Nigeria’s information, communication, and technology firms, including telecommunications companies in Nigeria, have been said to owe deposit money banks (DMBs) N1.69 trillion as of September 2024.
This development could be part of the reasons why telecommunication operators have recently called for a hike in the tariff payable by subscribers for data and voice calls.
Nigerian telecommunications companies have proposed a 100 per cent increase in their tariffs to the federal government. The proposal, which has been submitted to the Nigerian Communications Commission, aims to address rising operational costs, including inflation and increased service delivery expenses.
The disclosure was made by the Chief Executive Officer, MTN Nigeria, Karl Toriola, during an interview with a news medium in Nigeria recently.
The proposal which its approval is pending before the federal government, according to Toriola, was necessary for the sustainability of the industry, which has been facing significant financial pressures due to rising operational costs.
According to the Central Bank of Nigeria’s (CBN) quarterly statistical bulletin, the indebtedness of the telcos and the other ICT firms represents a year-on-year decrease of N68.04bn, or 3.9 per cent, compared to the N1.77tn owed in September 2023.
The decline reflects the impact of the CBN’s repeated interest rate hikes, which have tightened monetary conditions and discouraged borrowing within the sector.
Month-on-month, however, there was a slight increase of N31.61bn, or 1.9 percent, from the N1.66tn recorded in August 2024.
The decline in credit to the ICT sector throughout 2024 might be attributed to the CBN’s tight monetary policies, which have raised the cost of borrowing.
The apex bank has consistently hiked interest rates in a bid to curb inflation, with its monetary policy rate standing at a record high for most part of the year; six interest rate hikes was recorded in 2024, from 18.75 per cent in February 2023 to 27.50 percent in November 2024.
Interest rate hikes have an impact on the borrowing capacity of firms across board.
Despite the ICT industry, like other critical sectors, having continued to play a major role in Nigeria’s Gross Domestic Product growth.
For instance, the activities of Nigeria’s ICT sector contributed 16.35 percent to Nigeria’s real GDP in Q3 2024, a decline from the 19.78 percent it added in the previous quarter, according to the National Bureau of Statistics Q3 2024 GDP report.