Achieving FG’s ICT Vision Requires Deliberate, Sustained Efforts, says ALTON Chairman

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Samuel Mobolaji

The chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, has stated that the federal government’s ambitious objectives for Information and Technology (ICT) sector are impossible to achieve without deliberate sustained strategic and tactical action.

 

Adebayo explained that the ICT sector has the potential to drive a new wave of inclusive economic development that can be the foundation of Nigeria’s economy for decades.

 

To deliver this, the government has clearly and publicly acknowledged the importance of creating an enabling environment for investment and taken a number of bold steps to address investment bottlenecks, Adebayo affirmed, adding that, “From the tough decisions to unify the exchange rates, to the tightening of monetary policy and a focus on reviewing the tax regime to make it smoother and more efficient. They have also created target investment funds to support key sectors of the economy, from healthcare and agriculture to the small businesses that drive the economy.

 

“The specific role of the digital economy is captured in the Federal Ministry of Communications, Innovation and Digital Economy’s 4 year 2023-27 growth plan, which envisages a further 15 percent increase in the contribution of the ICT sector to GDP growth, as well as 15 per cent YoY increases in investment in the sector, both of which are projected to support a 100 percent increase in the annual net revenue that the sector delivers to government.”

 

However, ALTON chairman said, it will be difficult to achieve this ambitious goal if the government don’t address issues ranging from pricing, multiple taxation and concessionary finance.

 

Explaining further, he said: “If you look carefully at the investment trajectory in the telecoms industry, you can see two clear and concerning trends, which are being further exacerbated by the recent short term economic shocks. Between 2021 and 2022 industry CAPEX declined by 30.37 percent while industry Foreign Direct Investment declined by 46.9 percent.

 

“This happened at a time when operational expenses have surged, and it has been exacerbated more recently by rising interest rates increasing the cost of debt. What that means is that industry expenditure has been diverted from capital (expansion and growth) to operations and that the investment environment has deteriorated. The ultimate manifestation of this has been the recent losses declared by major operators for FY 2023 and HY 2024.

 

“This is further exacerbated by the multiple taxation ecosystem that continues to exist across Nigeria, with operators exposed to 54 different federal/state/local government taxies or levies, many of which are technically illegal. There is a perception that the telecoms industry is highly profitable and so can be treated as a ‘cash cow’ – we are now seeing the impact of this, and even though it is clear operators are suffering, more new taxes continue to be considered by the national assembly.”

 

This is a critical moment, Adebayo asserted, saying, “It is an inflection point. If we act, we can establish the platform for growth and the delivery of the government’s ambitious objectives. If we delay, or fail to take the decisions necessary, then the industry is likely to go in the wrong direction.

“This will not only damage the interests of investors, many of whom are Nigerian, but also impact the emergence of the innovative services and products that ride on telecoms infrastructure. We believe that decisive action can turn this moment from a crisis into an opportunity.”

Following extensive research, Adebayo. however, recommended that there is need for the industry to take immediate action on retail pricing, adding that, “In the short term, this means an industry wide increase to retail tariffs, which were last reviewed in 2016, when the exchange rate was N373/$ and inflation at 18.4 per cent.
“No industry can survive indefinitely in a rapid inflation environment and not be allowed to increase retail prices. Regulators have denied all recent requests, despite approvals being granted in other critical industries from power to fuel and transportation.”

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