved ranking of Nigeria on Ease-of-Doing-Business which has been the albatross to business growth in recent time.

With that move, it implies the President understands the place of National Digital Economy in diversifying the economy from oil of which the telecom sector plays major roles.

Sadly, the Nigerian telecommunication sector has witnessed stalled foreign direct investments leading to delays or deferrals of expansions and upgrades to networks and this trend has continued overtime.

The Finance Minister should know that the cash-cow needs care now. The sector is faced with low consumer purchasing power, currency movements and the recent loss of global investors. The inaccessibility of the dollar in the economy resulted in weak macroeconomic conditions. Nigeria’s weak macroeconomic conditions have led to weak labour market dynamics (high unemployment and underemployment), reduced disposable income and poor corporate performance.

To ensure long-term growth and sustainability, the Nigerian government should be rolling out incentives to support the sector which will lead to the Mobile Number Operators investing their assets in more creative services that focus primarily on meeting consumer needs and establish a regulated minimum market price. These will create new streams of income for operators and mitigate the decline in their traditional revenues.

Prior to 2014, Nigeria was attractive to both local and foreign investors due to a stable currency and rise in oil prices. However, since 2016, there was a significant fall in oil prices which resulted in the shortage of dollars and depletion of external reserves, revenue shortfalls, high inflation and ultimately a recession. The naira’s severe devaluation to N419/$ losing about 70% of value since 2015, pushed up the costs of imported items such as RF Coverage Equipments (Node B) and Transmission Equipment (Optical Fibre) which stifled expansion plans of most network operators from expanding their service capacity. The sector has also been affected by a reduction in consumer demand due to lower disposable income in consumption.

We want to remind the Finance Minister that Nigeria has set target for commercial launch of the fifth generation (5G) technology later this month which will require massive investments in billions of dollars. Is the Minister guaranteeing the availability of forex to the telcos? Is she aware that the Central Bank of Nigeria under Mr. Godwin Emefiele, at a time, removed telecom equipment from the list of forex-worthy items for importation? How much of the equipment is manufactured in the country?

Is the Finance Minister aware that a company like MTN has powered its Cable Landing Station (CLS) with generators in the past 10 years and counting? Remind us of the price of a litter of diesel, presently.

Is the Minister aware there are Bills on the floor of the Senate targeted at the telecommunication companies to deduce some percentages of their revenues to sponsor the provisions of these bills?

What is the Minister’s contribution towards resolving the Right-of-Way (RoW) impasse between the telcos and State governments? There are over 42 taxes and levies paid by telecom operators in Nigeria. As Federal government agencies are cutting their bounds of flesh, State revenue officers are readying their knives for cuts too. To make matters worse, local government revenue officers have made life miserable for telcos; down to street urchins who insist on collecting their own ‘taxes and levies’ before generators powering cell sites are re-fueled.

The Federal Government can set an example: Declare zero charges on Right of Way to telcos laying fibre optic cables along Federal highways. With this, you have set an example on how to drive the digital economy through support to businesses.

Many have argued that these telcos declare billions of naira in revenue yearly, but are we saying that investors do not deserve profits or shareholders should forfeit their dividends?

The truth is that with low incomes, more GSM mobile subscribers will move away from traditional cellular services to data bundle packs, which allows them to use Over the Top (OTT) services.

Telecom operators and Internet service providers are currently at loggerheads to deliver data at relatively cheaper prices. The fierce price competition among telecom operators on their voice and internet data has led to the contraction in the sector revenue over time. Consumers benefit from temporary low prices only in the short run. The sector has also contended with OTT players that utilize technology to convey voice/video calls at a fraction of traditional voice call costs. While Nigeria’s data bundle prices are the lowest in subSaharan Africa, they are priced below actual costs which can harm the sector and puts long-9term customer benefits at risk.

Smaller mobile network operators find it hard to survive in the market which leaves an industry dominated by few players. These few players will increase their market share and have the power to influence prices. Prices can more than double which can have a negative effect on the levels of consumption.

Solutions

The Minister of Finance should not reverse the changes made under the Nigeria National Digital Economy Policy which has committed the present administration in creating an enabling environment for the private sector to contribute innovative solutions to allow consumers to benefit from Information Communication Technology (ICT) advancements.

This will in turn bring about efficiency and productivity in the telecom sector and eventually enhance economic growth which is why the proposed tax is counter-productive.

The industry regulator, the Nigerian Communications Commission (NCC), should ensure that the quality of service provided by telecom operators is enhanced through an emphasis on the strength of their signals and the quality of their data services.

Customers can also play a part in regulating prices by valuing and promoting services that offer the best customer experience and not those that offer only the cheapest price. 

To ensure long term growth and sustainability there is a need to stop the proposed excise duty on telecoms services. This will result in increased investors’ confidence and will enable operators to serve multinationals including Small and Mediumsized Enterprises (SMEs) that are dependent on their internet services (better quality service). The sub-sector needs more government’s support and protection as it provides the infrastructural backbone for the new digital economy that drives socioeconomic development across all sectors in the economy (ecommerce, Mobile banking).