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