Exploring ICT sector to fight recession

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Though oil prices have started rebounding, analysts have urged the Federal Government not to relent on its efforts to diversify the economy. One sector they say could change the narrative is telecoms sector. It can pull the economy out of recession, having defied the ravages of the economic donwturn. LUCAS AJANAKU writes that the government will need to play its role as business enabler to unlock the potential.

Experts have said the  telecoms sector has the capacity to pull the country out of recession. What has been lacking is the political will and policies to drive the enormous potential of the sector to make this happen.

According to figures from the Nigerian Communications Commission (NCC), the telecoms sector, the fastest growing in Africa, has recorded over $32 billion investment, over 152 million subscribers and close to 100 million internet subscriptions.

Results of the 2014 rebasing of the economy indicated that the telecoms industry was contributing 10 per cent to the nation’s Gross Domestic Product (GDP).

The NCC said if the objectives of the National Broadband Plan (NBP) are pursued doggedly, it would spur more development because broadband is a business enabler.

President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, urged President Muhammadu Buhari to include ICT sector as part of his strategic economic diversification agenda because digital transformation is about technology and globalisation.

Teniola, who is also the MD of Internet Solutions, said the Federal Government could seek assistance from global financial institutions such as the World Bank to develop the broadband infrastructure that will take the country to the next level of development.

He said the sector could create additional jobs and other value addition to stimulate the growth of the GDP.

CEO MTN Nigeria, Ferdi Moolman, said the government should cntinue to boost investment into the sector through well thought-out policies.

While the telco said it is committed to pursuing its mission to provide the best data network to its over 60 million customers across the country, it, along side Pinet Infomratics and Airtel identified some factors are holding it back. These factors include but not limited to the following:

Inflation

 

Moolman said rise of headline inflation to about now18.72 per cent, according to the National Bureau of Statistics (NBS), is a major disincentive to investment.

 

OTT

 

According to him, there’s depletion of operators’ revenues by unlicensed providers of over-the-top (OTT) telecoms services that do not have any physical presence; nor pay any taxes; nor make any significant contribution to employment or other socio-economic objectives of government in the country.

 

Forex scarcity

 

Airtel CEO, Segun Ogunsanya and Moolman lament the inability of operators to access foreign exchange (forex). Moolman said this was particularly debilitating given that most of their input are sourced off-shore. This has very significantly increased both operating and capital expenses.

 

Stunted tariff structure

 

Despite these macro-economic challenges, telecom tariffs have declined significantly (over 67 per cent between 2007 and 2016) and data prices are amongst the lowest on the continent,Moolman added.

Immediate past president, ATCON, Lanre Ajayi, said for the country to tap into the enormous potential of the sector, there was the need to resolve challenges facing the industry.

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He identified some of the challenges to include the National Broadband Plan; e-Government, National Critical Infrastructure; Frequency Management; Secondary  Spectrum Market; Free Spectrum; Infraco; Numbering Plan and regulatory independence.

Others are facilitating low-cost finance for the development and production of local ICT products; leveraging Public-Private Partnership (PPP) to accelerate infrastructure development; and reclaiming and releasing of unused spectrum for trading or re-farming.

He also stressed the need to pass into law, the Critical National Infrastructure Bill and implement the National Economic Council’s Resolution on Multiple Taxation, Levies and Charges on ICT infrastructure.

There is also the need to review and amend the Taxes and Levies (Approved List for Collection) Act (Amendment) Order, 2015 as well as the implementation of the ‘Smart State Initiative’ in all the states of the federation in order to create sanity and properly streamline fees and levies chargeable from states.

Ajayi also stressed the need to further educate the public of the legal implications of sites lockup as stated under the Criminal Justice Provision Act 2004.

Sector analysts  say the slow growth of the ICT sector is a result of apathy towards indigenous products and services, lamenting that this had undermined patronage of local players in the  ICT sector.

Experts say Nigeria loses about $2.8 billion yearly to uncontrolled importation of ICT hardware and software. These losses are in form of capital flight. The Federal Government should muster the political will to implement local content in the ICT sector to stop the avoidable forex losses.

