Nigeria’s Telecoms Sector Threatened By Economic Challenges – Ikemesit

The chairman of the Technology Committee of the Nigerian Bar Association(NBA) Section on Business Law, Effiong Ikemesit, has raised concerns about the sustainability of Nigeria’s telecoms sector amid ongoing economic challenges.

In an insightful article titled ‘The Imperative of Upholding Nigeria’s Telecoms Lifeline,’ Ikemesit delved into the sector, emphasising its pivotal role as both an economic engine and societal enabler.

With approximately 15,000 direct employees and a significant 16 per cent contribution to Nigeria’s GDP, the sector’s health is crucial for the nation’s well-being.

Ikemesit highlighted various obstacles facing the telecoms industry, including frequent fibre optic cable cuts due to road construction and vandalism, multiple taxations, and challenges in acquiring rights-of-way. These issues, compounded by exploitative rent-seeking practices, have persisted despite efforts to resolve them, he averred.

“Central to the sustenance of any industry is a conducive economic environment that allows for sustainable growth and innovation. However, regulatory constraints that limit tariff adjustments hinder the sector’s ability to adapt to market dynamics unlike other industries,” Ikemesit further explained.

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Recent data from the National Bureau of Statistics (NBS) indicates a rise in inflation to 33.20 per cent in March 2024, up from 31.7 per cent in February 2024. This poses significant challenges for businesses striving to manage staff welfare and make necessary investments amid economic strains.

The inflationary pressures have led to price increases across various sectors, including agriculture, beverages, and services. Companies such as Nigerian Breweries Plc and Netflix have adjusted prices multiple times this year to cope with rising costs.

Recently, the quality of service has become a significant concern for subscribers across the country. Available data indicate that this issue may persist for the foreseeable future.

The 70 per cent broadband penetration target set by , Nigeria’s Minister of Communication, Innovation, and Digital Economy, Bosun Tijani, was severely impacted in 2023, experiencing a decline of 14.2 per cent from a peak of 48.28 per cenr in March to 41.87 per cent in November.

With operators reporting financial losses in 2023 and a challenging outlook for 2024, it is evident that funding will pose a significant challenge for the necessary investments needed to transform the sector.

Describing the challenges of the sector in 2023, the chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, said, “ALTON’s members currently pay at least 49 different taxes and levies. Additionally, our members continue to bear the brunt of multiple taxation and coerced compliance with tax and levy demands that have no legal basis by sub-nationals. This threatens investment, sustainability, and industry growth.