Nigeria works to increase the broadband penetration rate

Text size +-


Abuja has turned its attention towards infrastructure in a bid to boost telecoms quality and coverage. Given the efforts by the Nigerian Communications Commission (NCC) to improve services, along with the government’s aim to increase broadband penetration rate to 30% by 2018, there is recognition that the market faces significant infrastructure deficiencies.

Structural Aid

As of July 2016 some $68bn had been invested in the Nigerian telecoms sector, of which $35bn came from foreign direct investment, according to the NCC. However, there is acknowledgment that more than capital will be needed. In March 2017 the government again raised the prospect of classifying telecoms infrastructure as critical national assets, which would provide a stronger legal basis for dealing with cases of vandalism. This was first proposed in 2014, when the NCC argued that such a move would bring Nigeria in line with other markets like the US and EU, where infrastructure is protected by similar legislation.

Beyond issues of security, there is recognition that infrastructure gaps and unreliability are weakening services for consumers. In March 2017 the NCC declared a state of emergency for the service quality of national mobile networks. Subscribers lose as much as N730bn ($2.6bn) each year due to poor quality stemming from inadequate network capacity, and in the last quarter of 2016 alone operators experienced 458 cuts to their fibre networks. However, given slower economic conditions and tenuous security environments in certain regions, operators are constrained in their ability to deal with network unreliability. A lack of foreign exchange, erratic power supply, right-of-way issues and a heavy tax burden also impede the ability of operators to invest in their networks. However, in March 2017 the NCC stated that it was in discussions with the central bank over allowing operators better access to foreign exchange.

Tax Man

A confusing taxation regime is another challenge for operators. “Taxes inhibit broadband roll-out. The number and frequency of payments is not determined from the outset, so one cannot plan on investment,” Olusola Teniola, president of the Association of Telecommunications Companies of Nigeria, told OBG. Taxation is levied at the federal, state and local levels, and is often carried out on an ad hoc basis. Such execution affects incentives to expand coverage and roll out offerings to underserved areas.

Oluyemi Osinbajo, vice-president, has estimated that the country will require $25bn worth of annual investment for the next decade to meet telecoms and IT infrastructure requirements. However, it is not clear how this will be accomplished. Teniola told OBG, “It is unlikely that the government will achieve ubiquitous broadband using the same methods it used in the voice era. Unless the government can establish public-private partnerships, it will be very hard for it to unilaterally decide how to address digitisation in rural areas.”

Investment & Funding

The government has largely utilised the Universal Service Provision Fund (USPF) as a tool to achieve universal coverage, and it will help bring telecoms services to a further 40m people in Nigeria in 2017, according to the NCC. The 2017 budget included greater funding for the USPF, with 200 communities identified for telecoms improvements.

Private assets are helping support an increase in capacity as well. The introduction of Globacom’s Glo-1 submarine cable in 2011 ended the monopoly on international fibre bandwidth held by the now-defunct state-owned Nigerian Telecommunications. This has been supported by additional private investment in fibre infrastructure and other networks. Furthermore, MainOne, a West African services and network solutions company, has invested more than $240m in data centres and fibre-optic networks in metropolitan areas to date, which are seeing greater connectivity across the region. In the next five years the firm plans to invest a further $100m to improve broadband services in West Africa for a next-generation IP network, regional and metro terrestrial fibre-optics, and a tier-3 data centre.


You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Nigeria 2017

ICT chapter from The Report: Nigeria 2017

Cover of The Report: Nigeria 2017

The Report

This article is from the ICT chapter of The Report: Nigeria 2017. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart