States’ apathy may stall implementation of national broadband plan

Huge uncertainty trails federal government’s target of a five-fold increase in broadband penetration by 2018, in consonance with the National Broadband Plan (NBP), due to growing complexity in obtaining state government buy-in in the implementation of the policy, industry insiders have said.

Nigeria, Africa’s largest economy by GDP, has a broadband penetration of 6.8 percent. 15 months after the approval of the national broadband policy by President Goodluck Jonathan, only six states out of the 36 states of the federation have agreed to work with the Ministry of Communications Technology to create the much needed enabling environment for speedy deployment of broadband infrastructure.

 “The large size of the country and getting state governments from different political parties to implement the national policy on broadband are some of the challenges facing the implementing stakeholders as far as the NBP is concerned”, Femi Abikoye, ICT Policy Officer for Paradigm Initiative Nigeria (PIN), a social enterprise that connects underserved youth with Information Communications Technology (ICT) opportunities in order to improve their livelihoods. Industry insiders are however of the view that the Broadband Council is faced with a daunting task of convincing many state governments in the country to come on board the implementation process as a result of political affiliations and party sentiments.

 Industry observers also say that these state governments and their agencies need to begin to see telecoms as a veritable tool for socio-economic development, rather than a cash cow. “Multiple taxes levied on operators by state governments represent another huge challenge facing the telecommunications industry”, said Segun Ogunsanya, chief executive officer, Airtel Nigeria. These taxes, fees and charges are those payable to the MDAs (Ministries Department and Agencies) of the federal, states and local government agencies. There are also myriad charges imposed by non-governmental bodies such as community development areas, resident associations and ‘Area Boys’.

All of these taxes and charges are often generally aggressively pursued, and according to an industry watcher, through the illegitimate use of law enforcement agencies, shutting down and occasionally vandalising sensitive telecommunications equipment. Investigations by BusinessDay show a raft of multiple taxes being imposed on the operators by the federal, various state governments and their agencies across the federation.

Operators are often times forced to pay such taxes as permitting tax, annual renewal taxes, miscellaneous fees, development levies, tenement rates and even sanitation fees, in one base station, sometimes running well above N200 million, depending on the state.

 Few months ago, the Osun State Government vowed to confiscate the base stations of South Africa’s MTN, over its failure to pay the Right of Way (RoW) permit fees due to the state to the tune of N399.4 million.

On April 7, the base stations had been seized by the officials of the state Internal Revenue Service (IRS), but were later released two days after following the intervention of a senior executive of the telecoms company. Market observers however told BusinessDay that overlapping and often conflicting jurisdictions between the different agencies of government often lead to these multiple layers of taxes, charges and fees.

“Telecoms subscribers will continue to experience poor quality of service because many of the networks cannot complete network expansion initiatives due the issue of multiple taxes.

Telecoms operators spend significant amount of resources meeting the financial obligations of these states. It is a recurrent problem which affects the growth of the industry, said Usen Udoh, director, high communications, Accenture Nigeria, in an interview.

In view of this, the Ministry of Communication Technology and the Broadband Council chaired by Omobola Johnson, is promoting a ‘’Smart State’ initiative geared at engaging governors and relevant authorities at the state and federal level to quickly address the issue of multiple taxation impeding the acceleration of the roll out of critical infrastructure across Nigeria. “The ministry strongly believes that the elimination of multiple taxes will result in cost effective, accelerated and massive deployment of broadband infrastructure, which will enhance quality delivery issues being experienced by telecoms subscribers,” the minister said.

According to Johnson, the main aim of the Smart States initiative is to ensure that effective measures are adopted to remove arbitrary charges and eradicate multiple taxations across the nation. Anambra is one of the Smart States recently selected by the Broadband Council to facilitate Information Communications Technology (ICT) infrastructure rollout critical for national development. Other Smart states selected by the National Broadband Council include: Bayelsa, Gombe, Katsina and Ondo. Lagos, under the astute leadership of Babatunde Raji Fashola has already reduced Right of Way (RoW) charges by 85 percent. RoW procurement contributes at least 50 percent of the cost of fibre build – one of the highest in the world today. Besides, the Bayelsa state government has already signed a Memorandum of Understanding (MoU) on the Smart state initiative. The agreement with Anambra state government will foster an enabling environment for the deployment of Communications Infrastructure. The pact will indeed assist in the reduction in the cost of network deployment and an increase in the rollout of such networks to commercial centres, underserved and rural areas by telecoms operators.

Ben Uzor