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The Global System for Mobile Communications Association (GSMA) has called on the Federal Government to reduce taxes on the telecommunications sector to stimulate investment and drive Nigeria’s digital economy.
Angela Wamola, GSMA’s Head of Sub-Saharan Africa, emphasized that Nigeria’s complex and burdensome tax system is limiting the telecom industry’s ability to invest in critical infrastructure, expand services, and contribute to national economic development.
Wamola highlighted that rising operational costs, exacerbated by increasing energy prices, are placing immense pressure on telecom operators. Moreover, the difficulty in accessing foreign currency needed for importing essential equipment has further strained the sector’s efforts to maintain and expand its network infrastructure.
“These challenges aren’t unique to Nigeria; many African markets are facing similar issues. However, Nigeria’s complex tax regime adds country-specific obstacles that severely restrict the sector’s potential,” Wamola explained.
In recent years, Nigeria’s telecommunications sector has seen a slowdown in its growth and contribution to the nation’s Gross Domestic Product (GDP). This decline is largely due to significant financial losses and weakened performance among telecom operators.
In 2023 alone, telecom companies in Nigeria paid a total of approximately N2.4 trillion in taxes, according to a GSMA report on the digital economy. This substantial contribution to the economy comes from a sector that generated around N33 trillion, representing 13.5% of the country’s GDP for the year.
Despite the sector’s vast potential, Wamola noted that it faces further pressure from inconsistent right-of-way (RoW) charges, which are crucial for infrastructure deployment. These charges, paid by telecom operators for the use of land or property to install infrastructure like fiber optics, vary significantly across states.
While state governors agreed in 2020 to standardize the RoW charge at 145 naira per meter, many states have yet to comply, leading to higher infrastructure costs. In some cases, RoW charges range from 1% to 70% of the additional costs of fiber optic installations, depending on the state.
Wamola stressed that this inconsistency in RoW charges hinders the deployment of vital infrastructure and threatens the sector’s ability to invest in necessary network expansions. She added that if the agreed-upon 145 naira per meter charge were uniformly applied across states, the cost of deploying fiber could decrease by 15%, making it easier for operators to invest in expanding their networks.
To address these challenges, Wamola recommended that the government streamline taxes, harmonize right-of-way charges, and reduce multiple levies on the telecom sector. She argued that reforming the tax structure would benefit the industry, boost economic growth, improve connectivity, and enhance access to digital services for millions of Nigerians.
By encouraging investment through tax reform, Nigeria can harness the full potential of its telecommunications sector, driving digital inclusion and fostering long-term economic growth.
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