Nigeria’s 5% Telecom Tax: A Digital Lifeline or a
Data Death Sentence?
The
Nigerian government is at it again looking to squeeze revenue from one of the
most essential 21st-century utilities: telecom services.
A newly
proposed 5% excise duty on telecom services has sparked industry-wide backlash
and fears of skyrocketing data and call costs.
Telcos
say: “This tax will hurt the poor.”
The government says: “We need the revenue.”
Let’s
break it down.
What Is the 5% Excise Tax?
- The Federal Government is
proposing a 5% excise duty on all telecom services in Nigeria - This applies to calls, data,
SMS, and possibly OTT (over-the-top) services - The move is part of a
broader fiscal push to expand Nigeria’s tax base
The tax
will be in addition to the existing 7.5% VAT, pushing total indirect tax on
telecom usage to 12.5%
What the Industry Is Saying
Telcos Are Sounding the Alarm:
- MTN, Airtel, and Glo argue
the tax will: - Increase consumer bills
- Worsen the digital divide
- Slow telecom infrastructure
investment
The Consumer Impact
If
implemented, the average Nigerian could face:
- Higher airtime/data prices
- Lower internet access for
rural/low-income users - Reduced usage of digital
financial services (which rely on mobile networks)
For a
country pushing financial inclusion and digital literacy, the tax sends a
contradictory message.
Context: Africa’s Most Taxed Telecom Users?
With this
move, Nigeria risks joining the ranks of African countries with double-digit
telecom taxes, despite:
- One of the lowest ARPUs
(Average Revenue Per User) on the continent - Over 35% of citizens still
offline - Poor broadband penetration
in many states
Financial Juggernut Insight
Telecom
isn’t a luxury it’s infrastructure.
Taxing
calls and data like alcohol or cigarettes is a regressive strategy. It hits the
poor harder, widens the digital gap, and stalls innovation.
The
government needs revenue no doubt. But taxing connectivity is like charging
toll fees on the only road to progress.
What Needs to Happen?
- Rethink regressive digital
taxes - Consider usage-based
exemptions for low-income brackets - Incentivize rural digital
expansion, not punish it
