The GSM Association (GSMA) is highlighting the critical need for additional policy reforms to support the growth of Nigeria’s digital economy, beyond the recently-announced tariff increases by the Nigerian Communications Commission (NCC).
The recent decision by Nigeria’s telecoms regulator, NCC to raise tariffs for telecoms services has sparked widespread discussions on its potential to attract more investment into the country’s digital future.
While the GSMA, the advocate for the global mobile industry, has acknowledged the tariff increase as a positive move, the organisation is calling for a broader, multi-faceted policy overhaul to address deeper challenges within Nigeria’s digital economy.
This decision, the first tariff adjustment in 12 years, is set to unlock substantial investment in telecommunications infrastructure, increasing 4G coverage to 94% of the population and enabling mobile internet access for an additional 9 million people, with 2 million people in underserved areas, according to Angela Wamola, Head Sub-Saharan Africa at GSMA.
This call for enhanced policy frameworks comes amid the publication of the GSMA’s latest report, Nigeria’s Digital Economy: The Path to Growth, which outlines a comprehensive strategy to accelerate Nigeria’s digital transformation.
According to the GSMA, although tariff increases can incentivise investments, the country’s digital economy will need targeted reforms that go beyond cost adjustments to address underlying infrastructure and regulatory challenges.
The mobile sector advocate’s position underscores the importance of ensuring that the digital transformation in Nigeria is not just about adjusting prices but is driven by sustainable, long-term reforms. These reforms, outlined in the GSMA’s Nigeria’s Digital Economy: The Path to Growth report, focus on areas such as infrastructure development, regulatory frameworks, public-private partnerships, and digital inclusion, all of which are critical to supporting Nigeria’s future as a digital economy leader in Sub-Saharan Africa.
Role of tariff increase in Nigeria’s digital future
In the wake of the NCC’s tariff increase, which is expected to generate revenue and incentivise telecoms infrastructure investments, the GSMA has praised the move as a necessary step for Nigeria’s digital economy. The increase, the body says, aims to address long-standing issues within the telecoms sector, such as underinvestment, particularly in broadband infrastructure, which remains a significant hurdle to reaching the government’s digital transformation targets.
This decision, the first tariff adjustment in 12 years, is set to unlock substantial investment in telecommunications infrastructure, increasing 4G coverage to 94% of the population and enabling mobile internet access for an additional 9 million people, with 2 million people in underserved areas, according to Angela Wamola, Head Sub-Saharan Africa at GSMA.
“This decision by the NCC,” Wamola says, “is an important milestone for Nigeria’s digital future. By enabling sustainable investment, we are improving the quality of service for consumers and fostering opportunities for innovation and economic growth. However, to fully unlock the potential of this reform, it is critical to implement additional measures such as simplifying Right of Way permits, implementing of a Critical National Infrastructure plan, and reducing the mobile sector’s tax burden. These steps will be essential to accelerate digital adoption across sectors. It is estimated that increased digitalisation in agriculture, manufacturing, transport, trade and government will increase GDP by around two percentage points by 2028. This would also create nearly 2 million jobs and raise an additional ₦1.6 trillion in tax revenue.”
However, while the tariff hike might stimulate short-term investment, the GSMA argues that it is insufficient in tackling the larger issues at play.
However, while the tariff hike might stimulate short-term investment, the GSMA argues that it is insufficient in tackling the larger issues at play. Policy reforms should not be limited to pricing adjustments but should include a comprehensive, holistic approach to address infrastructure bottlenecks, enhance competition, reduce regulatory burdens, and increase digital literacy across the population.
The GSMA’s Nigeria’s Digital Economy report presents several key findings and recommendations on how the country can unlock its digital potential. These insights focus on the structural issues holding back the growth of Nigeria’s digital economy and highlight the need for a comprehensive overhaul of both policy and infrastructure.
The state of Nigeria’s digital economy
The digital economy is playing an increasingly crucial role in Nigeria’s broader economic landscape, and as the country’s most populous nation, it has the potential to become the leading digital economy in Africa. Despite the rapid expansion of mobile networks and the increasing use of internet-based services, Nigeria’s digital economy still faces several critical challenges:
- Inadequate infrastructure: While there has been substantial investment in mobile telecommunications, access to high-quality broadband services is still limited, particularly in rural and underserved areas. The digital divide remains a significant obstacle to inclusive economic growth.
- High cost of connectivity: Internet access in Nigeria remains relatively expensive compared to other African nations, making it unaffordable for many consumers. Tariffs, regulatory fees, and the high costs of deploying infrastructure in rural areas all contribute to this situation.
- Regulatory challenges: The regulatory environment in Nigeria has often been cited as a barrier to investment in the digital economy. Complex licensing processes, frequent policy changes, and high Right of Way (RoW) fees have been major concerns for telecom operators and other stakeholders.
