Less than 18 months after a bruising 50 percent hike in telecom tariffs, the International Monetary Fund is recommending that Nigeria introduce a brand-new tax on telecommunications services. For millions of Nigerians struggling with the cost of living, the timing could hardly be worse.
The recommendation is contained in the IMF’s 2026 Article IV Consultation Report on Nigeria, which assessed the country’s fiscal outlook and argued that further tax policy changes will likely be needed over the medium term, despite reforms already made to Nigeria’s tax system in recent years.
What the IMF Is Actually Proposing
The Fund’s proposed revenue package is wide-ranging. It includes raising Nigeria’s Value Added Tax rate from its current 7.5 percent, extending VAT to fuel products, rationalising tax exemptions and introducing excise duties on telecommunications services.
The IMF estimates that the combined effect of new revenue measures, administrative reforms, and some taxpayer-friendly adjustments could raise government revenue by as much as 4.6 percent of GDP over the medium term. Telecom excises, grouped alongside a proposed carbon tax on fuel, are projected to contribute an additional 0.4 percent of GDP.
The Fund framed these recommendations as necessary to create fiscal space for development spending and social interventions, arguing that Nigeria’s current pace of capital expenditure may not be sustainable without stronger revenue growth.
A Sector Already Under Pressure
The problem is that the telecom sector has already become a pressure point for Nigerian households.
In January 2025, the Nigerian Communications Commission approved a 50 percent increase in telecom tariffs in one of the sharpest single adjustments in the sector’s history. Operators argued the increase was necessary to cover rising operational costs and fund infrastructure investment. Nigerians pushed back hard, pointing out that data quality and network reliability had not kept pace with what they were paying.
More than a year later, industry observers say meaningful service improvements have yet to reach the average subscriber. Introducing a new excise duty on top of that would pass additional costs down the same pipeline, directly to consumers who already feel they are paying more for less.
The Poverty Problem the IMF Acknowledges
What makes the Fund’s position difficult to defend is that it contains its own rebuttal. The 2026 Article IV report projects that poverty has already reached 63 percent of Nigeria’s population, with approximately 27 million Nigerians facing food insecurity. The IMF itself cautioned that any new tax measures should be timed carefully, given these conditions.
That caveat, however, has done little to soften the reaction. Critics argue that recommending new consumer-facing taxes in the same breath as acknowledging record poverty levels reflects a fiscal logic that prioritises revenue targets over lived realities.
The Bigger Picture
Nigeria’s tax reform agenda is already active. The government signed new tax legislation last year, and the IMF acknowledges that robust implementation could gradually improve revenue collection.
The 2027 elections are also on the horizon, and the political calculus around further tariff or tax increases is not straightforward. For now, the IMF’s recommendations are exactly that, just recommendations. Whether the Tinubu administration moves on telecom excise duties is a separate question.
What is clear is that ordinary Nigerians, already navigating a 50 percent telecom tariff hike and a cost-of-living crisis, will be watching closely.
