IMF proposal rekindles debate over telecom taxes in Nigeria

The International Monetary Fund’s (IMF) recommendation that Nigeria consider introducing excise duties on telecommunications services has reopened a long-running debate over whether the country’s telecom sector should face additional taxes at a time when operators and consumers are already grappling with rising costs.

The recommendation, contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, comes barely one year after telecom operators implemented a 50 percent increase in tariffs for calls, SMS and data services.

While the IMF believes additional tax measures could help Nigeria raise much-needed revenue, stakeholders in the telecom sector warn that any new levy on telecommunications could eventually translate into higher costs for millions of subscribers and slow the country’s digital transformation efforts.

The proposal is not government policy and remains advisory. However, it has revived concerns over the balance between revenue generation and the need to keep digital services affordable and accessible.

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A familiar debate returns

This is not the first time telecom taxes have sparked controversy in Nigeria.

Previous attempts to introduce excise duties on telecommunications services were met with strong opposition from operators, consumer groups and digital economy advocates, who argued that telecom services have become essential infrastructure rather than luxury items.

The latest IMF recommendation has brought the issue back into focus.

According to the IMF, Nigeria may need additional tax policy measures over the medium term to strengthen public finances and create more fiscal space for infrastructure, healthcare, education and social programmes.

The Fund specifically mentioned telecommunications excise duties among several possible options.

For many Nigerians, however, the timing has raised concerns.

Subscribers are still adjusting to the impact of the 50 percent tariff increase approved in 2025, which significantly increased spending on airtime and data services.

With inflation continuing to affect household budgets, many consumers worry that any additional tax on telecom services could further increase the cost of staying connected.

Industry warns of potential impact

Telecom operators have consistently argued against additional taxes on the sector.

The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has repeatedly maintained that operators already face enormous financial pressure from inflation, foreign exchange challenges, energy costs and multiple taxation.

According to the association, telecom companies have spent years absorbing rising operational expenses while continuing to invest in network infrastructure and service expansion.

Industry stakeholders argue that introducing additional taxes could increase financial pressure on operators, potentially affecting investment plans and future network upgrades.

There are also concerns that operators may eventually have little choice but to pass some of the costs to consumers if new levies are introduced.

Investment versus taxation

The renewed debate comes at a critical period for Nigeria’s telecom industry.

Operators are investing heavily in expanding 4G and 5G networks, deploying fibre infrastructure and improving service quality across the country.

Karl Toriola, MTN Nigeria chief executive officer, has repeatedly stressed the need for sustained investment to meet growing demand for data services and improve network performance.

Industry analysts believe that while government revenue needs are legitimate, policymakers must also consider the potential impact of additional taxes on investment in digital infrastructure.

According to experts, reduced investment could slow network expansion, delay service improvements and affect efforts to bridge the country’s digital divide.

Subscribers fear higher costs

Consumer groups have also expressed reservations about any move to impose additional telecom taxes.

The National Association of Telecoms Subscribers (NATCOMS) has argued that consumers are already burdened by rising living costs and should not face additional charges on essential communication services.

Its president, Adeolu Ogunbanjo, has previously pointed out that the telecom sector is already subject to numerous taxes and levies imposed by different levels of government.

According to subscriber advocates, any additional tax burden is likely to be reflected in the final prices paid by consumers.

This concern is particularly significant because telecommunications now play a central role in everyday life, supporting communication, online learning, digital banking, remote work, e-commerce and access to government services.

Beyond the issue of consumer pricing, the IMF recommendation has reignited a broader conversation about the future of Nigeria’s digital economy.

Telecommunications have become one of the country’s most important economic enablers, supporting fintech innovation, digital entrepreneurship, financial inclusion and technology-driven growth.

Economists say the debate is no longer simply about taxation but about how Nigeria can increase government revenue without undermining sectors that are driving economic transformation.

Some experts argue that improving tax administration, widening the tax base and reducing revenue leakages could provide more sustainable solutions than imposing additional levies on strategic sectors.

Others maintain that every major sector must contribute to strengthening government finances, especially as Nigeria seeks to improve public services and reduce fiscal pressures.

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What happens next?

For now, the IMF’s recommendation remains advice rather than a policy directive.

Any decision to introduce telecom excise duties would require consideration and approval by Nigerian authorities.

However, the recommendation has already revived one of the most contentious debates in the country’s digital economy: how to balance revenue generation with affordable connectivity.

As government, industry players and consumer groups weigh the proposal, the outcome could have implications not only for telecom pricing but also for the pace of Nigeria’s digital growth in the years ahead.