Telecommunications Sector and Its Potential to Rebalance the Recessed Economy

The new buzzword in the media and the lips of every citizen is recession. The significant decline in economic activity across different sectors of the economy and its effect on consumers’ purchasing power is alarming. Recent reports have it that 60 million phones owned by Nigerians have become inactive due to deteriorating economic situation in the country. 

The Telecoms industry, also operating under similar harsh economic conditions as the citizens still remain a major contributor to the prosperity of the economy inspite of a dearth in infrastructure, inefficient electricity, ineffective regulation and multiple taxation among other challenges. 

To compound the problems of the operators, a Communication Service Tax Bill was introduced by the National assembly in which a nine per cent additional tax burden will be placed on users of telecommunication services. 

If such an ill-informed bill is passed it will further erode the return on investment where services are no longer affordable and the attendant losses that will be incurred by these companies will only lead to a relocation of Telecoms operators to climes with more favorable economic conditions leaving in their wake thousands of Nigerian workers who would be laid off.

Taking a cursory look at other sectors of the economy, the planned tax regime will wreak unprecedented socio-economic havoc in the country. The aviation sector is already reeling from the shocks of recession as airlines are finding it increasingly difficult to operate, making them to suspend their operations. Banks have sacked thousands of their workers while over 19,000 public service jobs have been wiped across all tiers of government. 

Telecommunications is a vital engine of any economy; it is an essential infrastructure that promotes the development of other sectors such as agriculture, education, industry,

health, banking, transportation and tourism. It is indispensable at this time since it could play a major role in resuscitating the Nigerian economy. This can only happen when the sector is effectively regulated and supported by the government and not by excessive taxation.

Rather than raise more hurdles for the already weary telecoms operators, the Federal Government and the NCC must pay more attention to the sector to ensure that they introduce policies that will encourage operators to invest more in their network so as to reach their potential to help revive the economy.