TECHDIGEST – The sustained growth of telecommunication subscribers pushed the Gross Domestic Product contribution of the Information Communications and Technology sector, in real terms, to N12.32tn in 2022.

Last year, the total number of mobile telecom subscribers rose by 13.89 per cent to 222.23 million from the 195.13 million that was recorded as of December 2021. This pushed the contribution of the ICT sector to GDP to 16.51 per cent, compared to the 15.51 per cent recorded in 2021, according to the National Bureau of Statistics.

In 2021, the sector’s contribution was N11.23tn in real terms. Overall, the sector also grew by 9.76 per cent in real terms. In nominal terms, the sector contributed N21.15tn to GDP in 2022, and N17.78tn in 2021.

The NBS said, “The total contribution of the sector in real terms in 2022 stood at 16.51 per cent, higher than the 15.51 per cent reported in 2021.

The ICT sector has been one of the pillars of the country’s economy. In 2022, it was one of the drivers of the service sector, which contributed 56.27 per cent to the aggregate GDP in the fourth quarter of 2022.

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The telecoms sector is the major component of the ICT sector, contributing 82.17 per cent to the sector’s output in 2022. Nigeria has the largest mobile population in Africa and this is expected to continue to grow due to its large youth population.

In 2021, mobile technologies and services contributed almost $140bn of economic value in Nigeria and other Sub-Saharan African countries.

The ICT sector grew by 9.76 per cent in real terms. The NBS said, “The total contribution of the sector in real terms in 2022 stood at 16.51 per cent higher than the 15.51 per cent reported in 2021.”

In Q4 2022, the ICT sector with 13.55 per cent was the third highest contributor to GDP.

According to the country’s national statistics body, the information and communication sector is composed of the activities of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.

Explaining the sector’s performance in Q4, 2022, the NBS noted, “The quarter-on-quarter growth rate recorded in the fourth quarter of 2022 was 18.16 per cent.

“Overall, the sector grew by 19.00 per cent in 2022. The Information and Communications sector contributed 10.42 per cent to the total nominal GDP in the 2022 fourth quarter, higher than the rate of 9.88 per cent recorded in the same quarter of 2021 and higher than the 9.58 per cent it contributed in the preceding quarter.

“The total contribution of the sector in nominal terms in 2022 stood at 10.61 per cent, higher than the 10.24 per cent reported in 2021. The sector in the fourth quarter of 2022 recorded a growth rate of 10.35 per cent in real terms, year-on-year.”

Overall, the sector improved by 9.76 per cent last year. “Of total real GDP, the sector contributed 16.22 per cent in the 2022 fourth quarter, higher than in the same quarter of the previous year in which it represented 15.21 per cent and higher than the preceding quarter in which it represented 15.35 per cent,” NBS stated.

A breakdown of the contributions to the ICT sector in real terms revealed that telecoms and information services contributed N10.13tn; publishing contributed N20.17bn; motion pictures, sound recording, and music production contributed N796.53bn, and broadcasting contributed N1.38tn in 2022.

In the previous year, telecoms contribution was N9.15tn; publishing was N19.11bn; motion pictures, sound recording, and music production were N752.71bn, and broadcasting was N1.31tn.

In 2022, the service sector, which is also composed of the activities of the ICT sector was a major driver of the economy. It grew by 5.69 per cent in Q4 2022 and contributed 56.27 per cent to aggregate GDP.

While the performance of the agricultural and industrial sectors was reduced in 2022, the NBS stated, “the performance of the services sector improved in 2022.”

According to the World Bank, the ICT sector is one of the sectors that did not contract during the 2020 recession, expanding by 9.5 per cent y-o-y as households and firms consumed more data services and subscriber numbers increased.

It stated that Nigeria’s period of expansion has been accompanied by improvements in total factor productivity which coincided with important sectoral reforms that boosted output and job creation in the financial and ICT sectors.

