Nigeria’s telecom industry, a vital contributor to the national GDP and a major employer, is facing grave challenges. Critical issues, such as disruptions in infrastructure, burdensome taxes, and demanding regulations, are jeopardizing the sector’s health. Once a robust engine of economic growth, the sector is now grappling with problems that could undermine its future. These difficulties not only pose a risk to the thousands of jobs in the industry but also to Nigeria’s position as a leading telecom market in Africa. Ensuring the stability and ongoing success of this key industry is essential, as its downfall would have far-reaching implications for the nation’s economy. Addressing the sector’s troubles is becoming increasingly urgent to maintain both its significance in the nation’s economic fabric and its competitive edge on the continent.
Turmoil in Infrastructure and Regulation
The fabric of Nigeria’s telecom infrastructure is continually being strained. This is marked by frequent fiber optic cable cuts due to construction and the scourge of vandalism. Effiong Ikemesit, at the vanguard of the Nigerian Bar Association’s business law section, has highlighted these as pernicious issues stalling growth. The industry also grapples with bureaucratic entanglements when it comes to rights-of-way permissions, which often prove to be time-consuming and costly.
Added to these are the tax burdens—the industry faces close to 50 different types of levies and taxes, as reported by the Association of Licensed Telecommunications Operators of Nigeria (ALTON). Such a punitive tax regime not only discourages new investments but also depletes existing operators’ resources. Telecom companies are ensnared in a web of financial obligations that stifle their ability to innovate and remain competitive.
Economic Pressures and the Path Ahead
Nigeria’s telecom sector faces a daunting challenge with inflation hitting a high of 33.20% in March 2024. Despite a decade of static prices, economic strain from currency depreciation and rising costs is now too severe to ignore. The repercussions are evident, with a decline in broadband penetration threatening a key industry for Nigeria, pivotal for voice and data connectivity.
Industries from drinks production to tech services are all adjusting prices in response, highlighting the telecom sector’s urgent need for a strategy shift. If tariffs aren’t reviewed or government support isn’t provided, the consequences for Nigeria’s digital framework and socio-economic stability could be disastrous.
There’s a critical need for coordinated action from both the government and telecom players to ensure the sector’s survival and progression. The stakes are high; they must stabilize the sector to safeguard Nigeria’s digital infrastructure and future economic growth.
