TUC president blames foreign exchange disaster for 50% telecom tariff hike in Nigeria
The President of the Commerce Union Congress (TUC), Festus Osifo, has attributed the current 50% enhance in telecom tariffs by operators in Nigeria to the continued depreciation of the Naira.
Talking on Come up Tv’s Prime Time, Osifo defined that the rising value of international change (FX) is considerably impacting the operational bills of telecommunications corporations, prompting them to regulate their tariffs upward.
Osifo recalled that the TUC had beforehand warned in regards to the potential ripple results of the fluctuating FX charge on important companies in Nigeria.
He cited Zimbabwe’s historic hyperinflation as a cautionary instance, emphasizing that unchecked foreign money devaluation might result in extreme {economic} misery.
“Someday final 12 months, we addressed a World Press Convention the place we recognized the foundation trigger that might set off numerous increment in social companies, and that was our FX—which is our change charge. When the Naira depreciates considerably, the price of operations for companies rises. To remain worthwhile, companies haven’t any alternative however to regulate their income, and the best means to try this is by growing the value of their items and companies,” he mentioned.
Burden on Shoppers
The TUC president careworn that the rising operational prices for telcos, largely pushed by foreign exchange fluctuations, are being handed right down to customers. He famous that because the Naira weakens, bills denominated in foreign exchange, corresponding to the acquisition of community gear and software program licenses, develop into costlier.
“The price of their [telcos’] operations in Naira equal goes up. The explanation that value goes up is as a result of they’ve to regulate income to stay worthwhile. If an organization’s value outweighs its income, it should function at a loss. To keep away from that, they enhance costs, thereby transferring the {financial} burden to the customers,” Osifo defined.
Name for Authorities Intervention
Osifo urged the federal authorities to take pressing steps to stabilize the Naira and mitigate the affect of FX volatility on companies and customers. He argued that if the present pattern continues unchecked, it should additional escalate the price of dwelling and scale back the buying energy of Nigerians.
“When our Naira was sliding down when it was being devalued, we argued that if you happen to go away this unchecked, it’s going to trickle right down to actually all the things. At the moment, we’re seeing that prediction come true, with telecom tariffs being the most recent instance,” he famous.
The telecom business is closely reliant on international parts, together with infrastructure, community gear, and software program, that are predominantly priced in {dollars}.
This dependence on FX makes telcos notably weak to change charge fluctuations, main to cost hikes in an try to keep up profitability.
As Nigerians grapple with the affect of the tariff hike, stakeholders are calling for coverage measures that may strengthen the native foreign money and create a extra secure enterprise surroundings.
Consultants counsel that authorities interventions in FX administration, improved native production of telecom infrastructure, and incentives for companies to scale back reliance on imported items might assist mitigate the rising prices.