- Lack of digital skills: Despite the increasing availability of digital devices and services, there is still a significant skills gap in the Nigerian workforce. Many Nigerians lack the necessary skills to participate fully in the digital economy, limiting the country’s potential for innovation and entrepreneurship.
The authors of the GSMA’s report argue that addressing these issues requires a multi-dimensional approach, with a focus on improving infrastructure, streamlining regulation, and expanding access to digital services across all sectors of society.
While there has been substantial investment in mobile telecommunications, access to high-quality broadband services is still limited, particularly in rural and underserved areas. The digital divide remains a significant obstacle to inclusive economic growth.
Key recommendations from the GSMA
The GSMA’s Nigeria’s Digital Economy: The Path to Growth report outlines several strategic recommendations aimed at catalysing the growth of Nigeria’s digital economy. These recommendations, which span across infrastructure development, regulatory reforms, and investment in digital skills, are integral to ensuring that the digital transformation benefits all Nigerians.
1. Infrastructure Development
One of the main findings in the report is the urgent need for infrastructure investment. While Nigeria has made strides in mobile telecommunications, broadband access, particularly in underserved and rural areas, remains limited. The GSMA recommends the following:
- Accelerating broadband deployment: The report suggests that Nigeria should prioritise the rollout of high-speed broadband infrastructure, particularly fibre-optic networks, across the country. This includes ensuring that rural areas are better connected, as a lack of coverage in these regions is holding back economic development.
- Government-supported initiatives: The GSMA advocates for government incentives, such as tax breaks and subsidies, to support infrastructure development in rural areas. Public-private partnerships should also be fostered to facilitate more efficient and cost-effective deployment of telecom infrastructure.
- Reducing high RoW fees: High Right of Way fees have been identified as a significant barrier to the development of digital infrastructure in Nigeria. The GSMA calls on policymakers to reduce these fees to encourage the expansion of broadband networks and improve connectivity.
2. Regulatory Reforms
The GSMA also highlights the need for a more transparent and predictable regulatory environment to boost investment in the digital economy. Key recommendations include:
- Simplifying licensing processes: The GSMA recommends that the Nigerian government streamline licensing processes for telecom operators and other digital service providers. This would reduce the regulatory burden and make it easier for companies to enter the market and expand their services.
- Predictable and consistent regulations: To attract more investment, the GSMA stresses the importance of regulatory consistency. Frequent changes in policy, such as sudden tariff hikes or shifts in spectrum allocation, have created uncertainty for investors. A stable regulatory environment will help to encourage long-term investment in the sector.
- Fostering competition: While Nigeria’s telecoms market is relatively competitive, the GSMA believes that further action is needed to ensure that competition remains healthy. The government should focus on creating an environment where smaller players can thrive alongside the dominant telecom operators.
3. Digital Inclusion and Literacy
In a country as large and diverse as Nigeria, ensuring that all citizens benefit from the digital economy is essential. The GSMA report stresses the need for inclusive digital policies that focus on reaching underserved populations.
- Expanding access to devices: One of the key barriers to digital inclusion in Nigeria is the cost of digital devices. The GSMA recommends policies that reduce the costs of smartphones and other digital devices, such as tax exemptions on imported devices or subsidies for low-income households.
- Increasing digital literacy: With many Nigerians lacking the necessary skills to use digital technologies effectively, the GSMA recommends large-scale investments in digital literacy programmes. These initiatives should focus on training young people and entrepreneurs to use digital tools and services to enhance productivity and economic participation.
4. Investment in Innovation
Nigeria’s potential to drive innovation in the digital economy is enormous. However, for this to be realised, the country must foster an environment conducive to research and development (R&D) and entrepreneurship.
- Support for Tech Startups: The GSMA highlights the importance of providing financial and technical support to tech startups in Nigeria. This includes facilitating access to venture capital, simplifying business registration processes, and offering incentives to encourage innovation.
- Promoting Fintech Growth: Nigeria’s fintech sector is already one of the most dynamic in Africa, but there is still much potential for growth. The GSMA recommends expanding access to digital financial services and ensuring that regulatory frameworks are flexible enough to accommodate new innovations.
Relevance for Nigerian consumers
The call for comprehensive reforms is of utmost importance for Nigerian consumers, as it directly impacts their ability to access affordable and reliable digital services. The GSMA’s recommendations align with the needs of the average Nigerian, particularly in rural areas, where access to digital services is limited.
For example, lower broadband costs and improved infrastructure would make internet access more affordable for consumers, allowing them to take advantage of digital services such as e-commerce, online education, and digital healthcare. Similarly, enhancing digital literacy programmes would empower more Nigerians to participate in the digital economy, improving their employment prospects and quality of life.
Editor’s Note: The lead article has been reviewed to correct the GSM Association (GSMA) .
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