Telecom Tariff Increase Could Help Tame Inflation, Says Rewane

Economic analyst Bismarck Rewane has suggested that a hike in telecom tariffs could play a role in reducing inflation in Nigeria. Speaking at a recent economic forum, Rewane, who is the Managing Director of Financial Derivatives Company, argued that an adjustment in telecom pricing could contribute to fiscal stability and indirectly ease inflationary pressures.

Rewane explained that higher telecom tariffs would increase government revenue through taxes and levies, providing a buffer for the fiscal deficit. Additionally, a tariff hike could regulate excessive demand in the telecommunications sector, aligning it more closely with supply and reducing market distortions.

“An upward adjustment in telecom tariffs would create a cascading effect that stabilizes the economy in the long term,” Rewane said. He noted that while the move might initially strain consumer budgets, it could spur investment in infrastructure, improving service delivery and boosting productivity in the sector.

The proposal has, however, sparked mixed reactions. Critics argue that increasing telecom costs could disproportionately affect low-income households and small businesses that rely heavily on affordable communication. Some experts caution that such a measure could exacerbate the cost-of-living crisis in the short term.

On the other hand, proponents believe the tariff adjustment could encourage more efficient use of telecom services, reducing overconsumption and fostering a healthier balance in the economy. They also point out that better infrastructure, funded by the increased revenue, would enhance connectivity and support economic growth.

The telecommunications sector has been a key driver of Nigeria’s economy, contributing significantly to GDP. With inflation rates remaining stubbornly high, policymakers are exploring unconventional strategies to stabilize the economy. While Rewane’s proposal adds an interesting perspective to the debate, its practicality and impact will depend on careful implementation and measures to cushion vulnerable populations.

As discussions continue, the focus will likely shift to finding a balance between generating revenue, supporting economic growth, and protecting consumers from undue financial hardship.