MUTIPLE TAXATION IS AFFECTING GSM GROWTH IN NIGERIA

Telecoms

Executive Vice Chairman of the Nigeria Communications Commission (NCC), Ernest Ndukwe, has warned that the numerous taxations and other levies imposed on GSM operators by states and local governments are discouraging further investments in the sector by GSM companies. Ndukwe who spoke to Vanguard exclusively last week said as a result of these levies many operators have not been able to build base stations and other infrastructure in may parts of the country for the past one year.

He explained that if operators did not build new base stations, they could not increase their capacity and the uptake of new subscribers would be retarded.

The NCC EVC said local and state governments and other state agencies should not look at the short term benefit of GSM by imposing taxes on the operators but see the service as a development tool. He said these states received a lot of revenue from the operations of GSM companies indirectly much more than they get through the imposition of levies. For instance, he said, all the states and local governments benefit from VAT on GSM calls; they also benefit from the taxes paid by the employees of GSM companies; and they also give employment to unemployed youths.

He explained that the NCC and government empathized with the operators on their plight, stressing that the issue was being tackled at the highest level of government. Said he: "We don't think that state goverments should be penalizing operators with any available opportunity. On the contrary they should actually be encouraging them because we believe this is better for development.

"When they finish installing, they employ people for the benefit of everybody. They share from the VAT generated from GSM activities. Those employed pay taxes to them. So it is not as if these levels of government do not get something at all.

"Every state in Nigeria is making one form of resource or the other from GSM. The operators buy things from the local market; their employees do and they contribute to the growth of the local economy. So there are good reason why rather than fight operators, states should actually encourage them."

The impact of multiple taxation on GSM operators is already being felt in the Federal Capital Territory where the authorities are requesting a whoopy N3 million for every mast erected by GSM operators. There were some indications at the weekend that some operators were already shunning the Abuja market because of these fees.

The operators say that returns from the Abuja market are not as encouraging as they hoped and that the new fees and levies imposed on their operations by the FCT government makes it unnecessary to continue to invest in the city. Indeed one of the operators swore that for the past one year no one has built a base station in Abuja.

The operators are are frowning at the FCT's directive banning all recharge card hawkers who constitute the life wire of the business for operators.

Some of the operators explained that despite the multiple levies in Lagos, they could still continue to put in more investment because of the lure of the market but cannot justify more investment in Abuja with the new levies and other regulations concerning their business.

Ndukwe contended that Nigerians were basking in the euphoria that Nigeria now has 20 million lines. He said considering the country's population, that was not enough, regretting that Nigerians were discouraging further investment in the sector through the imposition of different types of levies.

Said he: "There are many many more parts of Nigeria that have not been covered. Tele-density is still below 20. We want it to be 40. We can't achieve that by making people pull back on investment. And there are some places today where new base stations have not been built for the past 12 months because of the restriction of taxes that the state government and local governments impose in such areas.

"And we are complaining of poor quality of service. Unless you allow operators to install, we cannot achieve our objective. GSM should be seen as an agent of development across Africa, not as a revenue-generating tool. For instance, the things that are happening at FAAN and NCAA. But thank God we have new gentlemen in these organizations now and they have been co-operative so far."

Vanguard