The Intersection of Telecom and Nigeria’s Hike Economy

The soaring costs of goods and services in Nigeria have become an inescapable reality for the average citizen, marking the ongoing cost-of-living crisis that continues to stretch household budgets and amplify economic hardships. Initially, price hikes affected essential sectors such as petrol, gas, transportation, interest rates, food, and power, but this relentless surge has now expanded to include telecommunications services. This escalating pattern of rising costs has led many Nigerians to coin the term “Hike Economy,” capturing the collective frustration and sense of helplessness experienced by millions as the prices of basic necessities spiral further out of reach. The “Hike Economy” represents not only an economic challenge but a profound social issue, threatening the stability of a society striving for progress. As the impacts of this crisis deepen, understanding its dynamics and finding solutions becomes more urgent than ever.

Nigeria’s inflation rate reached alarming heights in 2023 and 2024, with figures fluctuating between 25% and 36.4% by November 2024, marking the highest inflationary peak in over three decades. This drastic rise in prices has pushed a significant portion of the population into poverty, as everyday goods become unaffordable. The inflationary pressures are felt across all sectors, and the country seems to be on the brink of a perpetual cycle of price hikes. For instance, the cost of a 50kg bag of rice, a staple food for many Nigerian households, has risen dramatically from ₦40,000 in early 2023 to over ₦100,000 by late 2024, contributing to the widespread food insecurity faced by millions. The term “Hike Economy” captures this relentless escalation, which is putting a strain on families and businesses alike.

One of the latest developments in this ongoing price spiral is the impending increase in telecommunications costs. Telecom companies, with the backing of the regulatory bodies, are preparing to raise prices, citing factors such as rising energy costs and the devaluation of the Nigerian currency. For example, a major telecom provider has announced a 15% increase in data tariffs, which, while seemingly justifiable, raise questions about the transparency and fairness of such price hikes. Although rising energy costs, particularly from Nigeria’s dependence on imported fuel, and currency devaluation are contributing factors, there is skepticism among consumers about the justification for these price increases. Telecom companies have not lowered their prices in the past, even when global oil prices fell, which suggests that these hikes may not be entirely due to the stated reasons.

One glaring example is the introduction of 5G technology in Nigeria, which was expected to enhance connectivity and bring affordability to users. However, the implementation of 5G has been overshadowed by high costs that have been passed on to consumers, despite promises that it would improve access at affordable rates. These practices have raised concerns about the fairness and accountability of the telecom sector, underscoring the need for stronger regulatory oversight to ensure that price increases are justified and reflective of market realities. The lack of mechanisms to guarantee fairness in pricing has contributed to a growing erosion of consumer trust, as Nigerians are left questioning why prices continue to rise with little to no explanation.

For the average Nigerian, these price increases deepen the financial struggles they face daily. With many households already stretched to their financial limits, the rise in telecom costs will force families to make even greater sacrifices. For instance, a family that spends ₦30,000 monthly on phone and internet services may now face an expense of ₦37,000 to ₦40,000, requiring them to cut back on other essentials. This comes at a time when the Nigerian government has set a target to reduce inflation to 15% by 2025, prompting questions about the government’s ability to meet this goal in light of the ongoing price hikes. The rising cost of telecommunications services threatens Nigeria’s vision of using technology to spur economic growth, as affordable connectivity is critical to driving progress in sectors such as digital banking, education, healthcare, agriculture, and e-governance. Further price hikes could undermine the country’s efforts to build a technology-driven economy, stalling progress in key areas that rely on digital access.

The impact of higher telecom costs will also disproportionately affect lower-income Nigerians, exacerbating existing inequalities. Many informal sector workers who depend on affordable mobile data for gig work opportunities may struggle to stay connected. Small businesses, which rely heavily on telecommunications for operations, marketing, and customer engagement, will also be significantly impacted. A local trade association estimates that even a 10% increase in telecom costs could reduce small business profitability by up to 7%, leading to potential closures. The education sector, which is increasingly dependent on digital platforms for learning, will also feel the strain. Higher telecom prices will limit students’ access to online learning resources, pushing Nigeria further behind in global competitiveness. Telemedicine and remote healthcare services, which have become essential in Nigeria’s rural areas, may also be less accessible due to rising telecom costs, worsening health disparities in underserved regions.

The agriculture sector, too, could suffer as many rural farmers rely on mobile technology for market access, weather updates, and agricultural support services. As telecom costs rise, these rural communities could find themselves cut off from vital information that could impact crop prices and market opportunities. For example, a cooperative of farmers in northern Nigeria that uses mobile apps to connect with buyers could find their access to crucial market data significantly limited by increased data costs, leading to reduced agricultural productivity and economic losses.

To mitigate the adverse effects of these price hikes, the telecommunications regulator must play a crucial role. Regulatory bodies must step in to ensure that price increases are fair and transparent, preventing operators from unjustifiably raising costs. They should advocate for service quality improvements without placing additional financial burdens on consumers and push for innovations that balance the needs of telecom operators with the affordability requirements of consumers. In countries like South Africa, regulators have successfully implemented price caps tied to inflation indexes to protect consumers, which could be an effective measure in Nigeria as well. Transparency in the cost structures of telecom operators can help consumers understand the reasoning behind price increases, fostering greater trust and accountability.

The National Association of Telecoms Subscribers (NATCOMS) has voiced its opposition to the planned price hikes, describing them as insensitive given the current economic climate. The association argues that the price increases will further burden Nigerian consumers and impede the country’s digital economy, particularly as more Nigerians rely on digital tools for education, healthcare, and commerce. Higher telecom prices could force many people to reduce their usage of these digital solutions, reversing the progress made in digital inclusion. For many underserved Nigerians, access to affordable connectivity is crucial for accessing government services, employment opportunities, and education.

Addressing the “Hike Economy” requires not just opposition but the implementation of concrete strategies that can alleviate the financial strain on both consumers and telecom providers. Encouraging the use of renewable energy to reduce telecom operators’ power costs, offering tax incentives to providers committed to maintaining affordable prices, and fostering public-private partnerships for infrastructure development could all contribute to reducing telecom costs. Additionally, implementing shared broadband networks, as seen in Kenya, could drive down operational costs for telecom operators and help reduce prices for consumers. Such initiatives, if adopted in Nigeria, could help create a more equitable and sustainable telecom sector.

Connectivity is the backbone of Nigeria’s economy, particularly in the service-based sectors. The threat of increasing telecom prices risks undermining the country’s efforts at economic recovery and technological advancement. Regulatory bodies must work to ensure that telecommunications remain an enabler of national development rather than a source of financial strain for citizens. Addressing the “Hike Economy” with empathy and innovative solutions will be key to securing a prosperous and equitable future for all Nigerians, one where the benefits of digital connectivity can be fully realized by all segments of society.