Nahimah Ajikanle Nurudeen
Nigeria telecoms has enabled a complex value chain that includes vendors, service providers, and users in an industry that has attracted over $38 illion investments in the past 16 years. And objective and responsive legislation could make or mar a sector often described as ‘the next big thing’
- Over-regulation disincentive to invest more in the infrastructure improvements
- Over 26 different taxes and fees levied on telecoms operators
- Youthful population holds great market potential
- Objective legislation balances the needs of everyone involved
- Fierce competition for scarce financial investment in globalised world
With over $38 billion investments in 16 years, Nigeria telecoms industry has enabled a complex value chain that includes vendors, service providers, and users in addition to thousands of direct and indirect employment and associate businesses. This calls for a focused, responsive and responsible legislation to help entrench fair operating environment in order to sustain growth and return to investment.
Importance of telecoms reflects in its near-ubiquitous penetration and use. Investors look up to the nation’s lawmakers for objective oversight in a converged globalised world where there is fierce competition for scarce financial resources.
The telecoms market is one of the most open and competitive in the world. Effective deregulation has set industry free to create new services and set international standards. We want to continue to encourage innovation and growth in the industry, but we also need to make sure consumers and investors are protected effectively. So, lawmaker must work to make sure we are regulating our communications industry in a proportionate way that balances the needs of everyone involved.
The primary functions of the legislature is to make laws for a nation through which the collective will of the people or part of it is articulated, expressed and implemented especially in matter of national growth. As enshrined in the constitution, the house of representatives is made up of 360 members while the senate has 109 members. Legislators should be busy making changes to the law and working with industry to ensure the consumer remains the main focus of the telecoms industry, which has changed very quickly since deregulation in 2001.
According National Bureau of Statistics (NBS), Telecoms contributed N1.58trn to Nigeria’s Gross Domestic Product (GDP) in the second quarter of 2016. The Sector has also created platforms for robust provision of service delivery in the areas of Financial Services, Education, Health-Care, Transportation, E-Commerce, Information and Logistics & Supply Chain Management. According to statistics from the ITU, opportunity exists for over 100 million potential internet users in Nigeria. With a youthful population, the market holds great potential.
For example, MTN alone has injected over $16 billion into Nigerian operations. It boasts of over 55 million subscribers or 43% market share. MTN Group has revealed that it is willing to invest more in the sector in the years to come because it has faith in Nigeria economy. Group Chairman/Chief Executive, Mr. Phuthuma Freedom Nhleko told Nigerian Communications Commission that the company is challenged in the past, during the period of the fine. It is obvious that over regulation is a big burden on investors.
It is worthy of note that irresponsible legislation and over regulation could stifle an industry often described as the industry that will be the next big thing’. Recently, there has been a lot of outcry from telecoms operators for more efficient regulatory framework to enhance the telecoms industry and indeed business operations in Nigeria. However, the lawmakers seem to be contented with their “bearish” approach to addressing issues of workable legislations. These have affected the operations of MTN Nigeria and indeed other companies.
This is because an industry with high service quality will meet customer needs whilst remaining economically competitive. It said that when you regulate technology, you regulate the infrastructure which includes GSM, LTE, Fibre and Fixed Network you when you regulate service your regulate the content and over the top service such as Phone call and text messages over the internet, Facebook, Yahoo, Whattsapp, BB messenger and the like.
While under regulation will lead the chaos and high security risks, over regulation will limit the use and application of dynamics of modern technology and also limit access to global trade and knowledge. Nigerians must continue to debate these issues in order to guarantee the sustainability of our technology development.
Over-regulation also reduces the incentive for telecom operators to invest in the infrastructure improvements that are essential to improve and expand mobile and broadband connectivity across Nigeria. In fact, there are 26 different taxes and fees levied on mobile operators and consumers, including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees.
To end overregulation, there must be increased enlightenment and awareness on the importance of telecoms services to national growth and development. The federal government should collaborate with state and local governments on the issue of tax harmonization especially because of challenges facing the industry.
Forex market currently a disaster for ICT industry
The forex market is presently a disaster for all of ICT. This is because Nigerian businesses bear the brunt. In 2008-2010 when the global recession happened, a lot of businesses died mainly in the Stock Broking sector. Now, businesses are dying again because a company that has for instance a $10 million trade bill, and by the time the company signed a contract with its foreign partner, the dollar was say N270. Now, the dollar has moved to above N500, they still have to repatriate to their foreign partner because if the local company doesn’t repatriate, the foreign partner will not supply again or they will take the local company to court. So, either way, it is the local companies that are going to suffer the exchange loss, not the customer nor the foreign supplier. This is not only happening in the IT sector, but also in other sectors because we are all importing raw materials and machineries, which must be paid at the new exchange rate. A lot of companies are going to die because of the forex market; and it is going to be very painful because it means a lot of jobs will go too.
Increase Diesel Price
The issue of power represents the biggest challenge to the industry. Responsive and responsible legislation would take into account the power challenge facing Nigeria telecoms especially at a time price of diesel is double and electricity supply is in highest decline.
Realistic Expectations and Taxation
Governments and host communities often see telecoms companies as cash cow, a big source of revenue. They believe that the best way to get their fair share is to target capital intensive infrastructure while at the same time, they have little or no knowledge of the effects of tempering with signal transmission assets.
As a result, there are different taxes and fees levied on mobile operators and consumers, including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees.
Nigerians including decision makers and legislators expect telecoms operators to be perfect under very uncertain business environment where nothing is sure.
It is important to note that operators build their own infrastructure and other resources from the scratch. In most part of the world, service providers including telecoms link up to existing but reliable resources like stable power, security, good road network, and stable government with responsive legislature.
Why Telecoms is important
Telecoms encompasses multiple service providers, including telephone companies, cable system operators, Internet service providers, wireless carriers, and satellite operators. The industry today includes software-based applications with a communications emphasis and intermediate layers of software incorporated into end-to-end communication services. It also includes suppliers of telecoms equipment and software products sold directly to consumers and also to service providers, as well as the telecoms service providers.
Importance of telecoms reflects in its near-ubiquitous penetration and use. Telecoms provide a technological foundation for communications which plays a central role from business to government to families. From Web browsing to cell phone calling to instant messaging telecoms has become increasingly integrated into how we work, play, and live.
The sector is critical in Nigeria because it enables participation and development across the country. It plays increasingly yet vital role in enabling the involvement and improvement of people in communities and regions disadvantaged by geography, like the Niger Delta and the rural areas.
Telecoms provides vital infrastructure for national security. From terrorism to manmade or natural disaster to communication of vital intelligence, telecoms plays a pivotal role.
The Way-forward
The Managing Director, Pinnet Informatics, Engr. Lanre Ajayi stressed the need for industry stakeholders to collaborate in sensitizing members of the National Assembly about importance of telecom sector to nation building.
According to him, educating the legislature is important because they come from different backgrounds which may not be relevant to the sector.
He suggested a retreat or training sessions for members of the House committees on Information and Communications Technology, ICT.
This he said will also guide against unnecessary political interference in the industry and promote healthy legislation.
Also, the Chairman, Zinox Technologies, Chief Leo Stan Ekeh said the problem is that most members of legislatures in Nigeria are not ICT compliance.
He said it is difficult to expect analogy legislatures to promulgate laws for digital economy.
He maintained that with continuous sensitisation, The Nigeria legislative environment will thrive to promote digitization.