Highlighting one of the constraints of the sector in its ‘Nigeria Development Update (December 2022): Nigeria’s Choice’ report, the global bank said, “In key sectors such as ICT, sectoral regulations also make it harder for domestic and foreign entrants alike to challenge with incumbent firms:

“For example, Nigeria’s current regulatory framework with respect to ICT grants zonal monopolies for wholesale broadband infrastructure, and there are currently no regulations that mandate infrastructure sharing by dominant operators that may possess control over bottleneck facilities.”

Despite this growth, Nigerian subscribers have been grappling with bad network reception and low broadband penetration. On other hand, telcos have been plagued by many problems such as vandalism, rising energy costs, and rising operations costs.

Recently, MTN Nigeria, the biggest telecom provider in the country, experienced a service outage in Lagos and Abuja that plunged its subscribers into a communication blackout. According to the firm, the outage was caused by fibre cuts and sabotage.

According to the Nigerian Communications Commission, about 10,000 telecommunication infrastructures get destroyed yearly.

Despite its many challenges, the ICT sector is expected to continue to grow, and form a major economic bloc for the country.

New technologies, falling smartphone costs, and rising digital consciousness are anticipated to influence this growth.

According to the President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, “When 5G rollouts fully, the impact of the sector will only grow.”

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TECHDIGEST – The National Association of Telecoms Subscribers (NATCOMS) has announced it will be suing the Nigerian government over plans to introduce a 5% telecom tax.

NATCOM’s president, Adeolu Ogunbanjo, said the association will challenge the legitimacy of the proposed 5% excise duty on telecoms services in court.

Ogunbanjo described the proposed excise duty on calls, SMS, data, and other telecom services as insensitive decision to further impoverish consumers whose purchasing power had already been weakened.

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“The Minister of Finance is insisting on implementing the excise tax, this shows insensitivity particularly when the substantive minister of the affected sector is pushing back,” said Ogunbanjo even as he warned that the new tax could erode gains made in the sector.

The federal government had announced recently through the Ministry of Finance, Budget and National Planning that it would begin the implementation of the telecom tax from first quarter of 2023.

But the Minister of Communications and Digital Economy, Prof Isa Ali Ibrahim Pantami, while speaking at the maiden edition of the Nigerian Telecommunications Indigenous Content Expo also recently in Lagos said his ministry was not consulted.

The minister warned that the telecoms tax could become counterproductive and advised that luxury items not essential services like telecom should attract higher taxes instead.

“Firstly, I have not been consulted officially and part of the rulemaking is to invite stakeholders to make contributions, I was not consulted officially. Secondly, if we have been contacted, we would have challenged the submission,” said minister.

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TECHDIGEST – The Federal ​Government has imposed a tax on telephone calls in the nation to fund free healthcare for vulnerable​ Nigerians.​​

This new tax is coming despite moves by telecom companies to increase the price of calls, SMS, and data by 40 percent as a result of an unfavorable operating environment.

The telecom tax, in the equivalent of a minimum of one kobo per second for phone calls, is a part of the sources of funds required to finance free healthcare for the Vulnerable Group in Nigeria, according to the National Health Insurance Authority Bill 2021 signed by President Muhammadu Buhari last week.

Under the new tax, the federal government will get a minimum of one kobo per second for phone calls It added that the Vulnerable Group Fund will subsidize the provision of healthcare to children under five, pregnant women, the aged, physically and mentally challenged, and the indigent as may be defined from time to time.

The Act includes a provision under Section 26 subsection 1c which states that one of the sources of money for the Vulnerable Group Fund shall include a telecommunications tax, not less than one kobo per second of GSM calls.

Speaking on the development via his Twitter handle, Taiwo Oyedele, fiscal policy partner and Africa tax leader at PwC, said the new telecommunications tax is equivalent to a 9 percent tax on GSM calls since call rates are charged at 11 kobo per second.

“S.26 of this new law imposes a telecommunications tax of not less than 1kobo per second on GSM calls. With call rates at about 11kobo per second, this translates to a 9% tax on GSM calls,” his tweet reads in part.

