The telecommunication industry President Muhammadu Buhari would leave behind, come May 29, is one that has significantly gained confidence but is still punching below its weight.
The industry accounted for over 80 percent of the 16.51 percent that the ICT sector contributed to the country’s Gross Domestic Product (GDP) in 2022, according to data from the National Bureau of Statistics. It contributed 13.35 percent to the GDP in real terms, compared to the oil and gas industry’s contribution of 5.67 percent. It is a significant leap compared to where the industry was in 2015, when it managed to record 8.5 percent.
The telecom industry has consistently been among the top five performers of the Nigerian economy in the past five years.
By the end of 2015, the number of telecom subscriptions was 151,017,244, and by February 2023, that number had reached 226,835,732, meaning the industry added 75,818,488 in nearly eight years of the President Muhammadu Buhari administration.
Some experts say the achievement of the industry could be traced to a few policies driven by the National Broadband Plan 2020-2025, which the administration created after suspending the previous broadband plan of 2013 to 2018. However, it is important to note that it took over a year for the new national plan to come into place. Around the period Etisalat left the market due to a $1.2 billion debt it owed Nigerian banks, and a messy takeover by EMTS ensued. Also, it was under President Buhari that operators like MTN were fined $5.2 billion, which was later reduced to $1.7 billion. The fine impacted the company’s revenue as it amounted to 40 percent of its revenue at the time and led to a 30 percent drop in the company’s share value.
Telecom wins under Buhari
Niyi Yusuf, managing partner at Verraki who has spent many years consulting for different operators in the telecom industry, said Buhari achieved four wins. The first was the spectrum licensing of 4G and 5G driving mobile broadband connectivity to over 46 percent in 2022 from 6 percent in 2015 and establishing coverage for over 80 percent of the population.
The second win was enforcing SIM registration on mobile networks and linkage to the national ID, which has led to significant improvements in Know-Your-Customer and national security. The National Identification Number database had only 7 million people registered in 2015 and has now jumped to 97 million in 2023, largely due to the linkages to mobile numbers from 2019.
Under Buhari, Nigeria has seen two additional submarine cables land on her shores increasing the number of submarine cables to seven and their combined capacity to 140 terabits. The country has also witnessed investments in five new Tier 3 data centres, which have led to increased digitisation, convenience for citizens, huge volume and value of online transactions, and higher revenue for operators and also the government.
The fourth win is telecom operators creating the infrastructure to drive the growth of fintech companies in Nigeria, including some telcos launching subsidiaries as super agents and payment service banks, enabling the creation of a new digital economy, a vibrant ecosystem consisting of dynamic new entrepreneurs.
Rotimi Akapo, partner and head of Telecommunications, Media, and Technology Practice Group at Advocaat Law Practice, added the administration’s digital economy policy and National Broadband Plan 2020-2025 as one of the wins. There were also new licences and frameworks like the VAS Aggregator and MVNO licences.
Nevertheless, the wins have often come at a great cost to the operators in the industry. There have also been many cases of unfulfilled promises. For example, while the government has been quick to auction its spectrum licences, it has been very slow in resolving Right of Way (RoW) charges, which are still very high in many states across the country.
In 2017, the government initiated efforts to reduce the charges to N145 through the National Executive Council, which also includes state governors. Although a resolution was reached in 2017, it was not until 2021 that seven governors took steps to announce either a total waiver of the fee or a reduction to N145. Unfortunately, operators say as of 2022, out of the seven, only three states have taken a step further to implement what they announced.
At the recent LEAP conference in Riyadh, Saudi Arabia, Isa Ali Pantami, minister of communications and digital economy, said the state was autonomous, therefore at liberty to decide what was best for them. He, however, said the government would continue to engage them to achieve the goal of the administration.
But as the clock ticks towards May 29, it is looking highly likely the President would bid farewell without resolving the RoW problem in the telecom industry.
The industry is also saddled with one of the highest numbers of taxes at over 40, originating from the federal, state, and local governments. This has ensured that operators pay a very high cost to run their daily operations, thereby impeding the speed of infrastructure rollout.
