Tinubu Scraps 5% Excise Duty on Telecom Services: Implications for Nigeria’s Digital Future

Introduction: A Landmark Tax Reform

Nigeria’s telecom sector just witnessed a major policy shift. President Bola Ahmed Tinubu has permanently abolished the 5% excise duty on telecom services, a levy that applied to mobile voice calls and data.

The Nigerian Communications Commission (NCC) confirmed that this tax has been struck out under the new tax reform framework, ending years of uncertainty that began when the duty was first introduced under the 2020 Finance Act.

This move is more than a tax change—it reshapes the cost structure of Nigeria’s digital economy, with direct effects on 172 million subscribers, telecom operators, and the country’s economic strategy.

The Journey of the Telecom Excise Duty

The idea of taxing telecom services has been controversial from inception.

• 2020 Finance Act: The 5% excise duty was introduced as part of broader fiscal reforms to increase government revenue.

• Immediate backlash: Consumer groups argued it would raise tariffs in an economy already burdened by inflation. Operators warned it could undermine growth in one of Nigeria’s most resilient sectors.

• Suspension in 2023: Shortly after assuming office, President Tinubu suspended the levy via executive orders, citing the need to relieve households and businesses.

• Revival attempts in 2024: The National Assembly floated reinstating the duty, but strong opposition from industry associations like ATCON and ALTON stalled it.

• Final abolition in 2025: Under new reforms, Tinubu has now fully abolished the duty, cementing a more stable fiscal and regulatory environment for telecom services.

Impact on Consumers: Relief in a High-Cost Economy

Telecom services are not luxuries—they are daily essentials for communication, commerce, education, and healthcare. Nigeria’s 172 million active subscribers were directly exposed to the excise duty.

1. Lower Cost of Access:
   Scrapping the duty means calls and data services will no longer carry the added 5% burden. This is particularly significant given the 50% tariff hike approved in early 2025.

2. Digital Inclusion:
   For low-income households, affordability is the difference between staying connected and being excluded. Removal of the duty aligns with Nigeria’s digital inclusion goals, expanding internet penetration in rural and underserved communities.

3. Consumer Confidence:
   The National Association of Telecom Subscribers (NATCOMs) praised the move, calling it “soothing” for millions of Nigerians struggling with high inflation and cost of living pressures.

Impact on Telecom Operators: Room for Growth

Telecom operators are central to Nigeria’s digital economy, contributing about 12–14% of national GDP in recent years. The abolition of the excise duty changes their operating environment.

• Stronger Demand: Lower consumer costs could drive higher data consumption and service uptake, boosting revenues through volume growth rather than tax burdens.

• Improved Investment Climate: Industry groups like ATCON and ALTON said the move creates a stable policy environment, making Nigeria more attractive for foreign and domestic investors.

• Operational Stability: Without the risk of sudden tax reinstatements, operators can plan long-term investments in 5G rollout, fiber infrastructure, and rural connectivity.

• Caution Remains: Operators warn against replacing the excise duty with hidden levies, which would undermine the gains of this reform.

Regulatory Reforms: More Than Just Tax Cuts

The NCC has tied the duty removal to a broader package of reforms aimed at consumer protection and service quality:

• Public Network Performance Map: Launching September 2025, this will allow Nigerians to compare network quality—including speed, latency, and reliability—by location.

• NIN-SIM Audit: Completing this audit will strengthen security, reduce fraud, and improve regulatory oversight.

• USSD Debt Resolution: Tackling outstanding debts between banks and telecom firms ensures sustainable mobile financial services.

• End-User Billing Transparency: A new interface will give consumers better visibility into data usage and billing, reducing disputes.

• Major Incident Reporting Portal: Designed to monitor service disruptions and enforce accountability.

These measures reflect a shift toward transparency and accountability in Nigeria’s telecom governance.

Economic Implications: Boost for Digital Growth

1. Stimulating GDP Contribution

Telecoms already account for a significant portion of Nigeria’s GDP. Lowering taxes on the sector should stimulate growth by increasing both consumption and investment.

2. Supporting Small Businesses

Small and medium-sized enterprises (SMEs), many of which rely on mobile internet for transactions, advertising, and operations, will benefit from lower telecom costs. This supports entrepreneurship and job creation.

3. Aligning with Reform Acts

The abolition ties into Tinubu’s broader Reform Acts, effective January 2026. These Acts streamline Nigeria’s tax system, consolidate levies, and reduce the cost of doing business.

4. Enhancing Digital Inclusion

Cheaper access supports government efforts to close Nigeria’s digital divide. Improved connectivity in rural areas boosts access to e-learning, telemedicine, e-commerce, and e-governance.

Risks and Challenges

While the abolition is widely celebrated, some challenges remain:

• Revenue Shortfall: The government must offset the lost revenue through improved tax collection elsewhere or alternative fiscal measures.

• Implementation Gaps: Without strict enforcement, operators could still raise tariffs independently, blunting the impact on consumers.

• Policy Stability: Stakeholders demand long-term certainty, wary that future administrations may revisit the tax.

Conclusion: A Strategic Digital Policy

By scrapping the 5% excise duty on telecom services, President Tinubu has signaled a strong commitment to digital inclusion, economic growth, and regulatory transparency.

For subscribers, it means lower costs. For operators, it provides a better business climate. For government, it reinforces reform credibility and enhances Nigeria’s digital transformation agenda.

If complemented by strict oversight and continued reforms, this decision could mark a turning point in Nigeria’s journey toward a fully inclusive digital economy.