The Chief Executive Officer of Financial Derivatives, Bismarck Rewane, has explained how the proposed tariff hike by telecommunication companies in Nigeria will help reduce inflation in the country.
Nigeria’s Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, on Wednesday, confirmed plans to increase telecoms tariffs, saying the Nigerian Communications Commission (NCC) would come up with modalities for the adjustment.
Rewane, who previously backed the plans for a tariff hike, said the move will make the sector more sustainable.
“Yesterday, the price of MTN shares went up by 10% to 220. The investors have already factored that in and are expecting a lot of good goodies,” Rewane said as a guest on Channels Television’s Business Morning on Thursday.
“But more important to think about is the fact that because of an increase in tariff and an increase in investment to make the industry sustainable, they’re going to see an increase in productivity, not directly but indirectly.
“Any increase in productivity and output is likely to allow inflation to moderate, which is the goal. So, we heard from the policymaker Bosun Tijani who was very clear that we want a sustainable sector. But we also heard from the regulator saying that we will hold these guys to quality of service.
“We also heard from the operators, MTN that they are all revving up. So in all, there are economic benefits because of increased output and productivity. Two, policymakers are aligned because they want this to lead to a moderation in inflation,” he added.
“So in all, I don’t think it’s a bad deal,” Rewane noted but re-echoed the minister’s comment that the tariff hike will not be 100 per cent.
“Will they get 100%? No, they will definitely not. We suspect that we are going to likely see something between 40 and 50% which is fair after so many years of static changes,” Rewane said on the show.