Addressing this challenge apparently necessitated a parastatal under the Communications Ministry, the National Information Technology Development Agency (NITDA) to establish software testing laboratory as well as a scheme to train 1000 software testers across the country.  It also plans to come up with framework for local software standards.

The industry, under the present dispensation, is striving to encourage international brands to establish factories in Nigeria or partner with local operators by buying components of their systems that are produced by local manufacturers as well as maintaining in-country research and development departments for the purpose of product conceptualisation, innovation, adaptation and design development.

Communications Technology Minister, Adebayo Shittu said this was to be part of measures to implement local content development policy to protect indigenous players in the industry, including the Small and Medium scale Enterprises (SMEs).

On the Smart Cities initiatives of the Ministry, he said the Federal Government was working with telcos to remove all the bottlenecks militating against deficiency in broadband penetration in Nigeria.

He said: “Some countries like Rwanda have already embraced the smart city initiatives and they are already reaping its benefits. I would want to enjoin the remaining states to also key into the initiatives that would ultimately make their states smart.”

 

Unsolicited messages,

cold calls

Subscribers have continued to suffer in silence over the menace of unsolicited messages and cold calls.

Shittu warned telcos to address customers’ complaints ranging from poor quality of services (QoS), network congestion, spam messages, billing for services never rendered, under declaration of tax and under payment of tax by companies which had impacted negatively on consumers’ satisfaction.

Shittu said he had invited telcos to Abuja to address these issues else sanctions would be applied to make them do the right things.

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In response Value Added Services Providers Association of Nigeria (VASPAN) urged their members to show some level of restraints.

The Executive Vice Chairman of NCC, Prof. Umar Danbatta said while the growth in the telecoms industry has continued to drive further growth in the economy, especially in financial services and e-commerce, the Commission has embarked on initiatives to further accelerate the growth into the future in addition to working with the government at all levels to address the identified challenges facing the operators.

He said the acknowledgement of the various challenges being faced by the industry has also informed the unveiling of a roadmap for the industry, adding that the industry would be regulated for the benefit of all the stakeholders.

Voice termination rates

review

The NCC said it has, however, hired PricewaterhouseCoopers (PwC) to, among other things, carry out an impact assessment on subsisting interconnect regime; identify shortfalls on its interconnection rate regime and provide workable solutions.

It said this was the beginning of the process that would culminate in the review of mobile voice termination rates in the country.

Danbatta, who gave indication to this at the Stakeholders’ Forum on the Cost Based Study for the Determination of Mobile Voice Termination Rate for Telecom Industry, said the review had become necessary in view of the changes in the sector since the 2013 review.

 

Investments

Telcos must continue to invest in the sector. For instance, MTN secured a 10-year national spectrum licence on a state-by-state as well as the Federal Capital Territory (FCT) for the spectrum band.

It paid for 2 x 30 megahertz (MHz) in the 2.6 gigahertz (GHz) spectrum. Danbatta said it is a significant fillip to the realisation of the Eight-Point Agenda of his administration designed to transform the industry.

It also paid N34billion to the National Broadcasting Commission (NBC) for the acquisition of 700 megahertz (MHz) broadcasting spectrum.

The acquisition of Visafone Communications Ltd with its 800MHz frequency band is another strategic step, the telco, said would allow it to roll out 4GLTE services across the country and improve its contribution to the GDP.

Moolman said the telco planned to have about 1,500 LTE collocated sites backhauled with fibre optics offering 4G VoLTE to its over 60 million customers.

He said the 2.6GHz band guarantees superior performance for wireless networks, especially 4G LTE services.

“With the 2.6 GHz band, we expect to roll out and provide the full range of LTE services to Nigerians, empowering Nigeria with the latest mobile broadband technology.

“Our subscribers, especially those in clustered areas, such as the major cities, can expect distinct improvements in browsing speed, quality and experience. This means that they will have fast access to high definition video streaming as well as conferencing and calling, lag-free music streaming, and improved data uploads and downloads,” Moolman said.

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