Regulation issues in ICT sector and the quest for investors

Since the advent of a new government in the country and the unveiling of new policies, particularly as they affect the Information and Communications Technology (ICT), stakeholders and industry experts have been at their wits’ end to suggest ways forward, especially in terms of regulatory framework. BODE ADEWUMI examines the role of regulation in the ICT industry, government’s meddlesomeness and how some policies may have adverse effect on the quest for Foreign Direct Investment (FDI) into the country.

 

It would be foolhardy of anyone not to acknowledge the developmental strides of the Nigerian Communications Commission (NCC), the chief regulator of the Information and Communications Technology (ICT) sector of the Nigerian economy since its formation in 1992.

Robust regulations of the industry by the NCC have seen the number of active telecommunications subscribers multiplied exponentially to 154,529,780 in December 2016, while internet users rose to more than 94 million. The growth in the sector has rubbed off on all other sectors of the Nigerian economy with the reality that ICT has become the major driver of the economy.

This for a fact has fuelled the realisation that the sector is a veritable option to Oil and Gas, which has made the economy a monolithic. While many Nigerians were making calls for the shift to agriculture as alternative to oil, stakeholders and those in the know have been canvassing for the ICT as the most viable alternative to oil.

But the ICT industry, also like others and the country as a whole needed the infusion of foreign investors to record a boost. The Federal Government, since the advent of democratic government under President Olusegun Obasanjo has been canvassing for foreign investors to come and invest in the economy by providing goods and services and to also create employment. To a lot of extent, Nigeria had been able to record much success in this regard, but a number of factors may have contributed to a slide in the continuous influx of investors alike.

The issue in the ICT sector today in terms of regulation is the Quality of Service (QoS), and as a matter of fact, most sanctions imposed by the regulator arose from QoS except for the recent fine placed on the major operators over failure to disconnect unregistered SIM cards from their networks.

Perhaps the biggest issue in the telecommunications industry concerning regulation in the sector was the N1.04 trillion (about $5.2 billion) fine slammed on MTN for failure to disconnect 5.1 million unregistered subscribers’ SIM cards from its network in October 2015.

But such fines, particularly the one on MTN, has polarised the country on the one hand and the industry stakeholders and the government on the other hand. Typical of Nigerians, many of who felt the company has been ‘milking’ them; the fine was a welcomed development and a step in the right direction.

Those in the know, however, understand the negative impact of such level of sanction on an investor who has contributed in no small measure to an industry as massive as the ICT sector. For Engineer Bayo Banjo, a former President of the Nigerian Internet Group (NIG), the MTN fine was capable of wiping out a company if totally executed.

He said: “The MTN fine was an unfortunate issue which could wipe out a company if such penalty is enforced to the letter. It is like throwing out the baby with the bath water if it is enforced in full. Of course, there are rules that must be obeyed and sanctions may be issued, but reality has to be observed.

“In the case of MTN, the only offence committed by MTN was that it said the truth because it was not the only one who committed the offence. If the company lied, may be it would have avoided the fine but it spoke the truth. It is wrong to destroy a company with an unrealistic fine.”

He stated that government remains the major problem in the country in terms of policies and meddlesomeness in most sectors of the economy. According to Banjo, no reasonable investor will invest a dime in an economy that is operative in the country today.

In the wake of the fine issue, a Communication expert, Dr. Dele Odunlami had warned on the implications on MTN Nigeria.

“I am aware that MTN is investing heavily in technologies and infrastructure that will bolster the ICT in Nigeria, particularly by the time we achieve the digital switch over on the new date of June 2017.  I know they have invested in the LTE technology capable of doing broadcast, data and voice. But now that this issue of fine is dragging on for this long, I am afraid the company may be weighed down as I am sure they would want this matter resolved on time and I believe the earlier the matter is resolved, the better for the Nigeria economy” Odunlami said.

Although the issue was later resolved but not without some echoes in the polity.

Engineer Gbenga Adebayo, the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), agreed that the current state of the economy, especially in terms of exchange rate would not encourage investors to come to Nigeria, adding that this was not any way limited to the ICT industry alone. He urged the government to do something very urgent to address the current economic recession if the economy is to grow at a greater pace.

The Chief Executive Officer of Medallion Communications Limited, Engineer Ikechukwu Nnamani, also praised the NCC for the robust regulation being provided in the industry, but he also maintained that the NCC has not provided an enabling environment for small operators to thrive.

He said: “Regulation in the industry by the NCC has been strong. The regulator’s policies have led to the growth of the industry so there is need to appreciate the activities of the regulator.

“But then, there is the need for the NCC to intervene in inter-operator relationships. The NCC has always taken the approach of letting operators handle their inter-operator relationship by themselves. This has created a situation where there is massive anti-competitive behaviour by some operators.