Why Data Prices Keep Rising in Nigeria and Other African Countries

Nigerian internet users paid more for mobile data in 2025 than they did in 2020, a trend that contradicts the global pattern of falling data costs. While subscribers in Asia and parts of Europe have watched prices decline, Africans face persistent increases that strain household budgets and limit digital participation.

The reasons behind this divergence reveal structural weaknesses in Africa’s telecommunications infrastructure and regulatory environments. Understanding these factors matters for anyone tracking digital inclusion on the continent, where mobile internet remains the primary gateway to online services for most people.

Infrastructure Costs Drive Base Pricing

Telecommunications operators in Nigeria and across Africa contend with infrastructure expenses that dwarf those in more developed markets. The cost of building and maintaining network infrastructure remains unusually high due to inadequate power supply, security challenges, and difficult terrain.

MTN Nigeria and Airtel have publicly cited diesel costs as a significant burden. Base stations require reliable electricity, but grid power remains unreliable across much of the continent. Operators run diesel generators at thousands of sites, with fuel expenses consuming roughly 30 percent of operational budgets according to industry analysts. When diesel prices surge, as they did following Russia’s invasion of Ukraine and again during Nigeria’s fuel subsidy removal in 2023, operators face immediate pressure on margins.

Security presents another cost layer. In northern Nigeria and parts of Kenya, operators employ armed guards at remote cell towers and sometimes negotiate with local communities for site protection. Equipment theft and vandalism force companies to factor replacement costs into their pricing models.

Currency Depreciation Compounds Problems

The naira has lost more than 50 percent of its value against the dollar since 2020. Similar depreciation has affected the Ghanaian cedi, Kenyan shilling, and Egyptian pound. This creates direct consequences for telecommunications companies that must import equipment, pay for international bandwidth, and service dollar-denominated debt.

Network equipment from Huawei, Ericsson, and Nokia arrives in dollars. Spectrum licenses often carry dollar-pegged fees. International bandwidth costs remain dollar-based. When local currencies weaken, operators absorb higher costs that eventually transfer to consumers.

The Central Bank of Nigeria’s multiple exchange rate windows between 2020 and 2023 added complexity. Operators struggled to access foreign exchange at official rates, forcing some to source dollars on parallel markets at significant premiums. Even after the CBN moved toward a unified exchange rate in 2023, volatility continued to complicate financial planning.

Spectrum and Licensing Fees Remain High

African governments treat spectrum auctions as revenue opportunities rather than infrastructure investments. Nigeria’s 2022 auction of 3.5GHz spectrum for 5G services raised $546 million from MTN and Mafab Communications. While this generated government revenue, the cost filters through to subscribers who ultimately fund these expenditures through higher data charges.

Ghana faced similar dynamics when its telecom regulator increased operating license fees in 2023, prompting immediate price adjustments from major carriers. The pattern repeats across the continent: governments extract maximum value from spectrum, and operators pass costs along the chain.

Licensing terms in many markets also mandate infrastructure sharing requirements and rural coverage obligations that increase expenses without corresponding revenue. Meeting these regulatory commitments while maintaining profitability pushes operators toward price increases rather than reductions.

Limited Competition in Key Markets

Market concentration limits competitive pressure on pricing. In Nigeria, MTN controls roughly 40 percent of the mobile market, while Airtel and Globacom split most of the remainder. The exit of 9mobile as a significant competitor and the consolidation of smaller players have reduced pricing competition.

Kenya presents a similar picture with Safaricom commanding a dominant market share. South Africa’s market, while more mature, still sees limited price competition among the major carriers. When a few players control most subscribers, aggressive price wars that benefit consumers become less likely.

Recent regulatory approval of MTN and Airtel tower sales to infrastructure companies also concentrates control. While tower sharing reduces duplication and lowers some costs, it also creates new intermediaries that extract value from the system.

Taxation Layers Inflate Consumer Prices

Multiple tax layers affect final data prices. Value-added tax applies to telecommunications services across most African markets. Nigeria adds a 5 percent excise duty on telecommunications services beyond VAT. Some states impose additional levies on telecommunications infrastructure.

Zambia introduced a daily internet levy in 2019, though public backlash forced modifications. Uganda implemented a social media tax before revising it following similar protests. These direct taxation attempts on internet access may have retreated in some markets, but indirect taxation through telecom service charges persists widely.

Kenya’s Finance Act adjustments in recent years have repeatedly touched telecommunications, adding fractions that accumulate into meaningful cost increases for consumers. Tax authorities across the continent view the telecommunications sector as a reliable revenue source, creating persistent upward pressure on prices.

Regulatory Interventions Produce Mixed Results

Nigeria’s telecommunications regulator has at times intervened on pricing. In 2021, the Nigerian Communications Commission rejected operator requests for tariff increases despite industry pressure. This maintained nominal prices but did nothing to address the underlying cost pressures, leaving operators to manage margins through other means such as reducing data bundle validity periods or adjusting bonus structures.

South Africa’s Independent Communications Authority has grappled with similar tensions between consumer protection and industry sustainability. Regulatory price caps without accompanying measures to reduce operator costs simply redistribute financial pressure rather than resolving fundamental issues.

Some regulatory efforts show promise. Nigeria’s mandated infrastructure sharing aims to reduce duplication, though implementation remains incomplete. Kenya’s efforts to streamline licensing procedures could lower compliance burdens. These structural reforms take years to produce measurable consumer benefits.

The Path Forward Requires Coordinated Action

Reversing the trend of rising data prices demands more than market competition alone. Governments need to reconsider spectrum pricing strategies, weighing immediate revenue against long-term digital inclusion benefits. Improved electricity infrastructure would reduce operator dependence on diesel. Currency stabilization policies matter as much for internet access as for broader economic health.

Tax policy requires careful calibration. While telecommunications generate revenue for cash-strapped governments, excessive taxation ultimately limits network expansion and keeps millions offline. Finding sustainable balance points between fiscal needs and connectivity goals represents an ongoing challenge for policymakers across the continent.

The immediate outlook suggests continued pressure on data prices. Inflation, currency volatility, and infrastructure deficits persist across most markets. Until African countries address these underlying conditions, consumers will likely continue paying more for mobile internet access while their counterparts in other regions pay less.