Telecoms tariff hike shouldn’t be more than 60% – Minister Bosun Tijani

The Federal Government has assured Nigerians that a potential tariff hike in the telecommunications sector would not be more than 60 per cent. The discussion surrounding the increase in charges per minute for voice calls, SMS, and a megabyte of data, which has been on for weeks, is set to be decided in the next one or two weeks. 

Disclosing the potential increase in quota information, the Minister of Communications, Innovation and Digital Economy, Bosun Tijani, during an interview on Politics Today with Channels Television on Wednesday said that the tariff hike would be between 30 to 60 per cent. He stressed that emphasis is on the need to balance the sustainability of the sector with affordability for Nigerians.

“I think it shouldn’t be more than 30 to 60 per cent,” Tijani said on the tariff increase percentage threshold.

When asked if the government is prioritizing the profit of the telecom sector over the affordability of Nigerians, he explained that the government highly considers the burden on the people which is why the tariff hike will not be 100 per cent as requested by telecom companies.

“We’ve already made it clear we are not going to approve a 100 per cent. These companies are asking for 100 per cent stating clearly that this is what they believe they need to get. But what we are looking at in terms of the sustainability of the sector is that if this is a sector that is responsible for driving growth in our country it would be harmful to our people to allow them to increase by 100 per cent,” the minister said.

While highlighting the significance of telecommunications in Nigeria’s economy, Tijani noted that the sector contributes about 14 to 16 per cent to the nation’s GDP and directly employs over 15,000 people, with an additional half a million benefitting indirectly.

Tijani also described the sector as a vital engine driving digital connectivity and economic growth, citing rising operational costs and inflation behind the demands from telecom operators for a 100 per cent tariff hike. But he stated that such an increase would do no good to Nigerians. 

Furthermore, the minister noted that decisions on tariff adjustments must be evidence-based and guided by independent reports, citing the one recently concluded by KPMG. He added that the government’s goal is to ensure the sustainability of the sector without neglecting the betterment of Nigerians.

Investment in the telecommunications sector

As significant investment is required to maintain and expand telecommunications infrastructure, emphasis was placed on the importance of both physical and soft infrastructure, including towers, fibre optic cables, data centres, and power solutions, as critical components for improving service quality.

The minister revealed plans by the government to step in where private investment falls short, especially in underserved rural areas. He noted that the government is working on creating special-purpose vehicles to develop infrastructure in these marginalized locations to ensure access to meaningful connectivity by more Nigerians.

Recall that the federal government on Tuesday signed a $2,095,000 grant with the U.S. government to help boost the country’s digital infrastructure. The grant will be invested into deploying 90,000 kilometres of new fibre optic backbone infrastructure across Nigeria over the next five to six years.

The tech grant which is funded by the U.S. Trade and Development Agency (USTDA) aligning with Nigeria’s National Broadband Plan 2020-2025 focuses on improving the country’s broadband penetration from 42.27 per cent to 70 per cent. It also aims at ensuring that no less than 90 per cent of Nigeria’s population has access to affordable and reliable broadband coverage.

With support worth about $500 million from the World Bank and other donors, the project is expected to commence by the third quarter of 2025.

About Nigeria’s effort to improve mobile network connection, Tijani highlighted plans to increase foreign direct investment in the tech ecosystem from $1bn to $5bn annually by 2027. He also disclosed collaborations with a technology hub in San Francisco to support Nigerian startups.

The matter of affordability vs tariff hike

On Wednesday, the Nigerian Federal Competition and Consumer Protection Commission (FCCPC) joined forces with its regulatory counterpart, the Nigerian Communications Commission (NCC), in a bid to protect Nigerian telecommunication consumers from the exploitative tendencies of telecom operators like MTN, Airtel, Glo, and others.

The Executive Vice-Chairman and Chief Executive of the Nigerian consumer protection watchdog, Tunji Bello, while signing the agreement said that the synergy between both bodies is critical to ensuring comprehensive oversight and consumer protection without regulatory conflicts or duplications.

In his response to the concerns about the high cost of data and poor service delivery amidst tariff increases, Bosun Tijani expressed that the government is collaborating with regulators to improve service quality and customer experience. He noted that vandalism of telecom infrastructure which causes service disruption remains a challenge. 

He spoke about efforts to expand broadband access and affordability. He announced plans to formally launch the National Broadband Alliance in February, which aims to extend affordable connectivity to public institutions such as schools, hospitals, and local government offices.

While expressing the need to strike an equilibrium between subscribers and operators in a meeting with telecom companies and stakeholders last week, the Minister emphasized the need to ensure that the telecommunication sector gets its acts together to put the right regulations in place to ensure the growth of this sector.

Tijani also pointed out that the Federal Government would no longer leave infrastructural investments of the sector to private companies alone while adding that quality service is needed from telecom operators amidst the push for tariff hikes. 

“As a country, over time, we have left these investments in the hands of the private sector. They typically invest where they can see returns in the short to medium term. We will not want this conversation to just be about tariff increases. What the world is talking about today is meaningful connectivity, people want to have access to quality service,” he said. 

Read More: Tariff hike: FG assures telcos of price increment but not the proposed 100%.