The Global System for Mobile Communications Association has called on the Federal Government to lower telecom taxes in order to stimulate investments and enhance the digital economy of the country.

Angela Wamola, the Head of Sub-Saharan Africa at GSMA, highlighted that Nigeria's intricate and heavy tax structure is obstructing the telecom sector's capacity to invest in infrastructure, broaden services, and contribute to the nation's economic growth.

In a statement released on Wednesday, Wamola noted that escalating operational costs, primarily due to rising energy prices, are placing significant pressure on telecom operators.

She further elaborated that the challenges are intensified by the difficulties in obtaining foreign currency, which is crucial for importing the necessary equipment to develop and sustain network infrastructure.

Wamola pointed out that while these issues are not exclusive to Nigeria, the country's complicated tax system introduces additional, specific challenges that severely restrict the sector's potential.

The telecommunications industry in Nigeria has seen a decline in growth and its contribution to the national GDP in recent years, largely due to substantial financial losses and declining performance among telecom operators.

According to a digital economy report from the Groupe Special Mobile Association, telecommunications companies in Nigeria paid around N2.4 trillion in taxes in 2023.

This amount represents a significant input to the Nigerian economy, as the telecom sector generated approximately N33 trillion, making up 13.5 percent of the country's Gross Domestic Product (GDP) for the year.

Despite the sector's vast potential, Wamola noted that it is also burdened by high right-of-way (RoW) charges, which vary significantly from one state to another.

RoW charges are fees that telecom operators must pay to landowners or authorities for utilizing their land or property for infrastructure development.

The GSMA representative expressed concern that, despite a 2020 agreement among state governors to establish the right-of-way (RoW) charge at 145 naira per meter, numerous states have not adhered to this rate.

She pointed out that this lack of compliance has led to increased costs for infrastructure deployment, with RoW charges varying from 1 percent to 70 percent of the additional expenses associated with fiber optic installations, depending on the state.

The GSMA leader emphasized that this inconsistency not only obstructs the deployment of essential infrastructure such as fiber optics but also jeopardizes the sector's capacity to fund necessary expansions.

However, she noted that if the agreed rate of 145 naira per meter were consistently applied, the cost of deploying fiber nationwide could be reduced by 15 percent, making it more viable for operators to invest in network expansion.

Wamola urged the government to simplify taxes, standardize right-of-way charges, and minimize multiple levies to foster investment and promote digital inclusion.

She contended that reforming telecom taxes would not only benefit the industry but also stimulate economic growth, enhance connectivity, and improve access to digital services for millions of Nigerians.