Business
Nigerians, businesses groan under multiple, high tariffs’ regimes
…as rebased inflation rate fails to lower prices of goods, services
Shun of the politics and media blitz of government economic policies, Nigerians in the past 18 months under the President Bola Tinubu administration are virtually at their wits’ end on surviving the next day, as the cost of goods and services have remained unbearably high.
Similarly, prices of goods and services have risen to unaffordable levels for most people, because businesses, apart from grappling with hostile operating environments characterized by poor infrastructure, such as power, road, security, forex scarcity, etc., are also encumbered by the increasing rate of new tariffs on basic services, which seem to add fuel to the fire of hardship.
With the government bent on subsidy removal on all public services, the challenge of Nigerians and businesses has been compounded from poor and adequate supply to high cost as the government continues to review the tariffs upward to commercial or price efficient level.
Buffeted on all sides by a slew of hard-hitting economic measures by the current government, chief of which is the removal of fuel subsidies and unification of the naira exchange rate, which has had a domino effect on virtually everything from rising prices of basic commodities to hike in transport fares, tuition fees, rents, inflation and other basic needs of life.
Now, as if these challenges are not enough, Nigerians are being forced to navigate their way through a series of either new levies or increases in the existing ones. Recently, the Nigeria Customs Service, NCS, made matters worse by introducing a new levy on imported goods, which both NACCIMA and manufacturers have decried, noting that it will affect prices, which are already to high.
These changes are adding to the daily expenses of millions of Nigerians already struggling with harsh economic conditions, as well as businesses across the country.
Though the government claims the adjustments are aimed at boosting revenue for companies and government agencies amid rising operational costs driven by Tinubu’s economic reforms, they are worsening the financial burden on citizens.
“The cost of living continues to rise, and purchasing power is declining, leaving many Nigerians feeling the strain, there is a need for policies to wear a human face”, Professor Adeagbo Moritiwon told Business Hallmark when asked to access the new tariffs regime.
Some of the tariffs include an Electricity tariff hike. The Nigerian Electricity Regulatory Commission (NERC) on April 3, 2024, approved an increase for customers under the Band A classification.
Musliu Oseni, NERC vice-chairman, noted that beginning from April 3, customers under the classification who receive 20 hours of electricity supply daily, will pay N225 per kilowatt (kW), up from N66.
The adjustment, he claimed, was to reduce the amount the federal government spends on subsidizing electricity, which in the 2024 fiscal year was about N1.14 trillion. Yet half of the country is in darkness, and most of the customers are not metered 12 years after the privatization of the sector.
The federal government said it aims to gradually phase out electricity subsidies. Another disturbing news entered the fray on January 30, though it was quickly dispelled.
On January 30, reports quoted Olu Verheijen, Special Adviser to the President on Energy, as suggesting that Nigeria’s power prices needed to rise by approximately 66 percent for many consumers to reflect the actual cost of electricity supply. She reportedly emphasized the need to balance higher tariffs with subsidies to protect low-income households.
However, in a statement released a week later, Verheijen stated that her remarks had been “misrepresented,” urging the public to seek accurate context regarding her position on electricity pricing.
“It has become necessary to clarify media reports suggesting an imminent 65 percent increase in electricity tariffs. This is a misrepresentation of what I said in a recent press interview. I highlighted the fact that, following the increase in Band A tariffs in 2024, current tariffs now cover approximately 65 percent of the actual cost of supplying electricity, with the Federal government continuing to subsidize the difference.” Many saw this as mere semantics, as the implication of her statement is that 65 percent of the current should go to relieve the government from the subsidy.
While Nigerians were yet to fully digest the fact that electricity tariffs may still rise, telcos announced the need for a 100 percent hike in call and data rates to save the sector from total collapse as a result of the high inflation rate from the removal of fuel and exchange rate subsidies, thereby tripling their costs of operations. However, the minister, Olatunji Ojo’s explanation that the hike would not go above 60 percent further outraged Nigerians who criticized him for speaking for the telcos rather than for the people.
Eventually, it was agreed to 50 percent hike, which is almost making the services unaffordable for many people and adding to over-burdened citizens, who are barely earning a living. The 2.50% hike in calls, data, and SMS has made life unbearable for many Nigerians.
