What We Know About the Telecoms 50% tariff Hike

The NUC has finally approved a 50% hike in telecoms tariff. The simple explanation of this act is that your 1GB will now cost 50% more. If you buy 18GB on Airtel for 5,000 Naira, it will now cost 7,500 Naira.

In announcing the tariff increase approval, the National Communications Commission (NCC) said; “The adjustment, capped at a maximum of 50 percent of current tariffs, though lower than the over 100 percent requested by some network operators, was arrived at taking into account ongoing industry reforms that will positively influence sustainability,”

This approval comes after 11 years of negotiations between the NCC and telecommunications stakeholders. The approved 50% hike will affect services such as calls, SMS and internet bundles. In the same vein, operators can adjust prices within the tariff bands of ₦6.40 to ₦50, based on the NCC’s 2013 Cost Study.

However, reactions from various groups have not expressed optimism and satisfaction with this development.

For instance, The Nigeria Labour Congress has asked Nigerians to prepare for a nationwide boycott of telecommunication services. NLC President, Joe Ajaero said, “This decision, coming at a time when Nigerian workers and the masses are grappling with unprecedented economic hardship, is a clear assault on their welfare and an abandonment of the people to corporate fat cats”.

The Take-It-Back Movement (TIB), a human rights advocacy organisation has also condemned the 50% increase in tariff.

Based on a Vanguard report, the Coalition of Northern Groups, CNG has rejected the hike. It said it was “ill-timed and did not consider the plight of suffering Nigerians”. Similarly, the Human Rights Writers Association of Nigeria HURIWA has described the hike as “an illegal, unconstitutional, and oppressive policy that undermines Nigerians’ fundamental rights and freedoms.

But the FCCPC on the other hand has given full support to the increase. It said; “It is, therefore, crucial that tariff adjustments directly translate into demonstrable and tangible service enhancements for consumers,”

According to the FCCPC; “Issues such as network congestion, dropped calls, inconsistent internet speeds, unusual data depletion, and poor customer service have remained prevalent concerns. It is, therefore, crucial that tariff adjustments directly translate into demonstrable and tangible service enhancements for consumers,”.

Perspective of Telecoms CEO’s and Stakeholders

CEO’s of the major providers; MTN and Airtel have provided justification for the act.

In the words of Dinesh Balsingh, CEO of Airtel; “The price increase which was highly needed for the survival and continued growth of the industry, will enable us to continue investing in network infrastructure, expanding coverage, and delivering improved products and services that meet the evolving needs of our customers”

Chief Executive Officer of MTN Nigeria, Karl Toriola, has also stated; “This tariff adjustment represents an important step towards addressing the impacts of the prevailing economic challenges on our business and industry.

However, the increase appears not to be a magic bullet solution as Gbenga Adebayo, President of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), has said unequivocally that the tariff increase is just one part of a broader agenda to ensure the sector’s sustainability. NCC Vice-Chairman; Aminu Maida has highlighted that the sector has been fraught with increase in operational costs by 120%, therefore necessitating the provision of a 3 months window for recovery of losses.

Impact on Youth and Innovation

According to Mckinsey, the evidence on the relationship between the internet and economic growth shows positive influence. When more people have access to the internet; innovation and productivity increase, thereby leading to positive economic growth. The internet accounts for 3.4 percent of GDP of top economies that make up to 70 percent of global GDP.

The World Economic Forum in a 2022 report notes that Sub-Saharan Africa has the most expensive internet, thereby negating the gains in rise of smartphones. Many people may own smartphones, but fewer will have productive access to the internet. Hence, this further increase in tariffs in Nigeria will further aggravate the inflationary pressures from expensive food and energy.

Africa is a continent of young people, where 70 percent are below 30 years. The expectation is that a demographic dividend will be made from this number, but lack of access to adequate will limit flow of information and participation in innovative activity.