The International System for Cellular Communications Affiliation has urged the Federal Authorities to cut back telecom taxes to encourage investments and enhance the nation’s digital financial system.
The Head of Sub-Saharan Africa at GSMA, Angela Wamola, mentioned Nigeria’s advanced and burdensome tax regime is hindering the telecom sector’s potential to put money into infrastructure, increase providers, and contribute to the nation’s financial improvement.
The GSMA official mentioned in a observe shared with The PUNCH on Wednesday that the rising operational prices, pushed by rising vitality costs, have positioned appreciable pressure on telecom operators.
Wamola defined that the state of affairs was additional exacerbated by the issue in accessing international forex, which is crucial for importing the tools wanted to increase and preserve community infrastructure.
“These challenges will not be distinctive to Nigeria; many African markets face comparable points. Nonetheless, Nigeria’s advanced and burdensome tax regime presents further, country-specific obstacles that severely restrict the sector’s potential,” the GSMA chief detailed.
Nigeria’s telecommunications sector has skilled a slowdown in progress and contribution to the nation’s GDP in recent times. This decline is attributed to vital monetary losses and deteriorating efficiency amongst telecom operators.
In 2023, telecommunications firms in Nigeria paid a complete of roughly N2.4tn in taxes, a digital financial system report from the Groupe Particular Cellular Affiliation obtained by The PUNCH confirmed.
This determine represents a major contribution to the Nigerian financial system, because the telecom sector generated round N33tn, accounting for 13.5 per cent of the nation’s Gross Home Product (GDP) through the yr.
Though the sector has monumental potential, in keeping with Wamola, it’s also pressed by the excessive value of the right-of-way (RoW) expenses, which range drastically from state to state.
RoW expenses are charges paid by telecom operators to landowners or authorities for the usage of their land or property for infrastructure deployment.
The GSMA official lamented that regardless of a 2020 settlement amongst state governors to set the RoW cost at 145 naira per meter, many states have didn’t adjust to this fee.
Based on her, this non-adherence has resulted in escalated prices for infrastructure deployment, with RoW expenses now starting from 1 per cent to 70 per cent of the extra prices of fiber optic installations, relying on the state.
The GSMA boss famous that this inconsistency not solely hinders the deployment of important infrastructure like fiber optics but additionally threatens the sector’s potential to finance crucial expansions.
Nonetheless, if the agreed-upon fee of 145 naira per meter have been uniformly utilized, the GSMA official mentioned that the price of deploying fiber throughout the nation might lower by 15 per cent, making it extra possible for operators to put money into increasing their networks.
Wamola really useful that the federal government streamline taxes, harmonize right-of-way expenses, and scale back a number of levies to encourage funding and improve digital inclusion.
She argued that reforming telecom taxes wouldn’t solely profit the sector but additionally improve financial progress, enhance connectivity, and improve entry to digital providers for hundreds of thousands of Nigerians.