A Cross-Border Insight into the 2021 Policy of the Ministry of Communications and Digital Economy: An Incredible Advantage to Local Operators in the Telecommunications Sector

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 By Thyword Nnadi

 ABSTRACT

There have been challenges experienced by the local content operators in telecommunications sector. These are associated with gaining dominance as the major key players in the sector and further promoting competitiveness amongst the local players in the sector. In the light of the above, a basis may be found as to why systematic regulations may be enunciated to ameliorate this challenges. Section 23(a) of the Nigerian Communications Act 2003 empowers the minister of Telecommunications to formulate policies for telecom sector. This section was appraised for both relevancy and adequancy within the context of what ought to be in tech-driven era. This research adopts a doctrinal methodology approach in examining the relevance of the current formulated policies by the Ministry of Telecommunications and Digital Economy. One of the major findings in this work is that our local content has gained little or no dominance in the global market. It is therefore recommended that institutions be set up wherein foreign  experts in the field of telecom would be deployed to train Nigerians who will man the sector to secure our future economy .it is further recommended that this policies should take a practical shape by inspection of telecom companies regularly to ascertain the level of compliance.

Keywords: Insight, policy, Local operators and telecommunications

INTRODUCTION 

On May 6, 2021, President Muhammadu Buhari Launched the policy made by the Federal Ministry of communications and digital economy, known as the “National Policy for the promotion of indigenous content in the Nigerian telecommunications sector” hereinafter refered to as “the policy”. Given that the velocity of a country’s economic progression is predicated on the nature of policies and laws regulating the economic sectors. Hence, the need to formulate policies and enact laws geared towards promoting our economy and human capital development. The high rate of consumption by consumers in telecommunications industry is an indication that employment and application of Telecommunications is an indispensable aid to corporate and individual entities in various business sectors for example the e-commerce, virtual meetings by corporate organizations, data usages, governmental bodies in their official routines  just to mentiion but a few.

A REVIEW OF PAST EVENTS IN TELECOM SECTOR

There has been a paradigm shift in the telecommunications industry ranging from the Nigerian Government’s monopoly in telecommunications industry and down to the foreign direct investments. The telecommunications sector has grown into a major key player in the list of Nigerian industry while the sector contributed 0.62% to Nigeria’s GDP in 2001, the contribution increased to 8.68% in 2014 and data published by the National Bureau of Statistics indicates that despite the serious impact of the recession in the Nigerian economy between 2015 and 2017, the sector’s contribution in 2017 rose rapidly to 9.1%.  Since 2001, the subscriber numbers have grown upwards leading to significant increase in tele-density. As at 2007 there were 41,975,275 active lines which progressively increased to 139,144,705 out of an estimated population of over 183 million people as recorded by the Nigerian communications commission as at July 2017. The major telecommunications operators are MTN Nigeria, Globacon, Airtel and 9 Mobile (Previously Etisalat Nigeria).

CURRENT STATE OF AFFAIRS IN THE TELECOMMUNICATIONS SECTOR

The outbreak of pandemic was an indicator of unanimous transition to teleworking procedure. Governmental institutions, private business sectors and individuals placed heavy reliance on telecom services in carrying out their official routines and business deals hence the pandemic forestalled human interface in a crowdy setting. Furthermore, the Telecommunications industry witnessed significant increase in the number of subscribers and exponential increase in the inflow of Foreign Direct Investment (FDI), the Nigerian Communications Commission, acknowledging the country’s FDI gains stated that the industry moved from a paltry $60 million private sector investment in the year 2000 to about $68 billion in 2016. The annual outflow of foreign exchange for the telecommunications sector amounts to approximately $2.16million as recorded by the leadership of the Association of Telecommunication Companies of Nigeria (ATCON). A break-down of the forex spending is as follows: CAPEX Progress – $750m, network software licensing $250m, management fees 800m, managed services (tier 2 & 3 support) – $157m, miscellaneous (international circuits, roaming and termination reconciliations etc) $200m ,the aforementioned analysis were clearly stated in the 2021 policy for promotion of indigenous content.

