The Global System for Mobile Communications Association (GSMA) has called on the Federal Government to reduce telecom taxes in a bid to encourage greater investment and accelerate the growth of Nigeria’s digital economy.
Angela Wamola, Head of Sub-Saharan Africa at GSMA, highlighted that Nigeria’s complex and burdensome tax framework is a significant barrier preventing the telecom sector from expanding its infrastructure and services. This, she said, has stifled the industry’s ability to contribute fully to the nation’s economic development.
In a statement shared on Wednesday, Wamola noted that telecom operators are grappling with rising operational costs, largely driven by soaring energy prices, while also facing challenges in accessing foreign currency. This foreign exchange limitation, she explained, has made it difficult for operators to import the necessary equipment for expanding and maintaining network infrastructure.
“These issues aren’t unique to Nigeria, as many African countries are experiencing similar challenges,” Wamola said. “However, Nigeria’s intricate tax regime adds country-specific obstacles that significantly limit the sector’s potential.”
In recent years, the growth and contribution of Nigeria’s telecommunications sector to the national GDP have slowed, a trend attributed to significant financial pressures and the declining performance of operators. In 2023 alone, telecom companies paid around N2.4 trillion in taxes, according to a GSMA digital economy report. This is a substantial figure, considering the sector generated approximately N33 trillion that year, accounting for 13.5% of Nigeria’s GDP.
Wamola stressed that while the telecom sector holds vast potential, it is also hampered by the high cost of right-of-way (RoW) charges, which vary significantly across states. These charges, paid to landowners or authorities for infrastructure deployment, have risen sharply, with some states charging RoW fees as high as 70% of the total fiber optic installation cost. This inconsistency, she argued, discourages the development of critical infrastructure, particularly fiber optics.
Despite a 2020 agreement among state governors to cap RoW fees at N145 per meter, many states have failed to comply. If enforced consistently, Wamola said, this uniform rate could reduce the cost of fiber deployment by 15%, making it more feasible for telecom operators to invest in network expansion.
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To unlock the sector’s full potential, Wamola urged the government to streamline taxes, harmonize RoW charges, and eliminate multiple levies. She emphasized that reforming the telecom tax structure would not only benefit the sector but also drive economic growth, enhance connectivity, and increase access to digital services for millions of Nigerians.
