Bismarck Rewane, CEO of Financial Derivatives, has endorsed the proposed increase in telecom tariffs, asserting that it will boost productivity and help moderate inflation in Nigeria’s economy.
In a recent appearance on Channels Television’s Business Morning, Rewane explained that higher tariffs would lead to improved services, thereby enhancing overall productivity.
Telecom operators have requested a 100% tariff hike to counter rising operational costs, including inflation and increased service delivery expenses.
Nigeria’s Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, has indicated the government’s intent to adjust tariffs, with the Nigerian Communications Commission (NCC) set to finalize the details.
Rewane noted that investor confidence in the sector is already rising, citing a 10% increase in MTN’s share price to N220.
He anticipates that the tariff increase, coupled with further investments, will make the telecom industry more sustainable, indirectly boosting productivity and output.
“Any increase in productivity and output is likely to allow inflation to moderate, which is the goal,” Rewane stated.
He predicts a more moderate tariff adjustment of between 40% and 50%, rather than the full 100% proposed by operators.
The NCC has scheduled meetings with telecom consumer groups to discuss the proposed hike, aiming to balance consumer concerns with the need for industry sustainability.
A final decision on the tariff adjustment will be announced after these consultations.
How Increased Investment in Telecommunications Boosts Productivity in Low-Income Countries
- Improved Network Infrastructure: Increased tariffs often fund better network infrastructure, leading to faster and more reliable internet and call services. This reduces downtime and communication disruptions, allowing businesses to operate more efficiently.
- Expanded Coverage: Investments driven by higher tariffs can extend telecom services to underserved rural areas, integrating more communities into the digital economy and enabling remote work, e-commerce, and access to financial services.
- Enhanced Service Quality: Higher tariffs can support innovations such as 5G deployment and enhanced data capacities, allowing businesses to adopt digital tools that streamline operations and improve customer experiences.
- Attracting Foreign Investment: A financially sustainable telecom sector attracts foreign direct investment, facilitating economic development and technology transfer.
- Education and Skill Development: Reliable telecom infrastructure supports e-learning and remote education, equipping the workforce with better skills and knowledge.
- Enabled Economic Activities: Quality telecommunications services empower small businesses to market their products online, help farmers access market prices and weather forecasts, support telemedicine services in rural areas, and facilitate digital financial services for greater financial inclusion.
Collectively, these factors lead to a more connected, efficient economy where businesses and individuals can maximize their productivity, contributing to long-term inflation moderation (by producing more with the same resources and thus lowering prices).
