Nigeria’s mass SIM cancellation hurts small businesses

On 4 April, millions of Nigerians woke up to discover that they could no longer make voice calls with their SIM cards.

The federal government ordered telecommunication companies operating in Nigeria to bar 72m unregistered accounts from making outgoing calls because the holders failed to link their National Identity Number (NIN) to the phone numbers. The NIN is a unique personal identification number that is mandatory for all citizens and residents over the age of 16 issued by the country’s National Identity Management Commission (NIMC).

“The Federal Government has directed all telcos to strictly enforce the policy on all SIMs issued (existing and new) in Nigeria,” said the NIMC on 4 April. “Outgoing calls will subsequently be barred for telephone lines that have not complied with the NIN-SIM linkage policy from the 4th of April, 2022.”

The drive to implement this policy started in 2020 when communications minister Isa Pantami announced 30 December of that year as the deadline for the linkage. But the deadline has since been extended nine times to allow more Nigerians to enrol.

The government insists that a database of all lines linked to NINs will help it track criminals and tackle insecurity. It says that criminal gangs use telephone lines to communicate and kidnapping gangs contact the families of their victims using unregistered telephone lines.

Businesses take a hit

As a result of the enforcement of the government’s directive by telecommunications companies, many small businesses, especially in rural areas, say they have been barred from calling active and potential clients.

David Udeme owns a stall where he sews male clothes in Imo state, in Nigeria’s southeast. Since his line was barred from making calls due to the inability to link his NIN to his SIM, keeping in touch with customers has been difficult.

“There are more than 10 customers who should bring work for me this week but I have not called them because my line is barred,” Udeme lamented. “Even when some try to call and I miss their calls, I can’t call them back.”

Betting store operator Olugbode Adewale is also feeling the impact. Some of his active customers usually don’t visit his BetNaija shop in Ibadan, southwest Nigeria. Instead, he calls customers to receive instructions on games and stake amounts. It’s now a week since his line was barred, and his revenue has taken a plunge.

“Today is Monday and I should have expected some good payment of commission but since I could not reach most of my customers during the week, I am expecting little to nothing,” he says.

Olugbode says the federal government’s directive will impact his business and truncate his long-term growth plan.

A defective system

Owede Babatunde, a Bolt ride-hailing driver in Ibadan, says he tried to link his NIN to his MTN and Airtel SIMs months before the call-barring implementation, but got no response from the network operators. 

“Before the barring started, I called them but they said I should wait. When the SIMs were barred, I called them again and they again asked that I should wait,” Owede complains.

Six days into the policy, his SIMs were still barred. Bolt requires their drivers to call riders to confirm their locations and pick them up when they receive orders. 

Economists say that the cumulative impact of so many small businesses being cut off from their customers could be substantial. Omolola Lipede, an economist and senior advisor at  RTC Advisory, a Lagos-based business advisory firm, says small businesses, especially those in rural areas with poor roads and sporadic internet connections, will be hurt. 

“Some of the businesses are just recovering from the impact of Covid-19. Not being able to connect with their customers will affect them badly”, says Lipede.

Small businesses like Udeme’s contribute at least 48% of national GDP and account for 96% of businesses and 84% of employment. If these businesses are affected, the ripple effect on people across the country and the economy will not go unnoticed, Lipede says.

The telcos are also losing revenue from barred customers, which will impact on tax revenues, he adds. 

Emmanuel Bamgboye, managing partner of Empyrean Professional Services, a Lagos-based accountancy and tax firm, says the long-term gains could outweigh immediate losses, but only if a better system for linking NINs to SIMs is implemented. 

“What is happening is a reflection of the state of the nation,” he says. “I don’t think they are ready… and the impact on businesses will be enormous”.

Instead of making a simple voice call, some people may resort to travelling distances to carry out business transactions.

“It will put more load on infrastructure and will slow down economic activities, which we are already seeing,” says Bamgboye.

Meanwhile, at his modest stall in Imo state, clothes-maker Udeme fears that by the time the linkage issue is resolved, some of his customers will already have moved on. This has worrying implications for his business and family, he says. 

“I have a wife, a son, and a daughter to provide for,” he says. “The plan to expand my business to the next community this year may have be scuttled.”