$70b telecoms investments under threat as CBN plans 0.005% levy on e-transactions, says ATCON

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What the levy will cost Nigeria

  • Operators to raise price of talk and data services
  • E-commerce growth to stall
  • CBN failing to meet Forex demands of operators
  • 30% broadband penetration target will be unmet

By Oluwatobi Opusunju

The Association of Telecommunications Companies of Nigeria (ATCON) has raised alarm over a recent directive to all banks by the Central Bank of Nigeria (CBN) asking banks to deduct a 0.005% levy on electronic transactions in the country.

ATCON, the umbrella body for all telecom companies, in a statement this week in Lagos, said this will not only impact negatively on the ecommerce sub-sector but affect all major businesses in the country. It also signaled that the action will erase over $70b telecoms investments.

The levy is intended to feed the National Cyber Security Fund within the CBN.

But ATCON is warning that businesses which are to be affected are GSM service providers and all telecommunication companies; Internet service providers; banks and other financial institutions; insurance companies and Nigerian Stock Exchange.

End of e-commerce and broadband targets

All of these companies are already struggling under a harsh economic climate. The levy will not only erode profit and business confidence but scare off consumers and investors already wary of a troubled market. The loss to economy will overwhelm the gains to government, a worried ATCON said.

Telcos and consumers will be at the receiving end, warned ATCON adding that the action was also capable of stalling the growth of broadband despite the concerted efforts by government and the private sector to deepen broadband penetration; and scale over the 30% penetration target by year end. Broadband penetration is currently 23%.

“The eventual implementation of this levy of 0.005% would cripple if not render useless government and private sector efforts to speed up the broadband penetration in Nigeria and our Association has a mandate to protect the investment in the telecom industry from undue pressure from the government in the form of yet additional burden on our members that are already overtaxed by all tiers of governments,” said ATCON.

Telcos already overtaxed

“ATCON believes any premeditated actions that are capable of killing the telecoms industry must be eschewed by all tiers of governments in Nigeria as the perceived benefits of imposing this levy on aforementioned businesses have the direct capability to erase if not destroy the achievements that have been made since the telecoms sector was liberated. We therefore advise government to review this directive as it would affect some macro-economic elements such as loss of employment and we as industry will have to increase prices to cover the collection, processing and pass on these costs to the 150 million subscribers.”

The telecom association further stated that it was preposterous that while some government agencies are working towards migrating all government services online, some other government agencies are working towards discouraging people from making use of electronic channels via the obnoxious levy.

“For the purpose of records, government should not think that the elasticity of demand for the use of electronic channels is inelastic as this move can stop people from transacting their businesses via available electronic channels,” said ATCON adding that it has requested repeatedly to meet with the CBN’s governor to discuss some of the issues “our members are facing with respect to sourcing for foreign exchange to purchase the needed equipment and to our great surprise the central bank of Nigeria has not honoured the invitation.”

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