Telcos demand greater board representation on universal service fund

Telecommunications companies in Nigeria are demanding greater representation on the board of the Universal Service Provision Fund (USPF), amidst insinuations of  huge financial mismanagement  limiting its effectiveness.

The mandate of the USPF as stipulated in the Nigerian Communications Act 2003 is to “promote the widespread availability and usage of network and applications services throughout Nigeria by encouraging their provision to  institutions in un-served and underserved areas, or for underserved groups within the community.”

Between 2009 and 2012, the USP Fund focused on projects such as the deployment of Base Transceiver Station in rural areas, (BTS), Community Communications Centres (CCC), fibre backbone infrastructure rollout, and School and University Access Programmes, amongst others.

A senior executive of one of the largest telecoms companies in the country told BusinessDay yesterday, that the fund’s objectives were rather unclear. “There is no operator visibility on the board of USPF, yet we pay for it”, he added.

According to him, huge financial resources were being squandered on irrelevant and unsustainable projects, rather than in pursuit of the fund’s statutory objectives.

Speaking on  condition of anonymity, the telecoms executive said,”Much money is being wasted on buying Personal Computers (PCs) for schools and donating equipment, rather than pursuing its statutory objectives”.

He further observed that the USPF had been reduced to a mere treasury management institution, adding that this was evident in its abysmal performance in the area of project monitoring and execution.

Mobile operators are required by licence condition to pay 2.5 percent of their net operating revenue (Annual Operating Levy – AOL), to the Nigerian Communications Commission (NCC) on a quarterly basis. The NCC, in turn, contributes 40 percent of the AOL to the USPF for its activities.

According to the 2007 Regulation, the USP fund is to be financed based on 1 percent of net revenues (net of interconnection payments) of the licensees.

Given the significant amount of the contributions collected from most mobile operators, the telecoms executive said that greater transparency and accountability in USPF’s financial reporting is paramount.

According to him, there were unclear, contradictory and in some cases non-existent relationships presented between funds collected, funds disbursed and remaining balance, during project implementation. The current amount in the USPF account is not publicly available, but reported balance in 2009, to be carried forward to 2010, was N23.6 billion.

The USPF Board, currently chaired by Omobola Johnson, ministerof communications technology, with representation from the NCC, is required to prepare and submit an annual report to the National Assembly, through the President, not later than six months after the end of each financial year.

Our source observes that the USPF has failed to maintain a website that includes posting of the Fund’s quarterly reports, the USPF Board annual reports, as well as projects underway.

“The last time a financial report was posted on the site was way back in 2012,” said a mid-level executive at a telecoms outfit. The 2007 Regulations established the USPF Board to supervise and provide broad policy direction for the management of the USPF, as well as, to aid the USP Fund managers.

The current executive secretary of the fund is Ibrahim Maikano.

Maikano is of the view that the USP fund has done pretty well in terms of actualising its statutory mandates. According to him, the fund’s intervention had been critical to Nigeria’s telecoms revolution.

“Beginning from 2010 till date, we have built about 250 Base Transceiver Stations (BTS) which in terms of population is about 10 million more Nigerians who now have access to mobile telephony as a result of the creation of USPF” said Maikano in an interview.

“We have also built an average of 2,000 kilometres of fibre-optic cable yearly from 2011. So, when you now calculate maybe two times three is about 9, 000 kilometres of fibre optic we have extended to places where without our own intervention they will not have access to fibre. Without fibre backbone transmission there is no 3G,” he said.

The GSM Association (GSMA), a lobby group protecting the interest of mobile operators, in a recent report entitled, “Sub-Saharan Africa (SSA) – Universal Service Fund (USF) study”, said many USFs across the region did not have a clear articulation of their overall objectives. “In addition to causing the difficulties mentioned with respect to oversight and governance, the lack of a clear strategy has resulted in a number of obstacles with a number of funds such as an inability to adequately set targets or an inability to demonstrate what the fund has achieved in terms of coverage or in meeting overall obligations of the fund.”

According to the GSMA research study, even in USP funds where there had been a high degree of autonomy and independence, there were cases where political intervention or interference from other government agencies affected the fund’s overall performance.

Ben Uzor