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The policy report reveals that the Nigerian Communications Commission (NCC) in 2018 noted a high percentage of foreigners among top management staff when compared with other staff in telecommunications sector, with Nigerians making up 31% in relation to foreigners who make up 69%. NCC noted also that 77% of software in use are foreign while only 23% are obtained locally. Furthermore, in respect of hardware being used 86% of them are foreign while 14% come from local companies and finally data on Base Transceiver Stations (BTS) also revealed dominance of foreign product over those produced locally, as 88% are foreign with only 12% being manufactured in Nigeria.

DEVELOPMENT OF INDIGENOUS CONTENT

The Federal Ministry of Communications in its quest to promote local contents paid key emphasis on the manufacturing of Subscriber Identity Module (SIM) cards, smart-phone, recharge cards, parts, fibre optic cables, marts etc. The Ministry also identified the services and software for telecom sectors, with respect to Business Support Service (BSS), Operators Support Systems (OSS), Performance Mentoring Customer Resource Management, Data Analytics and Network Inventory Management etc. Key attention was also paid to manpower skill rather than degrees to ensure preparedness for emerging technologies etc.

The word “Indigenous” within the context of the policy in line with the Presidential Order 005 of February 2018, refers to telecom companies incorporated or otherwise organized in Nigeria, having its principal place of business located in Nigeria and having at least 51% of its equity held by nationals of Nigeria.

 LAWS EMPOWERING THE MINISTER TO FORMULATE POLICIES

pursuance to section 148 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended)2011, the President is empowered to assign by way of its discretion a responsibility for any business of government to any Minister of the government of the federation.

Note also that Section 23 (a) of Nigerian Communications Act 2003 empowers the Minister to formulate policies for the communications sector in Nigeria with a view to ensuring utilization of the sector as a platform for the economic and social development of Nigeria.

Furthermore, Section 25(1) of Nigerian Communications Act 2003 mandates the Minister to notify the Nigerian Communications Commission from time to time and express his views on the general policy direction of the Federal Government in respect of the communications sector.

It is worthy of note to state that the Minister derives its power also by virtue of the Presidential Executive Order 003 issued by the Federal Government in May 2017 on “Support for Local Content Procurements by Ministries, Department and Agencies of the Federal Government of Nigeria” and finally the Presidential Order 005 issued in February 2018 for the “Planning and Execution of projects, promotion of Nigerian Content in Contracts and Science, Engineering and Technology. 

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POLICY OBJECTIVES ON MANUFACTURING

  1. The new policy is designed to develop production, sales and utilization of high quality telecom equipment and services developed by indigenous companies.
  2. That the Minister of Telecommunications and digital economy through the relevant stakeholders shall promote indigenous telecommunications companies to become world class manufacture service providers.
  3. That incentives shall be given for the production of cables, connectors, masts and telecom tools in a way that meets global minimum and certificate standards.
  4. That the Government shall support local manufacturing through relevant institutions such as the Universal Service Provision Fund (USPF), Central Bank of Nigerian (CBN) etc.
  5. Establishment of Vocational Training Institutes focused on the design, fabrication and assembly of telecom equipment and
  6. The Government shall further encourage partnership and collaboration between global Original Equipment Manufacturers (OEMS) engaged in the manufacturing of foreign sourced software, equipment and devices.

POLICY OBJECTIVES ON SERVICES

Pursuant to a forecast by statistics, the telecommunications software industry is expected to generate $822 billion globally in 2020. Worthy of note is that software in telecom sector covers a range of services for both Business Support Systems (BSS) and Operations Support Systems (OSS). Services like Performance Monitoring Billing, Customers Resources Management, Analytics and Network Inventory Management. Currently, emerging technologies such as data analytics are now being utilized on a regular basis. Looking at the rise in virtualization of service, normalization of work-from-home trends, and increased focus on digitalization, it is pertinent to build our economic power within local content entities and as well foster the creation and storage of personal data within our geographical borders. It is due to the industry’s high level of dependency on foreign software and services the following policies were made.

