The Global System for Mobile Communications Association (GSMA) has urged the Nigerian government to reduce telecom taxes to stimulate investments, boost the country’s digital economy, and enhance connectivity.
Angela Wamola, Head of Sub-Saharan Africa at GSMA, highlighted that Nigeria’s complex and burdensome tax regime is hindering the telecom sector’s ability to invest in infrastructure, expand services, and contribute meaningfully to economic development.
Rising operational costs, fueled by increasing energy prices and difficulties in accessing foreign currency, have further strained telecom operators. These challenges, while prevalent in many African markets, are exacerbated by Nigeria’s specific tax obstacles.
Despite contributing significantly to the Nigerian economy, with telecom companies paying approximately N2.4tn in taxes in 2023, the sector has witnessed a slowdown in growth and GDP contribution in recent years.
One of the major impediments to the sector’s growth is the high cost of right-of-way (RoW) charges, which vary widely across different states. While there was an agreement among state governors in 2020 to set the RoW charge at 145 naira per meter, many states have failed to comply.
This inconsistency has led to increased costs for infrastructure deployment, with RoW charges ranging from 1% to 70% of the additional costs of fiber optic installations. This not only hinders the deployment of vital infrastructure but also threatens the sector’s ability to finance necessary expansions.
The GSMA recommends that the government streamline taxes, harmonize right-of-way charges, and reduce multiple levies to create a more conducive environment for investment and digital inclusion. By reforming telecom taxes, Nigeria can enhance economic growth, improve connectivity, and increase access to digital services for millions of its citizens.
