By Chimamanda Ngozi Adichie
The recent 50% tariff increase in Nigeria’s telecommunications sector has been hailed as a strategic move poised to stimulate growth and attract critical investments, according to the GSMA, a global association representing mobile network operators.
During a virtual press briefing last Friday, Angela Wamola, Head of GSMA Sub-Saharan Africa, and Caroline Mbugua, Senior Director of Public Policy & Communications SSA at GSMA, emphasized that Nigeria’s bold digital reforms could generate two million jobs and expand the mobile user base by 15 million by 2028.
This marks the first significant tariff adjustment in over a decade, approved in January by the telecoms regulator, responding to operators grappling with escalating costs, inflation, and currency depreciation.
Wamola highlighted that the Nigerian Communications Commission’s (NCC) decision is set to enhance service quality and fuel economic growth in a nation urgently needing investment to bolster its GDP.
“This decision by the NCC is a pivotal moment for Nigeria’s digital trajectory. Sustainable investment will not only improve consumer services but also open doors for innovation and economic advancement,” Wamola asserted in a Wednesday statement.
While lauding the government’s proactive stance, she underscored the need for further measures, including streamlining Right of Way permits, implementing a Critical National Infrastructure plan, and easing the tax burden on the mobile sector.
“These steps are crucial to fast-tracking digital integration across industries. Increased digitalization in sectors like agriculture, manufacturing, transportation, trade, and governance could boost GDP by approximately two percentage points by 2028,” Wamola noted.
The GSMA projects that these reforms could generate nearly two million jobs and an additional NGN 1.6 trillion in tax revenue. However, Wamola cautioned that a lag in digitalization could stifle economic growth and reduce the sector’s tax contributions, hindering the government’s ability to meet its socio-economic commitments.
“In the medium term, slowing digital adoption will undermine productivity gains and service improvements, while in the long term, it risks stagnating the telecom sector, leaving Nigerians reliant on outdated technologies and subpar service,” she warned.
However, the 50% tariff hike has sparked concern among Nigerians already burdened by the worst cost-of-living crisis in a generation. The Nigeria Labour Congress (NLC) rejected the increase and announced plans for a nationwide protest on February 4.
Addressing these concerns, Mbugua acknowledged the potential inflationary pressures but framed them within a broader economic context. “The risk is part of a macroeconomic reality beyond the control of Nigeria or Africa. While consumers might initially feel the pricing pressure, improved services and the broader benefits of connectivity will ultimately create more opportunities and value,” she explained.
Wamola pointed out that Nigeria, like much of Africa, lags in infrastructure development, with 4G still dominating. By 2030, Africa’s 5G adoption is projected at just 17%, in stark contrast to 80% in China, North America, Asia, and Europe.
“While 2G and 3G may suffice in rural areas, these are not the technologies of the future. As the world advances towards near-universal 5G coverage, our region remains at just 1%,” she emphasized.
Mbugua added that the tariff hike could propel the telecom sector’s contribution to Nigeria’s economy from 13.5% to between 20-22% by 2030. “This growth requires investment. As the sector expands, its benefits ripple across the economy,” she said.
She further highlighted how connectivity will revolutionize sectors like health, energy, manufacturing, and agriculture. “Ultimately, it all comes back to the consumer, who remains at the heart of the telecom sector’s development and growth,” Mbugua concluded.