The Nigerian Federal Government has taken a decisive step to alleviate the financial strain on its citizens by abolishing the five percent excise duty levied on telecommunications services. This move, announced by the National Orientation Agency, effectively reverses a policy implemented in 2022 under the previous administration. The excise duty, which affected both voice calls and data usage, had been met with widespread criticism from telecom operators and consumer rights groups who argued it would exacerbate the financial burden on Nigerians already grappling with rising living costs. The removal of this tax is expected to bring significant relief to over 171 million active telecom users in the country, many of whom had recently endured a 50% tariff increase. This decision reflects President Bola Tinubu’s commitment to easing cost pressures and fostering growth within the digital economy.
The excise duty was initially introduced as a revenue generation measure to offset dwindling oil earnings. The former administration, under President Muhammadu Buhari, defended the levy as consistent with global taxation practices, citing the need to bolster government coffers. However, telecom operators, represented by the Association of Licensed Telecom Operators of Nigeria (ALTON), vehemently opposed the policy. They argued that the Nigerian telecommunications sector already faced one of the highest tax burdens in sub-Saharan Africa and that the additional duty would stifle growth, limit access to digital services, and ultimately prove counterproductive to the government’s revenue goals. The industry’s warnings went unheeded at the time, leading to increased costs for consumers and concerns about the long-term impact on the sector’s development.
The decision to abolish the excise duty marks a significant policy shift by the Tinubu administration, demonstrating a prioritization of consumer welfare and a recognition of the telecom sector’s vital role in the nation’s economic growth. This move aligns with President Tinubu’s broader economic agenda, which focuses on streamlining the tax system, reducing multiple taxation, and promoting investment in technology and innovation. By removing the excise duty, the government aims to create a more conducive environment for the telecom sector to thrive, ultimately benefitting both businesses and individual consumers.
The removal of the excise duty is anticipated to have a tangible positive impact on household budgets and business operations. Telecom users, who have been subjected to a combination of tariff hikes and high inflation, are now poised to see a reduction in their voice and data bills. This development provides much-needed financial breathing room for individuals and businesses alike, freeing up resources for other essential expenditures. Analysts view this policy reversal as a strategic move that balances the government’s revenue needs with the well-being of its citizens and the competitiveness of the telecom sector.
Nigeria’s telecom industry, with over 171 million active users, stands as one of the largest in Africa. It plays a pivotal role in driving digital transformation across various sectors, including e-commerce, financial inclusion, and access to information and services. By eliminating the excise duty, the government is reaffirming its commitment to ensuring that digital services remain affordable and accessible to a wider segment of the population. This move is expected to further stimulate growth within the digital economy, fostering innovation and entrepreneurship.
The abolition of the five percent excise duty on telecom services signifies a departure from the previous administration’s approach to revenue generation. This decision highlights the Tinubu administration’s focus on fostering a more balanced and sustainable economic environment. By prioritizing consumer welfare and recognizing the strategic importance of the telecom sector, the government is laying the groundwork for greater digital inclusion and economic growth. The removal of the excise duty is a positive step towards creating a more affordable and accessible digital landscape for all Nigerians and promises to have a significant positive impact on the nation’s overall economic development.
