Nume Ekeghe
The Naira yesterday, decline at both the official market and parallel markets.At the Nigerian Autonomous Foreign Exchange (NAFEM) window, it closed at N1,459.73/$1, marking a depreciation of N38.67 compared to the previous rate of N1,421.06/$1 on Wednesday.Meanwhile, the parallel market concluded at N1,455/$1 a marginal loss from N1,450 it exchanged on Wednesday.The daily turnover recorded a 48.77 per cent decline in transactions to $84.38 million yesterday compared to the $164.74 million recorded on Wednesday. Furthermore, the highest spot rate observed yesterday stood at N1,465, with the lowest spot rate recorded at N1,331.
FG Dithers as Telecoms Operators Intensify Call for Tariff Hike, Security of Network Infrastructure
*GSMA submits Nigeria’s digital report, says sector contributed N33tn to GDP in 2023
Emmanuel Addeh in Abuja
The federal government yesterday failed to give any commitment to the growing demand by telecommunications services operators in the country to approve the increase in tariffs to cover the rising cost of their operations.The Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani, who spoke in Abuja, argued that the issue goes beyond raising the price that Nigerians pay for network services, maintaining that the current challenges needed to be tackled at the macro-economic level.Tijani made the remarks at an event to mark the release of Nigeria Digital Economy Report by GSMA, a global organisation that unifies the mobile ecosystem.The body delivers for its members across three broad pillars: Connectivity for Good, Industry Services and Solutions as well as Outreach, including advancing policy tackling today’s biggest societal challenges.
The minister stressed that if anything, what has become clear is that President Bola Tinubu remains a pro-business leader, emphasising that he (Tinubu) will do whatever needs to be done to improve the overall business environment, rather than raising tariffs now.“I have made it clear that some of these repeated challenges that our sector is facing, to the best of my knowledge, they are not things that we cannot surmount. The economy is facing these challenges from multiple angles. It’s not just from one angle.“And in the middle of that as well, we are in a world where our people are struggling. So as a sector, as leaders, we must achieve the things we want to achieve by also being sympathetic, but also extremely practical as well. I think the government of today, for every single demand of this sector, is willing to support, is willing to actually ensure that we improve the business environment.“We have a president that is extremely pro-business. And whatever he needs to do to improve the environment, he will. There are more macro issues and hard decisions that our country will have to take at some point. And the president has decided to be the one to take some of those decisions,” he stated.The minister called for understanding and collaboration from the operators, stressing that the discussions on all issues besetting the sector, including tariff, will continue.
“I think what we need to do is, collectively, we have to deepen and address so many of those pains. The solution to these pains will not come from one single thing, which is raising tariff. That’s never going to be the solution.“ There are a ton of other things that we must do to ensure that the business environment is conducive for the investors in this space. And government is articulating these, including the tariff conversation.“And we’ve had this conversation in private meetings, and in several other meetings as well. We have to do it collectively. And then there’s the issue of how investors perceive our sector.
“The government may intentionally put out the right messages, the right policies, the right intentions, but everything that is coming from the association on just one issue is extremely negative, investors will not come. I’ve not seen anything in what you’re demanding that is actually impossible.“It’s the approach to addressing them that I think we’re not ready to do. And I’m being open about this because we must, for once, and finally, agree to addressing these issues positively. Because they’re not just affecting the companies that you represent, they’re affecting the economy and the security of the nation as well.“So we have to be extremely careful how we approach it and make sure we focus on solving it. Some of the things proposed nine months ago, if we collectively came together to address those things, nine months ago, your demands would have been met. But the association is saying it is only one solution. And I don’t believe anyone wants that,” he stated.
