BusinessDay

How states use MDAs to frustrate telcos

Telecommunications operators in Nigeria have paid over N700 million in levies and charges to a minimum of 180 MDAs (Ministries Departments and Agencies) of government across the federation between 2011 and 2013 in order to get the nod to deploy network infrastructure.

The multiplicity of state government MDAs involved in the site deployment process, according to an analyst, is the offshoot of a dysfunctional federal system. According to them, the current situation inhibits network rollout activities and timelines and stunts service quality upgrades.

“These MDAs are probably aware of the huge profits generated by telcos in the country, and are bent on milking them, so as to boost Internally Generated Revenue (IGR),” one analyst familiar with the trend told BusinessDay.

It is estimated that Nigerians spent N2.14 trillion on voice calls and Short Message Service (SMS), amongst other services, between January, 2011 and December, 2012. This is based on an Average Revenue per User (ARPU) of N912 monthly accruing from over 100 million subscribers, to telcos in the country. Industry revenues have been projected by Research firm, Pyramid, to gross N1.7 trillion by the end of fiscal 2013.

BusinessDay investigations show that the MDAs involved in the standard permitting process include the State Town Planning Authority, State Urban Development Board, State Ministry of Environment, Infrastructural Development Council, Environment Control/Protection Agency, Local Government Authorities and Community Development Associations.

On the average, in order to complete each site, operators are compelled to engage and pay levies to all of these agencies in the 36 states of the federation.

Each of these agencies brings with it, its own encumbrances. For instance, the entire EIA process takes an average of about two years to complete.

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“This has very serious consequences, considering that sites often need to be built and activated at very short timelines, to meet unexpected traffic demands and guarantee acceptable quality service,” says a top executive of one of the telcos.

BusinessDay checks show countries such as Ghana, Zambia and Kenya have long instituted best practices that at best have eliminated bottlenecks that inhibit both broadband GSM growth and deployment.

Ghana for instance provided in section 95 of the Electronic Communications Act, 2008 (ACCT775), that the district assemblies can only determine the rate to be paid by a network operator or service provider, in respect of it business within the district, with the approval of the National Communications Authority.

In the Zambia, the government recently waived all duties and importation taxes on telecoms equipment and inputs, for a period of five years in the first instance, while the regulator provided additional support through reduction of spectrum fees for rural coverage. This is in recognition of the fact that telecommunications services are a critical social infrastructure .

In Kenya the regulator slashed regulatory fees charged various services in the telecoms and broadcasting industry in the country.

Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), said in a report,” I think there is a need for us to have the ears of the Presidency on this matter, the reason being that without a clear directive to state and local governments, and even some local government authorities, this matter will continue”, he further added.

These MDAs often go to great lengths in the name of revenue generation. Some MDAs have asked telecoms operators to pay building/planning approvals generally chargeable on commercial premises. MDAs also impose annual renewal fees on networks.

To justify these fees, MDAs often claim to want to assure ‘structural integrity’ and environmental compliance, and other activities which are statutorily within the exclusive remit of the Nigerian Communications Commission (NCC).

BusinessDay also gathered that discriminatory ‘permit’ fees are often imposed on telecoms infrastructure and installations, without any legitimate justification. A typical example is the Environmental Impact Assessment (EIA) fee often demanded by state government ministries and agencies.

This, is in spite of the fact that the EIA process is exclusively within the remit of the federal government’s ministry of Environment.