Recently at a stakeholders’ meeting in Abuja, organised by the Nigerian Communications Commission (NCC), the federal government disclosed her resolve to commence the implementation of five percent excise duty on telecommunications services in the country.

According to Mr. Zainab Ahmed, the Minister of Finance, Budget and National Planning, through Frank Oshanipin, the Assistant Chief Officer in the ministry, “the five per cent excise duty has been in the Finance Act 2020 but hasn’t been implemented. The delay in implementation was as a result of government’s engagement with stakeholders”.

He further said that the duty rate wasn’t captured in the Act because it is the responsibility of the President to fix rate on excise duties and has fixed five per cent as the duty rate for telecommunication services, which include, GSM services.

Oshanipin added: “It is public knowledge that our revenue cannot run our financial obligations, so to that effect we are to shift our attention to non-oil revenue. The responsibility of generating revenue to run government lies with us all.”

The Role of NCC in the 5% Excise Duty

NCC is the federal government agency that regulates telecommunications sector of the country’s economy. It is wrong for anybody to attribute the 5 percent excise duty on telecommunications service to the commission. That NCC organised the stakeholders’ meeting where the announcement was made does not mean that it came from the Commission.

As stated in the presentation made by the representative of minister of Finance, the five per cent excise duty is contained in the Finance Act of 2020 and the percentage determined by the President.

However, the Commission opposed the implementation date of the duty as stated in the opening remarks of Prof. Umar Garba Danbatta, the Executive Vice Chairman/CEO of the Nigerian Communications Commission,  who was represented at the meeting by Adeleke Adewolu, the Executive Commissioner, Stakeholders Management: “As communicated in the federal government Circular of March 1, 2022, the five per cent Excise Duty was to have been implemented as part of the 2022 Fiscal Policy Measures, but the industry considered the earlier scheduled commencement date of June 1, 2022 inadequate and we duly took this up with the federal government.”

More so, in opposition to the excise duty Prof Isa Pantami, minister of Communications and Digital Economy, also rejected the planned implementation of the five percent excise duty on the telecommunications sector by the Federal Government.

The minister faulted the timing and process of imposing the tax on the industry, arguing that part of the responsibility of responsive government is not to increase the problems of the citizens.

Speaking at a forum organised by the Nigeria Office for Developing the indigenous Telecom Sector (NODITS), an agency domiciled in the Nigeria Communications Commision (NCC), he said he is not in support of excise duty.

“I have not been contacted officially. If we are, we surely will state our case. The sector that contributes to the economy should be encouraged,” Pantami said. “You introduce excise duty to discourage luxury goods like alcohol. Broadband is a necessity.

“If you look at it carefully the sector contributes two per cent excise duty, 7.5 per cent VAT to the economy and you want to add, more” he said, adding hardship at this time cannot be tolerated.

He urged the tax masters to expand the scope of other sectors that are not contributing to the economy to do so.

“We must come together and salvage the sector. Only telecom sector contributed 13 per cent and you want to add more.”

Pantami faulted the lawmaking process that produced the harsh tax because it didn’t involve the chairman of the House Communications Committee. “So, we reject it,” he said.

According to him, further tax on the sector will impact on its contribution to the country’s Gross Domestic Product (GDP).

NCC on Reduction of Tariff in the Industry

The commission has over the years demonstrated that consumers of telecommunications services must be treated fairly and protected from incessant tariff increase by operators.

It is on record that NCC has implemented policies and programmes that give consumers voice in expressing their dissatisfaction of services or treatments by operators such as consumer outreach programmes among others.

Through effective regulatory efforts, it has ensured that the cost of making calls has crashed from around N70 per a minute to around N20 per minute. The commission has prevented mobile network operators from just increasing tariff any-how, and that tariff or promotions of any kind that may lead to traffic increase are reviewed by NCC to ensure they are fair to consumers.

Interestingly, a reverse of common trends in the country where price increases never come down is witnessed in telecommunications sector as calls and data cost have consistently been going down from where it used to be. This is a testament of NCC’s consumer -centric approach to regulation of the industry.

The commission has also revealed plans to reduce the price of data to N390 per Gigabyte by 2025, as contained in the Nigeria National Broadband Plan. And is assiduously working to realise this objective. Among such efforts is its plans to introduce a licencing framework for the establishment of Mobile Virtual Network Operators (MVNOs) in Nigeria, which will lead to the massive penetration of broadband services to the unserved and underserved areas of the country.

Just recently, ALTON wrote a letter to the NCC, calling for an upward review of the cost of SMS from N4 to N5.61k and voice call termination rate from N6.40k per minute to N8.95k per minute. The operators said the move to increase the cost of telecom services became necessary due to the high cost of delivering telecom services across networks, coupled with the harsh business environment and the continuous rise in the cost of various items in various sectors of the Nigeria economy among others.

However, the commission responded by issuing a statement to allay subscribers’ fears over the planned hike of the voice call, SMS, and data service costs by 40 per cent.

According to the statement, “For the avoidance of any doubt, and contrary to MNOs’ agitation to increase tariffs for voice and Short Messaging Services (SMS) by a certain percentage, the commission wishes to categorically inform telecoms subscribers and allay the fears of Nigerians that no tariff increase will be effected by the operators without due regulatory approval by the commission.”

The statement read: “The demand being made by MNOs under the auspices of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), citing the high cost of running their operations as the major reason for their proposed tariff hike, is contained in a letter to the commission.

“Consistent with international best practice and established regulatory procedures, the NCC ensures its regulatory activities are guided by regular cost-based and empirical studies to determine the appropriate cost (upper and floor price) within which service providers are allowed to charge their subscribers for services delivered.

“The commission ensures that any cost determined, as an outcome of such transparent studies is fair enough as to enhance healthy competition among operators, provide wider choices for the subscribers as well as ensure the sustainability of the Nigerian telecoms industry.”

NCC noted that tariff regulations and determinations were made by the commission in line with the provisions of Sections 4, 90, and 92 of the Nigerian Communications Act (NCA) 2003, which entrusts the commission with the protection and promotion of the interests of subscribers against unfair practices including but not limited to; matters relating to tariffs and charges.

NCC said the current tariff regime administered by the service providers was a product of NCC’s determination both for voice and SMS in the past.