Also present at the meeting were : The Nigerian Communications Commission (NCC), Chief Executive of MTN Nigeria, Karl Toriola; Executive Vice Chairperson, Globacom, Bella Disu; Chief Executive of 9Mobile, Juergen Peschel and Airtel Africa’s Chief Regulatory Officer, Daddy Mukadi.Also at the event were: Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo; Senior Director, Public Policy and Communications, Sub-Saharan Africa GSMA, Carolina Mbugua and Head of Sub-Saharan Africa at the GSMA, Angela Wamola, among others.In a session with journalists after the meeting, the industry chief executives underscored the need to allow cost-reflective tariffs in the telecoms industry and called for the protection of telecoms infrastructure in the country.
MTN’s Toriola stated that the issue of tariff increase in the industry remains a very emotive one, explaining however that as an industry that is highly capital intensive, the matter has to be quickly resolved to ensure the sector continues to provide quality service.“Tariff increase is obviously very emotive. But it is a very big issue that can fix the investment into the sector. If you don’t have the cash to invest, or there’s no returns for people to inject cash to invest, they won’t. Capital does not flow where it makes negative returns.“The elephant in the room is the tariff increase. The price of diesel cannot go from N200 to N1,200 and it doesn’t affect someone somewhere. And at some point in time, it’s going to become so expensive, people can’t fuel base stations.
“Those are the realities that we have to deal with. People see Forex dependencies because they see a headline of Forex loss. That’s optical. The truth is the price of garri, which is completely produced in Nigeria, has not been stagnant from year 2000 until now, neither has the price of a basket of tomatoes or anything that’s completely locally produced. Inflation is real and affects every sector of the industry.
“And that’s why a tariff increase is needed. If you ask a person who is producing garri from Cassava in the village to sell the price of garri he’s producing, at whatever he was selling in 2000, let’s say it was N500, he will stop producing the garri. It’s a fact of life.“So that’s what the tariff increase is about. The practical reality of the cost of production in this economy as it stands today is being able to cover that and continue to protect the health of the industry,” he argued.
He maintained that investment in alternative sources of energy like solar would also cost massive investment, and could take eight years to recover the initial investment, which nobody was ready to undertake.Arguing in the same vein, ALTON Chair, Adebayo, stated that the stability of the industry’s infrastructure remains critical as well as the need for right pricing to cover the cost of service rendered.
“We relate that with the macroeconomic headwinds, including how energy costs have gone up, how security costs have gone up, and the rest of that. And it’s an ecosystem problem that we have to solve.
“So tariff hike came as one of the items. While the public will be very sensitive to it. That’s why it gained the headline. But really and truly, it’s an ecosystem problem that has to be addressed holistically by all the stakeholders. And that has to be solved. And we can’t solve that alone as an industry,” the telecoms spokesman said.
In the report, GSMA stated that is estimated that in 2023, the telecoms sector contributed 13.5 per cent to the Gross Domestic Product (GDP) of Nigeria, stressing that the sector’s contribution to Nigeria’s overall economic activity is much greater, estimated at N33 trillion in 2023, with N2.4 trillion in tax revenue.
To unlock these economic opportunities, it said that connectivity and mobile financial services are crucial foundations, emphasising that while 29 per cent of Nigerians can regularly use mobile internet, there remains untapped potential, as 71 per cent is not accessing the services on a regular basis.
“An improved policy environment has the potential to help the industry boost coverage and adoption, resulting in 15 million additional internet users by 2028. However, the sector faces challenges to infrastructure deployment.
“These include: Complex and costly process of securing Rights of Way (RoW) significantly increasing the time and costs associated with rolling out infrastructure, the complex tax environment in Nigeria, providing for high and increasing costs of tax compliance because of the complex and overlapping tax structure within the country,” it stated.
It noted that an enabling policy and regulatory framework will be critical to realising the full potential of Nigeria’s digital transformation, as recognised in Nigeria’s Strategic Plan 2023 – 2027 as well as the Federal Ministry’s National Broadband Alliance for Nigeria (NBAN).
“Without universal access to digital connectivity, a broader digital transformation of the Nigerian economy is not possible,” it add
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