Lagos, Nigeria — The Global System for Mobile Communications Association (GSMA) has called on the Federal Government to reduce telecom taxes to stimulate investment and enhance Nigeria’s digital economy. Angela Wamola, Head of Sub-Saharan Africa at GSMA, highlighted the detrimental impact of Nigeria’s complex tax regime on the telecom sector’s growth and infrastructure development.
In a statement shared with The PUNCH on Wednesday, Wamola noted that the burdensome tax system is stifling the sector’s potential to invest in infrastructure and expand services. The rising operational costs, driven by increasing energy prices, and difficulties in accessing foreign currency for importing essential equipment, have compounded these challenges.
“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,” Wamola explained.
The telecommunications sector in Nigeria 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. In 2023, telecom companies in Nigeria paid approximately N2.4 trillion in taxes, according to a digital economy report from the GSMA.
Despite this significant contribution, the sector’s growth has been hampered by high operational costs, including the exorbitant right-of-way (RoW) charges for deploying infrastructure. RoW charges are fees paid by telecom operators for the use of land or property for infrastructure deployment, and they vary widely from state to state.
Wamola lamented that although a 2020 agreement set the RoW charge at 145 naira per meter, many states have not adhered to this rate. This non-compliance has led to inflated costs for fiber optic installations, with charges ranging from 1 percent to 70 percent of the additional costs, depending on the state.
“If the agreed-upon rate of 145 naira per meter were uniformly applied, the cost of deploying fiber across the country could decrease by 15 percent, making it more feasible for operators to invest in expanding their networks,” Wamola said.
The GSMA official urged the government to streamline taxes, harmonize RoW charges, and reduce multiple levies to foster investment and enhance digital inclusion. She argued that reforming telecom taxes would benefit not only the sector but also contribute to economic growth, improve connectivity, and increase access to digital services for millions of Nigerians.
By addressing these issues, Nigeria could unlock the full potential of its telecom sector, paving the way for a more robust digital economy and better connectivity nationwide.
