The President of the Trade Union Congress (TUC), Festus Osifo, has attributed the recent 50% increase in telecom tariffs by operators in Nigeria to the continued depreciation of the Naira.
Speaking on Arise Television’s Prime Time, Osifo explained that the rising cost of foreign exchange (FX) is significantly impacting the operational expenses of telecommunications companies, prompting them to adjust their tariffs upward.
Osifo recalled that the TUC had previously warned about the potential ripple effects of the fluctuating FX rate on essential services in Nigeria.
He cited Zimbabwe’s historical hyperinflation as a cautionary example, emphasizing that unchecked currency devaluation could lead to severe economic distress.
“Sometime last year, we addressed a World Press Conference where we identified the root cause that would trigger a lot of increment in social services, and that was our FX—which is our exchange rate. When the Naira depreciates significantly, the cost of operations for businesses rises. To stay profitable, businesses have no choice but to adjust their revenue, and the easiest way to do that is by increasing the price of their goods and services,” he said.
Burden on Consumers
The TUC president stressed that the rising operational costs for telcos, largely driven by forex fluctuations, are being passed down to consumers. He noted that as the Naira weakens, expenses denominated in foreign currencies, such as the purchase of network equipment and software licenses, become more expensive.
“The cost of their [telcos’] operations in Naira equivalent is going up. The reason that cost is going up is because they have to adjust revenue to remain profitable. If a company’s cost outweighs its revenue, it will operate at a loss. To avoid that, they increase prices, thereby transferring the financial burden to the consumers,” Osifo explained.
Call for Government Intervention
Osifo urged the federal government to take urgent steps to stabilize the Naira and mitigate the impact of FX volatility on businesses and consumers. He argued that if the current trend continues unchecked, it will further escalate the cost of living and reduce the purchasing power of Nigerians.
“When our Naira was sliding down when it was being devalued, we argued that if you leave this unchecked, it’s going to trickle down to literally everything. Today, we are seeing that prediction come true, with telecom tariffs being the latest example,” he noted.
The telecom industry is heavily reliant on foreign components, including infrastructure, network equipment, and software, which are predominantly priced in dollars.
This dependence on FX makes telcos particularly vulnerable to exchange rate fluctuations, leading to price hikes in an attempt to maintain profitability.
As Nigerians grapple with the impact of the tariff hike, stakeholders are calling for policy measures that will strengthen the local currency and create a more stable business environment.
Experts suggest that government interventions in FX management, improved local production of telecom infrastructure, and incentives for businesses to reduce reliance on imported goods could help mitigate the rising costs.
