There is higher percentage of foreigners among top management staff
In the next three years, Nigeria’s capacity in telecoms infrastructure production would have surpassed what is needed to be self-reliant. The nation has set 2025 to be selfreliant by at least 80 per cent, while targeting to stop importation of telecom equipment for the development of its telecoms sector.
This was emphasised by the Minister of Communication and Digital Economy, Prof. Isa Pamtami, who said the government was making frantic efforts to make sure Nigeria becomes a producer country rather than consumer country, and stop importation by the next three years. Industry players have already identified that there is too much gap between the Nigerian local content and the foreign telecom products which has to be bridged to sustain growth in the sector.
The Nigeria Telecommunication Commission (NCC) had disclosed that importation of telecoms hardware products into Nigeria had climbed to 86 per cent while only 14 per cent are produced by the local companies.
The Commission stated that 77 per cent of the software used in Nigeria was imported from other countries while a paucity of 23 per cent is produced locally.
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Data on Base Transceiver Stations (BTS) also revealed a dominance of foreign products over those produced locally with 88 per cent coming from foreign countries while only 12 per cent is manufactured in Nigeria. In regard to the workforce, there is also higher percentage of foreigners among top management staff when compared with other staff, with Nigerians making up 31 per cent in relation to the foreigners who make up 69 per cent.
However, the ratio of Nigerian to foreigners (for Senior, Line, Contract and Outsourced staff) in the industry is high in absolute terms (I.e. 98% to 2%). The NCC believes that the Nigerian telecoms sector has experienced a lot of growth over the last two decades. “For example, the sector has experienced a significant increase in the number of subscribers and an exponential increase in the inflow of Foreign Direct Investment (FDI).
For the country’s FDI gains, the industry moved from a paltry $60 million private sector investment in 2000 to about $68 billion in 2016,” the Commission said. In the first quarter of 2022, the sector attracted a total of $57.79 million in foreign direct investments.
This is according to the latest capital importation report released by the National Bureau of Statistics (NBS). This shows a 2.6 per cent increase year-on-year when compared with the $56.28 million the sector attracted in Q1’21.
The NBS data also revealed that the funds attracted by the telecom sector accounted for 3.67 per cent of the total capital importation in the first quarter of this year, which stood at $1.57 billion. The Q1’22 figure came as a respite for the telecoms sector, which had been consistently recording a decline in foreign investments over the last five years.
This was despite the government’s sustained efforts at wooing foreign investors into the Nigerian telecoms sector, with broadband infrastructure at the heart of various international campaigns. However, much as there has been a lot of progress in the sector, there is high level of capital flight in the sector.
According to statistics made available by the Association of Telecommuni- cations Companies of Nigeria (ALTON), the annual outflow of foreign exchange for the telecom sector amounts to approximately $2.16 billion. The Association stated that CAPEX programmes take $750 million; Network Software Licensing takes $250 million; $800 million goes to Management Fees; $157 million spent on Managed Services (Tier 2 & 3 Support); and $200 million is spent on miscellaneous including international circuit, roaming and terminations reconciliations. To revert the trend, the federal government has declared determination to grow the local content and develop at least 80 per cent of the local production as emphasised by the Minister of Communications and Digital Economy.
Meanwhile, industry players said the government had to walk the talk, saying many such promises were not realised at the long run. They charged the government to release a master plan for the realisation of local production and start consulting the private experts who can develop the project.
The CEO coming of Global Tech, Fashole Akindoye, told New Telegraph that what the government needed to do first is to gather the experts and have an in depth discussion with them on the way forward. “Government has always been talking about developing local contents but nine has been achieved. Government only talks they don’t work their talks.
They set policies but they don’t implement them. There is need for us to be up and doing if we must move forward not only talking,” he said.