Minister Bosun Tijani said that despite complaints by Nigerians about data costs, the cost of internet in Nigeria is still one of the cheapest in the world
Following a claim by Nigeria’s Minister of Communications, Innovation, and Digital Economy, Dr. Bosun Tijani that Nigeria has one of the cheapest data prices in the world, Paga CEO, Tayo Oviosu has countered the minister, insisting that data is not cheap in Africa’s largest economy.
“Data is not cheap in Nigeria, and even if it were Bosun Tijani, remove the floor and get costs lower,” the serial investor said in a tweet.
The floor referenced by Tayo is the floor on the price of data in Nigeria which has since been suspended by the Nigerian Communications Commission (NCC). Many have argued that the removal of the price floor is the reason why independent data service providers can’t compete effectively with the already established ones like MTN, Airtel, Glo etc.
While featuring on the Arise TV morning show, Minister Bosun Tijani said that despite complaints by Nigerians about data costs, the cost of internet in Nigeria is still one of the cheapest in the world. Thus, his ministry will focus on ensuring the improvement of the quality of services Nigerians are getting from the telecommunications service providers.
“People talk about data being expensive but it is still one of the cheapest in the world. Of course, we know how important it is to our people. And we need to continue to look for ways to improve the quality but we want to also ensure that broadband penetration in Nigeria is in the critical parts of the country,”
Bosun Tijani, Minister of Communications and Digital Economy
See also: Nigeria ranks 31 among countries with the cheapest data price in the world
NCC data price floor and the cost of competition and innovation
In 2016, the NCC planned to institute a price floor of 90 kobo per megabyte for the cost of data in Nigeria. This price floor stipulates the minimum price a data service provider could charge for data in the country. This is different from a price ceiling which stipulates the maximum price a provider could charge for data in the country.
However, following protests and claims that introducing a price floor was hurting consumers in the long run, the plan was suspended. The then Director, Public Affairs of the NCC, Mr Tony Ojobo said the suspension would be in place until the commission could determine an appropriate pricing system. But to date, there has been no revisiting of the policy.
There are also legal perspectives to it. According to a report by the UniLag Law Review, introducing a price floor would run contrary to the principles of fair competition. According to the report, a market regulator, in this case, the NCC, should not interfere with price in the market. Ideally (and consistent with a free market), price should be determined by market forces, that is, the interaction between demand and supply.
If a market regulator must regulate price at all, such interference must be based on sound economic analysis of the market; and can only be justified if it aims to preserve fair competition (where “fair competition is not an end in itself, but a means to achieving “consumer welfare”).
UniLag Law Review
Finally, competition law assumes that, in a free market, sellers are in business to make a profit. This is a legitimate goal and one that incentivises supply/investment and innovation. Accordingly, there cannot be “fair competition” if one seller sells below cost, that is, selling for a price at which other sellers cannot make 1 kobo of profit (or sufficient profit to replenish supply) even if they were to operate efficiently.
This is in tandem with Tayo’s position although his main focus remains on innovation and appears to be oblivious that plans to introduce a data price floor have since been suspended. Perhaps the Nigerian tech leader is advocating for it to be jettisoned altogether.
“The Nigerian Communications Commission should strike out one line in its regulations – the floor on the price of data. Do this and see innovation skyrocket in Nigeria,” he said in the tweet.