The issue of non unified and high cost Right of Way (RoW) has lingered unresolved for years in Nigeria’s telecommunications sector. However the notice of increase in these charges by over 1,200% in some states on Tuesday, 14 January 2020, prompted kick backs and disapproval by stakeholders, who say this damaging act contradicts promises of affordable internet for all, and is likely to harm the efforts of federal government to deepen broadband penetration, which subsequently undermines the national target for a digital economy.
News that 14 states, mainly in the South East and South West, including Lagos State have increased or plan to increase right of way charges sparked several reactions, even as the Federal Ministry of communications and digital economy disapproved the move in a press statement, saying that the hike disregards the resolutions reached by the National Economic Council (NEC) on uniform RoW charge of N145.00 per linear metre of fibre.
“We are therefore calling on all state governors, especially those that have made public their decisions to increase the RoW charges, to reconsider these decisions in the interest of Nigerians as well as for the socio-economic growth and development of the country. We also draw their attention that these decisions, if implemented, will result in an increase on the costs of operations of the telecoms operators, which will naturally be passed to the consumers,” Isa Ali Pantami, minister of communication and digital economy said.
Industry watchers say that unfortunately policy flip-flops in Nigeria is crippling businesses and could scare away potential economic investors, as irrational and immediate moves such as sudden increment in taxes for telecoms industry which contributes over 11.3% to Nigeria’s Gross Domestic Product (GDP) , is the same as killing the goose that lays the golden egg.
In a statement sent to BusinessDay, Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON) said;
“ATCON reiterates its commitment to work with the various state governments and agencies in providing an enabling environment for the establishment of more telecom and ICT companies in the states but the recent hike in the cost of Right of Way (RoW) did not augur well with the association because we know it is going to slow down development in the states.”
“Our members which are principally telecom and ICT companies rely heavily on the state governments and its agencies to make policies that promote further investment which would lead to building more telecom infrastructures that are needed by the citizenry, governance and businesses to deliver hitch free broadband services but with the recent upward review of the RoW, this might be difficult to achieve. We therefore appeal for a reversal of the cost back to what is being charged before,” the association stated.
Teniola told BusinessDay in a telephone interview that 14 states – Lagos, Ondo, Osun, Anambra, Adamawa, Kano, Kogi, Kaduna, Kebbi, Enugu, Ebonyi, Cross River, and Gombe State have raised or plan to raise right of way charges.
Nigeria’s telecom sector is the hardest hit by multiple taxies, increased levies and heavy fines. As at the last count, there is a minimum of 38 different taxes and levies that are paid by telcos. These exclude some of these taxes that are just levied by local governments that creep up on them.
Rotimi Akapo, a partner at Advocaat Law Practice and an expert in telecommunications law said issues like this only occur due to the short sightedness of government agencies.
“Everybody sees telecoms as a cash cow and they want a big bite of the apple but they are not being realistic. We have to realise that the telcos will push all these costs to the customers who are the end users; or they would simply walk away from operating in a particular state and then it is your citizens that would suffer poor service and not have the kind of facilities needed for development,” Akapo told BusinessDay in an interview.
The federal government stipulates that Right of Way (RoW) of about N145 per square metre should be paid as a one off fee; however, some state governments demand annual renewal.
“Unfortunately, I think our problem stems from the fact that we operate a federal system of government and these states believe that because they are autonomous and they are independent, they can determine whatever they want to do. For example, Lagos state has signed a memorandum of understanding (MoU) with the telcos and they agreed N500 per linear metre, so you can imagine if an MTN for example pays N145 on federal highway and in Lagos which is a commercial capital, where they probably make a lot more revenue than a lot of other states, they pay N500 and then they are now asked to pay up to N4,000 in another state for example, it becomes entirely disjointed.
Federal government has tried to bring a lot of these state agencies to work together with them so that there is a framework. It doesn’t have to be exactly the same amount in all states, because the costs of doing business in different states vary but there needs to be a framework where all government agencies will agree on price points,” Akapo said.
Recall that in 2013, NEC set up a committee comprising state governors and ministers to review the issues of multiple taxation in the telecoms industry and its impact. The committee resolved to harmonise the taxes applicable to broadband related activities and streamline the taxation management processes across Nigeria. Specifically, to deepen broadband penetration for the social and economic development of the country, the committee agreed to the uniform RoW charge of N145.00 per linear metre of fibre.
Jumoke Akiyode-Lawanson
