Multiple Taxations Discouraging Investments In Telecoms Industry, Operators Lament

Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Engr. Gbenga Adebayo has said that the challenge of multiple taxation is one of the major factors discouraging further investments in the industry. This is coming on the heels of the Capital Importation data released by the National Bureau of Statistics (NBS) which shows a plunge in Foreign Direct Investments in Nigeria’s telecommunications sector in the second quarter of 2023, attracting only $25.81 million as against $153.50 million recorded in the same period last year, representing a 494 per cent decline year on year. The NBS data also revealed that the telecom sector accounted for 2.51 per cent of the total capital inflow into the economy in the second quarter of 2023, which stood at $1.03 billion. Reacting to the report, Adebayo said telecom operators are currently paying a total of 39 taxes and levies, and governments at different levels in the country keep coming up with different charges. He said the undefined tax regime in the industry has made planning and projections very difficult for players in the industry, adding that potential investors are also on the lookout for these factors and are still watching. Expressing a similar view, the immediate past President of the Association of Telecommunications Company of Nigeria (ATCON) another umbrella body of players in the telecom industry, Engr. Ikechukwu Nnamani also observed that instability in the country’s forex market has been a major discouragement for many foreign investors who are interested in the country’s telecoms. “It has been estimated that the country would require $100 billion in investments in the next 10 years to bridge the existing infrastructure gap in the telecom sector, but where is the money going to come from? The exchange rate situation in Nigeria is of serious concern for foreign investors; they are not sure of what the situation will be by the time they want to repatriate their returns. Their returns on investments could be halved due to the fluctuations in the exchange rate. If we want to see the investors, we have to first address the foreign exchange situation,” he said. While there has been a general downtrend in FDI in the country’s economy since the outbreak of the coronavirus (COVID-19) pandemic in 2020, the telecoms sector has been recording a consistent decline in investments over the last 5 years.

Telecoms Investment Jumps From $38bn To $77bn, Says NCC

Prof. Umar Danbatta, the Executive Vice-Chairman, Nigeria Communications Commission (NCC), says telecoms investment inflow grew from $38 billion to $77 billion by the second quarter of 2023. Danbatta, who spoke in Kano on Saturday at a media parley, revealed that the sector had contributed 16 per cent to the nation’s Gross Domestic Product (GDP) within the period under review. He said that the statistics by the NCC was based on the computation by the Nigeria Bureau of Statistics (NBS). He said: “From about eight per cent contribution to GDP in 2015, when I came on board as the EVC of NCC, quarterly GDP has increased significantly to reach its current threshold of 16 per cent. “And this has continued to positively impact all aspects of the economy.” Danbatta, however, attributed the success to “thorough sustained regulatory excellence and operational efficiency by the Commission”, adding that the industry has grown in leaps and bounds over the past two decades. “We have witnessed explosive growth, improved regulatory standard, digital innovation that have generated global recognition,” he said. He said that telephone users in Nigeria had hit 218.9 million, internet subscribers 159.5 million, while broadband users in the country now are 88.7 million within the period under review. Danbatta listed issue of Right of Way (RoW), fibre cuts, high capital requirement for deployment, multiple taxations and regulations, among other frustrations, constituting barriers to broadband deployment in the country. The EVC, however, assured that the NCC would “navigate regulatory complexities, digital divide and literacy to tackle the challenges”. He said that the commission would establish an emergency communication centre in each of the 36 states of the federation and the Federal Capital Territory, Abuja. Danbatta said establishing the centres was necessary, so as to bridge the gap between distressed and emergency response agencies in the country. He explained that the commission had increased the amount of research grants being given to universities from N20 million to N30 million. He said that three universities had benefitted from the new grant, so far. “NCC as a regulator is mindful of the fact that telecom is an enabler and catalyst for economic advancement of the country. “It has consistently made available, affordable and accessible telecoms service to check certain telecoms barriers,” he said. Danbatta added that the task of the commission as a regulatory agency in the development of the telecommunications sector was to ensure best practices. He said that this was in view of the fact that NCC was one of the sectors that had contributed to the enhanced growth of the Nigerian economy. The vice-chairman pointed out that other major challenges confronting the commission included wilful destruction of its facilities and the number of taxes imposed on telecommunication companies. “The challenges being faced by the commission include 41 categories of taxes imposed on telecommunications companies and wilful destruction of our facilities,” he said. He said that the commission would continue to engage stakeholders in the media industry in order to keep members of the public abreast of its activities.

ALTON calls for total abolition of 5% telecoms tax

The Association of Licensed Telecoms Operators of Nigeria (ALTON), has called on President Bola Ahmed Tinubu to go a step further and abolish the 5 per cent Excise Duty on telecommunications services.   The ALTON Chairman, who made the call on a ChannelsTV programme monitored by the NIGERIAN ANCHOR, said telecommunications companies offer services and that subscribers will bear the brunt if the suspension is not lifted. On Thursday, President Tinubu signed four Executive Orders, one of which is suspending the 5 percent tax on telecoms companies. According to Adebayo, the 5 per cent tax on telecoms companies was unnecessary in the first place as they only offer services. Adebayo said: “If they bring it back, we will pass the burden to subscribers.” While saying that the sector needs protection from the three tiers of government, the ALTON Chairman said multiplicity of taxes had tremendously increased the cost of service delivery to subscribers. “The weight of the tax itself would have been on the subscribers. As a sector, we face over 39 taxes and levies across the country. And sadly, a number of them are not captured in any document and some of them are repeated at both the federal and the state levels. “And when we talk of high cost of service delivery and the burden being passed to the end users, all of them are due to multiple taxation on the services that we provide. For greater good, government should consider the total abolition of the 5 per cent Excise Duty on telecoms services,” he explained.