“IMF Agent,” Nigerians Descend on Rewane for Backing Higher Telecoms Tariffs

The “debate” on Rewane’s position…is typical of Nigerian debates on economic reforms. Angry commentators hurl insults and labels (“exploitation”, “IMF agent”, “imperialism”, “economic slavery”, etc) without even a basic understanding of the argument or the impact of their positions on the economy and their welfare.

In a recent appearance on Arise TV, renowned economist Bismarck Rewane, CEO of Financial Derivatives Company, sparked controversy with his suggestion that tariffs should be increased to improve services and infrastructure in the telecommunications industry.

Tunde Akogun, who describes himself as a “political sociologist, public policy analyst, writer, media strategist” dismissed Mr. Rewane as an “IMF Agent” for advocating a hike in prices Nigerians pay for telephone calls and data services.

Rewane had argued that telecom companies need to adjust tariffs upwards to cope with the high cost of operations and infrastructure upgrades, citing the urgent need for investment in the sector.

Rewane had justified his position, highlighting the plight of Nigeria’s telecommunications sector.

According to the economist, operators in the sector have not increased tariffs in 11 years despite soaring inflation. He explained that the services provided by the telecommunications companies are critical to the development of the Nigerian economy.

Rewane must have imagined that he was stating the obvious-telecommunications firms should increase tariffs after 11 years so that they can be able to finance the investment in new infrastructure required to improve services that have become increasingly patchy.

But his comment sparked a wave of criticism on social media, with many users decrying the cumulative burden of increasing taxes and levies on Nigerians, alongside the high cost of living. The Nigerian Electricity Regulatory Commission had in April 2024 approved a 300% increase in electricity tariffs for residents of high-income areas.

Read more: Telecoms Sector Attracts $2Billion Foreign Direct Investment As GDP Grew From 8.5% to 12.61% 

Killian Agbarakwe commented “All these increments, taxes, and levies are becoming a huge burden to Nigerians. From NEPA to mobile networks, cyber security levy on bank account holders, petrol, and etc. The taxes and levies are legion, coupled with a high cost of living. Government and multinational companies should allow citizens to breathe.”

Also, dissatisfaction with the quality of telecom services prevails among users, with complaints ranging from network disruptions to subpar internet connectivity, prompting skepticism about the justification for tariff hikes without tangible service improvements.

James Jukwey noted, “The telecommunications companies in Nigeria deliver poor services, not worth what people pay, and not fit for purpose. Most of the time the network is disrupted, and even ordinary phone calls are difficult to make or connect. You hear people shouting ‘hello, hello’ in utter frustration. Internet services are equally patchy. Before they raise tariffs, they should get basic services up to scratch.”

Tony Izuagbe, President of the Association of Telecommunications Companies of Nigeria, warns of financial ruin for operators without tariff adjustments.

He advocates for regulatory intervention to tackle industry challenges and uphold service standards.

However, Jacob Idowu challenges this viewpoint, noting that the government should focus on politicians, and not the masses when it comes to taxing to increase its revenue net.

“When telecommunication tariff is dropping in most countries of the world, you are canvassing for an increase in Nigeria.

“Sir, you did not advise the government to go after all these politicians who have stolen the future of the unborn generation, flaunting wealth on social media, and get the money from them,” he added.

Also read: Suspension of New Tariffs Exposes Nigeria’s Power Sector to Ridicule, Sam Amadi, former NERC Boss

Detractors call for government intervention to keep tariffs low, pointing to global trends of declining telecom tariffs and urging authorities to tackle corruption instead of burdening consumers.

Binbol Wilson shares this sentiment, saying, “Maybe that is true, maybe it is not; I wouldn’t know. One thing I know and can say for sure is that it shouldn’t be now. Everything is on the increase, and Nigerians are bearing so much burden presently. We should be careful how we add more loads to their burden.”

Despite the stringent opposition to Rewane, a few Nigerians support the tariff hike, arguing that it is essential for the survival of telecom companies and the delivery of quality services.

According to those supporting Rewane’s position, the upward review is important to ensure the sustainability of the telecommunications companies amidst rising costs and dwindling revenues.

Uyi Josiah argues, “The Telcos need to survive. Forget all these emotional responses to genuine concerns. A cost-reflective tariff is important at least. There is no way a company can survive when marginal cost keeps going up and marginal revenue dips; at least a balance will keep them running till things get better.”

Some commentators condemned Rewane’s critics for failing to engage with the substance of his intervention and hence not understanding his argument about the negative impact of poor telecommunications services on the economy.

Muhammed Balogun, while commenting on the development, noted that most of the arguments are being marshaled by people with little understanding of the subject matter.

He stated: “It’s clear that most of the commenters have not bothered to click on the link and read.”

The “debate” on Rewane’s position that an increase in telecommunications tariffs is necessary to improve services and hence economic efficiency and growth is typical of Nigerian debates on economic reforms. Angry commentators hurl insults and labels (“exploitation”, “IMF agent”, “imperialism”, “economic slavery”, etc) without even a basic understanding of the argument or the impact of their positions on the economy and their welfare.

The telecommunications sector in Q3 2023 contributed 16% to Nigeria’s GDP and has become a major magnet of foreign investment and a driver of new jobs. The growth of Nigeria’s buoyant creative industry is significantly dependent on telecommunications services.  A steady decline in investment and the quality of services is thus a significant threat to jobs and growth.