According to the act, the Vulnerable Group Fund is money budgeted to pay for healthcare services for vulnerable Nigerians who cannot pay for health insurance in a bid to subsidize the cost of provision of health care services to vulnerable people in the country.

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For funding, the act provides several options such as a basic health care provision fund to the authority; health insurance levy; telecommunications tax, not less than one kobo per second of GSM calls; money that may be allocated to the Vulnerable Group Fund by the Government; motley that accrues to the Vulnerable Group Fund from investments made by the Council: and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund.

But telecom subscribers under the aegis of the National Association of Telecoms Subscribers, have said they will reject this new move by the government.

The President of the association, Adeolu Ogunbanjo, said, “It is quite unfortunate that the government is viewing telecoms as a cash cow. We are saying. There is a lot of corruption in the system, and rather than curb that they want to focus on the telecoms sector. “What do they mean by vulnerable?

Vulnerable people in the nation are probably about 80 percent of the population; we are all vulnerable. What has happened to the health budget? Why should it touch telecoms again? The government should look elsewhere for money. This new action is only likely to impoverish more Nigerians and they are masquerading as helping the vulnerable. This is not right.”

Source: Techeconomy.ng

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TECHDIGEST – Experts in the telecommunication industry have said the move by the Federal Government to tax social media companies is right because the companies generate commercial revenues from the nation.

According to Meta, 7.5 per cent value-added tax will be applied on sales of ads to advertisers from January 2022, and this applies to all non-resident businesses that provide digital service in the nation.

The company’s spokesperson said, “Starting in the New Year, Nigeria will implement a new value-added tax. This law requires all non-resident businesses that provide digital services to charge an additional 7.5 per cent in tax. This includes advertising services like those from Facebook.

“Facebook is required to charge VAT on the sale of ads to advertisers, regardless of whether you’re buying ads for business or personal purposes. All advertisers with a business in the country of Nigeria will be charged an additional 7.5 per cent VAT on advertising services purchased beginning 1 January 2022. As with all VAT, companies like Meta will be collecting this tax on behalf of the Nigerian government.”

The National Coordinator, Alliance for Affordable Internet, Olusola Teniola, noted that the move by the FG was aimed at increasing its revenue through taxes.

He said, “It is all under the auspices of the government trying to increase its revenue. There has been a debate even amongst the OECD countries, as to how they can achieve taxation of digital companies.

“And there has been an agreement that there should be an adopted taxation model. The issue here is that Africa is the weaker partner under the OECD countries. So, when the developed countries that form part of the OECD agreed to tax up to about 15 per cent of revenue generated from their countries, they didn’t consider revenues generated from African countries.

“So, each country is having to devise a method as to how it can estimate the amount of taxation due to them from the transactions made on these platforms. Recently, there has been an agreement that any transaction on these platforms will attract a levy.

”According to Teniola, Nigeria’s approach is very similar to that of Ghana.

He added, “I think Ghana is also placing a levy on not only social media transactions, but on many other such transactions.

“But for us as an industry, we need to find a way to engage the government on a way to cushion the effect on consumers.”

He said since the VAT would naturally be transferred to the consumer, a way to cushion this impact, especially as the increase in digital transactions would continue, had to be adopted too.

The President, National Association of Telecoms Subscribers, Adeolu Ogunbanjo said, “One of the things the Federal Government has said to social media companies is how to tax them. Facebook is being used for adverts, commercially, which calls for some sort of taxes, which of course is one of the duties of this government: to widen the tax net.

“However, because we are using it for advertising, I think this move is only right. And we have been informed by the way. They’ve carried us along – which is one of our rights – that there would be tax and that they are negotiating with the owners of these social media companies. I think it is alright as the Federal Government would have more revenue.

“We need to wait and see how the tax would be implemented first before we criticise this move.”

Recently, the Minister of Finance, Budget and National Planning, Zainab Ahmed, hinted at the introduction of new tariffs and levies as the nation’s economy continues to recover in 2022.

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