Telecom And The ‘Hike Economy’

The stark reality of un­avoidable price hikes has woven itself into the fabric of the average Nigeria’s daily existence, a grim hallmark of an unyielding cost-of-living crisis. What began with increases in petrol, gas, trans­portation, interest rates, food, and power has now extended to telecommunications services. This unrelenting rise in costs has prompted many Nigerians to label the phenomenon the “Hike Economy.” The term encapsu­lates the frustration and despair of millions as essential services and commodities become increas­ingly unaffordable. At its core, this crisis is not just an economic challenge but a social one, threat­ening the very fabric of a society striving for development and sta­bility. Understanding this trend and its implications has never been more critical. The pervasive impact of the “Hike Economy” demands urgent, innovative in­terventions to alleviate its burden on households and businesses, of­fering a glimmer of hope in these challenging times.

In 2023/2024, Nigeria recorded one of the highest inflation rates globally, with figures hovering between 25% and 36.4% by No­vember 2024. This marked the highest inflation peak in 30 years, pushing more citizens into pover­ty. Inflation has permeated every aspect of the economy, making it seem as if Nigerians are destined to face new price increases daily. For example, the price of a 50kg bag of rice—a staple food item— rose from ₦40,000 in early 2023 to over ₦100,000 by late 2024, creat­ing food insecurity for millions of households. The term “Hike Economy” reflects the relentless escalation of costs burdening households and businesses alike.

The latest manifestation of the “Hike Economy” is the impending increase in telecommunications costs. With the active support of the regulator, telecom companies are poised to raise prices, citing rising energy costs and currency devaluation. For instance, a lead­ing telecom provider recently an­nounced a 15% increase in data tariffs. While these reasons seem plausible, they warrant closer scrutiny. Rising energy costs have been exacerbated by Nigeria’s re­liance on imported fuel and the lingering effects of subsidy re­moval. Currency devaluation, a persistent issue in the Nigerian economy, raises operational costs for telecom providers who rely on imported technology and infra­structure. However, these factors do not tell the whole story.

Consumers often question why telecom companies fail to lower prices when such factors stabi­lize. For example, telecom tariffs remained unchanged during pe­riods of lower global crude oil prices, which typically reduce energy costs. This one-direction­al trend fuels skepticism and frustration among consumers. A glaring example is the rollout of 5G technology in Nigeria. Touted as a game-changer for connectiv­ity, its implementation has been marred by high costs passed on to consumers despite promises of affordability and accessibili­ty. Such practices underscore the need for regulatory oversight to ensure price adjustments are jus­tified and reflective of market re­alities. Without mechanisms for fairness and transparency, these hikes erode consumer trust.

The far-reaching effects of these price hikes deepen finan­cial struggles for the average Nigerian. With household bud­gets already stretched, further increases in telecom costs will push many to the brink. For in­stance, a family spending ₦30,000 monthly on telephone and inter­net services may need to adjust to a ₦37,000–₦40,000 expense, forcing cutbacks on other essen­tial needs. This move starkly con­trasts the government’s promise to reduce inflation to 15% by 2025, raising questions about policy co­herence.

Higher telecom costs threaten Nigeria’s vision of leveraging technology to drive economic re­vival. Affordable connectivity is a linchpin for progress in critical sectors like digital banking, edu­cation, healthcare, agriculture, and e-governance. A price hike risks derailing advancements in these areas, undermining efforts to build a robust, technology-driv­en economy.

Increasing telecommuni­cations prices will exacerbate poverty and widen existing in­equalities, hitting lower-income families the hardest. Informal sector workers who depend on affordable mobile data to access gig work opportunities may find it harder to stay connected. Small businesses, which rely heavily on affordable telecommunications for operations, marketing, and customer engagement, will face additional strain. A local trade group estimates that a 10% in­crease in telecom costs could re­duce small business profitability by up to 7%, potentially leading to closures. Education, increasingly reliant on digital platforms, will also suffer. Higher costs will limit students’ access to online learn­ing resources, putting global com­petitiveness further out of reach.
Telemedicine and remote healthcare services, which rely heavily on internet connectivity, may become less accessible to ru­ral and underserved populations, widening healthcare disparities. Farmers and rural communities increasingly depend on mobile technology for market access, weather updates, and agricul­tural extension services. Rising telecom costs could disrupt these advancements, reducing produc­tivity and economic opportuni­ties. For instance, a farmer coop­erative in northern Nigeria that uses mobile apps to connect with buyers and monitor crop prices could be cut off from critical mar­ket information due to increased data costs.

The telecommunications reg­ulator plays a pivotal role in nav­igating this crisis. Regulatory bodies must prevent unjustified price increases, push for service quality improvements without adding financial burdens on consumers, and advocate for in­novative solutions that balance operator needs with consumer affordability. For example, regu­lators in South Africa have suc­cessfully implemented price caps tied to inflation indexes to protect consumers. Such measures in Ni­geria could mitigate the effects of the “Hike Economy” while supporting technological and economic growth. Transparency in telecom operators’ cost struc­tures can also help consumers understand the rationale behind price adjustments, building trust and accountability.

The National Association of Telecoms Subscribers (NAT­COMS) has opposed the planned hike, calling it insensitive in an already challenging economic environment. Their argument highlights the undue burden these increases place on consum­ers and the threat to Nigeria’s digital economy. As more Nige­rians embrace digital solutions for education, healthcare, and commerce, higher telecom prices could force many to cut back on usage or disconnect entirely. This would reverse years of progress in digital inclusion, especially in underserved areas where connec­tivity is vital for accessing gov­ernment services and economic opportunities.
Addressing the “Hike Econo­my” requires more than opposi­tion; it calls for actionable strat­egies. These include encouraging renewable energy use to reduce operators’ power costs, offering tax incentives to telecom provid­ers committed to affordable pric­ing, promoting public-private partnerships for infrastructure development, and establishing a price review mechanism to en­sure fairness and transparency. For example, shared broadband networks in Kenya have reduced costs for telecom operators, re­sulting in more competitive data pricing for end users. Adopting similar strategies in Nigeria could alleviate the financial strain on both operators and consumers, creating a win-win scenario.

Connectivity is the backbone of Nigeria’s service-based econ­omy. Price hikes in telecom­munications risk jeopardising economic recovery, worsening inequalities, and stifling tech­nological progress. Regulatory ingenuity is essential to combat­ing these challenges. The focus must shift towards maintaining affordability, improving service quality, and ensuring telecom­munications remain a catalyst for national development rather than a source of financial strain. Addressing the “Hike Economy” with empathy and innovation will be key to securing a pros­perous and equitable future for all Nigerians.