Telecom taxes
By Tony Folarin
The Global System for Mobile Communications Association has implored the Federal Government to lower telecom taxes in order to foster investments and bolster the country’s digital economy.
The Head of Sub-Saharan Africa at GSMA, Angela Wamola, stated that Nigeria’s complex and burdensome tax regime was obstructing the telecom sector’s ability to invest in infrastructure, expand services, and contribute to the country’s economic development.
The GSMA official said on Wednesday that the growing operational expenses, driven by increasing energy prices, have imposed enormous strain on telecom operators.
Wamola asserted that the situation was further exacerbated by the difficulty in accessing foreign currency, which is essential for importing the equipment needed to expand and maintain network infrastructure.
“These challenges are not unique to Nigeria; many African markets face similar issues. However, Nigeria’s complex and burdensome tax regime presents additional, country-specific obstacles that severely limit the sector’s potential,” the GSMA chief detailed.
Nigeria’s telecommunications sector has experienced a slowdown in growth and contribution to the country’s GDP in recent years. This decline is attributed to significant financial losses and deteriorating performance among telecom operators. This figure represents a significant contribution to the Nigerian economy, as the telecom sector generated around N33tn, accounting for 13.5 per cent of the country’s Gross Domestic Product (GDP) during the year.
Although the sector has enormous potential, according to Wamola, it is also pressed by the high cost of the right-of-way (RoW) charges, which vary drastically from state to state.
RoW charges are fees paid by telecom operators to landowners or authorities for the use of their land or property for infrastructure deployment.
The GSMA official lamented that despite a 2020 agreement among state governors to set the RoW charge at 145 naira per meter, many states have failed to comply with this rate.
According to her, this non-adherence has resulted in escalated costs for infrastructure deployment, with RoW charges now ranging from 1 per cent to 70 per cent of the additional costs of fiber optic installations, depending on the state.
The GSMA boss noted that this inconsistency not only hinders the deployment of vital infrastructure like fiber optics but also threatens the sector’s ability to finance necessary expansion