  1. That indigenous telecom industry will now contribute significantly towards the overall development of the telecom industry.
  2. An increase of public sector patronage of indigenous telecom business and services.
  3. Provision of a conducive environment for companies and services  povided to participate in the telecom industry.
  4. Institutionalization of mechanism to ensure that certain categories of telecom services are reserved for indigenous players and
  5. monitoring and analyzing of indigenous contents compliance by operator and service provider.

 POLICY OBJECTIVES ON HUMAN-CAPITAL

The World Bank report 2017, stated that skills, knowledge and innovation that people consume are the greatest assets of economies on the rise. Undoubtedly, human-capital otherwise referred to as employees in the telecom industry play key roles through their support system. However, it should be noted that there is insufficient or lack of technical skill capacity by the indigenous employees which culminated in the recent policy objective as follows:

  1. building the skills capacity of Nigerian and the indigenous telecom companies in order to access opportunities within the sector.
  2. defining minimum indigenous content levels for projects across the telecommunications value chain and
  3. Supporting the development of the local telecom startup and entrepreneurial ecosystem by making the licensing framework less cumbersome for new entrants and telecom startup. 
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POLICY OBJECTIVES ON RESEARCH AND DEVELOPMENT FOR INNOVATION

  1. supporting a win-win partnerships and knowledge transfer between indigenous and foreign companies.
  2. supporting of research and development effort aimed at advancing the impact of indigenous content in the telecom sector.
  3. driving the inclusion of telecommunications – related training and in the curricula of tertiary and skills-based institutions.
  4. Imposing a mandate on telecom institutions to create a platform for research and development within the country and
  5. encouraging through incentives, the participation of indigenous research institutions, operators and telecom equipment manufacturing companies in deliberations at the appropriate standard development organizations.

THE BODY ENTRUSTED WITH THE TASK OF IMPLEMENTING THIS POLICY

There is now a body known as the Nigeria Office for Developing the Indigenous Telecom Sector (NODITS) which will serve as a vehicle under the purview of the Nigerian Communications Commission (NCC) to fast track the development of indigenous content in the telecommunications sector of Nigeria. NODITS’s responsibility is not only limited to implementing this policy but as well as putting up strategies, standards, guidelines and frameworks aimed at developing indigenous content in the Nigerian telecommunications sector.

RECOMMENDATIONS

It is not enough to formulate policies geared towards positive impacts and promotion of our own local content but serious measures of bringing it into reality must take a practical shape. Foreign players in telecommunications industry should be deployed by Federal government to consistently train indigenes to save our future local economy and actualize this goal. There are thousands of Nigerian youths with an unwavering enthusiasm in telecommunications skill acquisition  and trainings and who are willing to man the sector if only opportunities present itself. This can only come to fruition when laws are enacted which will specifically mandate governments to partner with the foreign players to train good percentage of indigenes on a regular basis in order to bridge the gap between foreign technical experts and Nigerians.

Secondly, the new body referred to as the Nigeria Offices For Developing The Indigenous Telecom Sector (NODITS) should not hesitate to inspect the telecom industry periodically to ascertain the level of compliance to this new policy and attach punitive measures where necessary.

There is also the need to reduce the multi tax system  on the local operators in telecom sector. Federal government should further take steps to implement the funding of the sector to encourage the ease of doing business .

Finally, Nigerian government through the NCC should partner with foreign telecommunications experts by establishing institutions such as colleges and universities were telecommunication will be made a course of training wherein the experts will be made not only to train Nigerians but to also reproduce themselves in the indigenes as part of the long term goal.

CONCLUSION

Undoubtedly, this policy is an advantage to local operators in Telecommunications sector in Nigeria and will  reform the sector by creating an enabling environment that promotes local content, create employment, attract investors and boost our local economy .

Thyword Nnadi may be reached on: 08100712260 and email thywordnnadi@gmail.com

References:

  •  Nigerian Communication Act 2003.
  • The Constitution of Federal Republic of Nigeria 1999 (as amended) 2011.
  •  National policy for the promotion of indigenous content in the Nigerian Telecommunications sector, 2021.
  • www.iclg.com
  • www.nigerianstat.govt
  • https://www.proshareng.com
  • https://ncc.gov.ng

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