In January 2024, the federal government, through the Nigerian Communications Commission (NCC), permitted telecom companies like MTN, Airtel, Glo, and others to raise their prices for the first time since 2013. However, the NCC limited the tariff increase to 50%, even though the companies wanted to double their prices. But before then, the telcos were posting staggering profits of hundreds of billions of naira. For instance, MTN’s 2023 profit was almost a trillion naira, but the devaluation of the local currency seriously undercut their performance.
At that period, Wale Edun, the finance minister, noted that telecom prices would be subjected to periodic review regularly to help the industry cope with rising costs and inflation.
Edun’s disclosure met a hailstorm of criticism from the public and the Nigeria Labour Congress (NLC), which called it a blow to workers’ well-being.
Then on February 11, the House of Reps urged the government to pause the 50% price hike to douse tension. Despite this, MTN Nigeria had already increased its prices, with a 15GB weekly data plan jumping from N2,000 to N6,000, and only last week, Airtel followed suit, which prompted NLC to instruct members to boycott MTN between 12 to 2 pm beginning from February 15 to 28, after which picketing and other actions will follow should the telco fails to revert to status quo. MTN controls 50 percent of the market.
As if this wasn’t enough and prearranged, Nigerians were taken aback when the Central Bank of Nigeria (CBN) recently adjusted auto teller machines (ATM) transaction fees to increase revenue for the financial sector, which has seen regulatory headwinds more than at any other period in history. The new charges said to cover rising costs and improve banking efficiency, will take effect from March 1, 2025.
Under the new policy, customers will not be charged for using their bank’s ATMs at branches, malls, or other public places.
However, withdrawing N20,000 from another bank’s ATM will attract a N100 fee. If the ATM is at a mall or other public location, an extra charge of up to N500 may apply.
Before now, customers could withdraw three times for free every month from other banks’ ATMs. This will no longer be allowed.
Then, recently, 15% of Port Charges were introduced. For the first time in 32 years, the Nigerian Ports Authority (NPA) increased port tariffs, a move that will impact importers and exporters. Many affected by this increase have started complaining about the outcomes of these, as consumers will ultimately be forced to bear the cost.
Abubakar Dantsoho, NPA’s managing director, had noted that the hike was needed to fund new technology systems for ports, like the Port Community System (PCS) and National Single Window (NSW), due to rising inflation.
However, the Manufacturers Association of Nigeria (MAN) criticized the increase, saying businesses are already struggling with high costs, foreign exchange issues, and economic challenges.
Earlier this month, Customs raised the free-on-board (FOB) charges to four percent.
However, the Lagos Chamber of Commerce and Industry (LCCI) urged the government to pause the charge, as businesses were not given prior notice to prepare.
“A 4% levy on imports, which will inevitably raise the prices of goods and services,” Dr. Olufemi Omoyele of the Osun State University Department of Entrepreneurship told Business Hallmark.
Former Senate President Bukola Saraki also warned the charge would hurt businesses and consumers. Following public outcry, the NCS suspended the 4% charge on February 11, citing ongoing talks with Finance Minister Wale Edun.
The government is also considering new toll charges, adding to the cost of transportation.
Professor Moritiwon noted that the financial capacity of ordinary citizens has been overwhelmed given that salaries could no longer cope with rising prices, the recent increase in wages has been swallowed by inflation he noted. He added that “taxing the people, who are not economically productive doesn’t make sense. Where do the government expect ordinary citizens who have no means of livelihoods or whose wages or earnings could not guarantee them normal meals, where are they going to get the money to fund the new levies or the readjusted ones?”
Abiola Adeola, a mechanic said, “I only recharge my phone twice a week with N300, what I do more is flashing people I want to call. I don’t know how they expect us to get money, these increases are not fair.”
“What I do is buy N1000 data every week, and I prefer to do WhatsApp calls than direct calls which is a rip-off. Before you know it, you will just discover that your credit has finished,” Mrs. Josephine Okonkwo, a trader at Alakuko market, voiced her frustration to this medium.