“Regional InfraCos were licensed but none has been successful to rollout broadband backbone infrastructure, and we still consume less than 20 percent of the submarine cable capacity in the country laying waste at the coastal areas as there are no incentives for private operators to move the capacity into the hinterland. Hence, internet affordability worsened from 107th in 2021 to 114th in 2022, with quality and affordability being the two big issues,” Yusuf said.
But Pantami said the country has not done badly in terms of affordability, being among countries with the lowest price for 1GB of data in the world. 1GB costs less than N400, which is less than $1.
However, experts say measuring affordability is beyond the cost of 1GB. It has more to do with the capacity of the citizens to afford the data, even at the lowest rate. According to the International Telecommunications Union, broadband can be considered affordable when it is at or below five percent of the average monthly income.
In 2015, Alliance for Affordable Internet released a survey in which it showed that a fixed broadband connection costs the average citizen approximately 40 percent of their monthly income, eight times more than the affordability target set by the UN Broadband Commission in 2011. Mobile broadband is cheaper but still double the UN threshold, averaging 10 percent of monthly income — about as much as developing country households spend on housing.
The country’s ranking got even worse in 2022, dropping to 114 out of 117 countries in terms of internet affordability. The Digital Quality of Life Index ranked Nigeria’s digital infrastructure services at 86th, while e-government and internet quality ranked 95th and 99th, respectively.
In 2023, a report from Surfshark, an Amsterdam-based cybersecurity firm, showed that while internet quality remains poor, Nigeria ranks 109 out of 117 countries whose citizens overpay for internet services. That ranking puts Nigeria 44 times below the global average.
Search for made-in-Nigeria smartphone
As mobile network operators struggled, the country’s ambition to manufacture its smartphones locally also slipped away under Buhari’s administration.
“Given the size of the Nigerian market, we should be seeking to be the Sub-Saharan African hub for manufacturing/assembly of telecom devices starting from handsets and accessories,” Yusuf said.
Investors like Imose Mobile and Pliris Mobile Limited, launched in 2015, as well as AfriOne and Solo Aspire, launched in 2017, did not live up to expectations as these companies struggled to convince consumers their devices were made-in-Nigeria, let alone buy the phones.
As the investors failed to deliver made-in-Nigeria smartphones, in June 2021, Buhari’s administration went live on television with the claim that it has been able to manufacture smartphones locally. Otunba Niyi Adebayo, minister of industry, trade, and investment, said the ITF mobile was one of 12 phones manufactured locally by the Electrical/Electronics Technology Department of the Industrial Training Fund’s Model Skills Training Centre. Those phones also did not make it to the market.
“There are a lot of indigenous individuals as well as foreign investors that are willing to take up this project of smartphone production in Nigeria but they are crippled with the fear of a potential crash of their business due to the current Nigerian economy,” Akubue said. “Nobody wants to invest a ton of money into a business and obtain major losses but with the instability of the Nigerian economy, it seems as though that might be the case and with that factor hanging in the air, it would almost be impossible to embark on such a project,” said Ifeanyi Ifak Akubue, president of Phone and Allied Products Dealers Association.
New hurdles ahead
The government is currently at daggers drawn with telecommunications companies on the amendment of the National Information Technology Development Agency Act, which is seen as an overkill of regulations in the industry and an attempt to undermine the regulatory powers of the Nigerian Communications Commission enshrined in the Communications Act of 2003.
Representatives at the Association of Telecommunications Operators of Nigeria and Association of Licenced Telecommunication Operators in Nigeria said the passage of the bill would erase every single positive step the government has taken so far as it would draw the industry back.
Experts say there is a need for a deliberate effort towards improving the ease of doing business across the federation and the government must drive this through well-thought-out policies.
“Laying of national backbone fibre is impeded by demands by communities including high fees for right of way; the current over 40 taxes/levies needs to be urgently harmonised so we don’t kill the goose that is laying the golden eggs, likewise the protection of telecom assets against vandalisation by giving effect to the much talked about a critical national infrastructure bill,” Yusuf said.