The Information Technology Law 2024 recently signed by Governor Usman Ododo of Kogi State has sparked concerns about its impact on digital access in Nigeria.
Governor Ododo’s quick approval of six new bills, including the creation of a State Electricity Market and Electricity Regulatory Commission and the Information Technology Law 2024, are quick wins for Kogi State’s social and economic advancement. The Governor also emphasized that these laws, collectively known as the People’s Acts, directly affect the lives of residents. “These laws combined together can be referred to as the People’s Acts. All the laws have a direct bearing on the lives of our people and this is the reason we are here,” he said.
But a deeper assessment of some of these laws indicates a bigger issue.
For instance, the Kogi Technology Law was set up to establish policies, infrastructure, and a roadmap to drive information technology development in the state. The law introduces a new 0.5% income tax on companies across the telecommunications, banking, insurance, and pensions sectors. The law also empowers the Kogi State Internal Revenue Service to enforce these levies, with penalties for the non-payment including fines exceeding ($1000) including prosecution of company representatives. Kogi State’s new law mimics the levies by another State, the Kaduna State Government, which arbitrarily introduced an annual base station fee of N500,000 ($500) per base station, to telecommunications infrastructure providers. This is an addition to existing licenses and fees being paid by telecommunications companies to the Local, State, and Federal Governments.
Nigerian telecom operators face up to 49 different taxes and fees, including Aviation Height Clearance tax, Business Premises tax, Sewage Fees, Annual Operating Levy (AOL), Right of Way Charges, Bridge Crossing, Community Access Fee, Economy Development Fee, Companies Income Tax, Nigeria Police Trust Fund Levy among others. This multiple taxation hinders investment and increases service costs for consumers.
Kogi has one of the least developed telecommunications networks in Nigeria, with 2602 km of fiber, for a population of over 4.1m people. Kaduna has just a little over 3000km for its 8.3m people. Yet the Northern region, where these states are, has the highest rate of out-of-school children in Nigeria.
According to The United Nations Children’s Fund (UNICEF), one in every five out-of-school children in the world is in Nigeria, and 50% of that is in the North.
Governments around the world are investing more in digital infrastructure, creating critical national infrastructure policies that streamline permitting processes and incentivize private sector investment, and creating open-access shared networks that address unserved areas. Regulations such as this limit investment into these states by existing operators, while curtailing entry by new operators. When it becomes a choice between investing in new infrastructure or paying yet another arbitrary and unlawful tax, operators will prefer to expand to other countries, with more mature and harmonized regulatory regimes. And this is a best-case scenario. For local operators who are unable to grow profitably under unfriendly regimes, it usually starts with missed base station colocation fees and exacerbated service reduction till Chapter 9. And states, the real beneficiaries, would have lost out of a transformational opportunity to digitize and improve economic outcomes for their citizens.
Nigeria and indeed, Africa have significant institutional infrastructure voids, with Africa currently possessing a minimal global share in data centers (1% of the world’s data centers is in Africa) and fiber networks (Africa has 0.024% of the world’s fiber networks). There is a pressing need to rethink regulatory approaches. Enabling operators to invest more in digital infrastructure could unlock significant economic opportunities and drive sustainable growth across the continent. Regulators should focus on delivering supply-side outcomes first, such as building infrastructure, incentivizing operators, and creating a supportive regulatory environment
