New Telegraph

Telecoms Sector Scaling Hurdles to Make Progress

Although Nigeria’s telecoms sector has been plagued with various challenges, it is, however, making progress while facing hurdles hindering its growth to contribute to the socio-economic development of the country. Abolaji Adebayo reports

Information and communication technology (ICT) has become the backbone of Nigeria’s socio-economic development. Apart from being one of the major sources of revenue generation for the government and so many individuals in the country such as it is in other countries across the world, ICT has also been aiding other sectors of the economy to grow. Since its liberalisation about 24 years ago, Nigeria’s telecoms industry has re- corded tremendous feats.

However, at 63, Nigeria is still battling with some challenges surrounding the growth of its telecoms landscape, which include policy, infrastructure, lack of skills, brain drain, and many others. However, despite the identified challenges, coupled with a tough economic environment, the sector has continued to progress. Though the progress is not at the expected speed, there is hope for a robust telecom industry in the country. Before looking at the successes hitherto recorded by the sector, there is a need to analyse the challenges faced by the industry players.

Challenges

Nigeria’s telecoms sector has been struggling in an environment plagued by erratic electricity supply, ethnic and religious divides, Right of Way (RoW) disputes, fiber cuts, high capital requirements, multiple taxations, infrastructure vandalism, and regulatory hurdles. At 63, Nigeria has not been able to solve the issues around its power challenge. The price of fuel that would have served as an alternative to power-generating machines has continued to skyrocket.

The situation has affected the operation of many tech businesses in the country. The industry players are now looking at another source of generating power from renewable energy but the cost has also put many of them aside. Apart from this, the operators have continued to lament over multiple taxation payable by them.

They claim that they now pay about 41 different taxes while striving to survive in their businesses. Success However, as evidenced by its consistent 16 per cent contribution to GDP, Nigeria’s telecoms sector has demonstrated resilience in the face of socio-economic and political challenges.

The progress in the telecoms sector has been attributed to the doggedness of the regulatory agency – the Nigerian Communications Commission (NCC) at the helm of the transformative journey – stakeholders said the leadership of the agency led by its Executive Vice Chairman, Prof. Umar Danbatta, should be commended for the feat. Despite the challenges, the Agency, with its determination, has made sure the sector continues to grow, putting up various strategies to build a world-class telecoms industry for the country.

Investment

Since the advent of GSM and the expansion of broadband infrastructure, Nigeria’s telecoms sector has attracted a staggering $77 billion in investment. It was recorded that $39 billion of this sum flowed into the sector during the last eight years under the Danbatta-led NCC. Moreover, the sector now contributes a substantial 16 per cent to the nation’s Gross Domestic Product (GDP), a remarkable increase from the 8 percent it contributed in 2015.

In the last eight years, the sector has doubled its contribution to the GDP, surpassing many other sectors in the development of the nation’s economy. “The growth of the telecoms sector reflects the surging demand for telecommunications services across various sectors of the Nigerian economy, from agriculture and commerce to education.

“It is a testament to the resilience and adaptability of the industry, which weathered global challenges like CO- VID-19 and economic recessions while maintaining its bullish stance,” said Dan- batta, who credited the remarkable journey to “thorough sustained regulatory excellence and operational efficiency” by the NCC. Local content Indeed, telecoms has become a shining example of local content development, with significant growth in digital innovation, human capital development, and skills acquisition among Nigerian youths.

This has enabled them to compete on a global stage, earning recognition from multinationals and international agencies alike. Within six months, between August 2022 and January 2023, Nigeria produced over 100 million Subscriber Identity Module (SIM) cards. The Head of Financing and Stakeholders Engagement Team, Nigerian Communications Commission (NCC), Aderonke Sola-Ogunsola, the country was able to record the achievement following the ban put on the importation of SIM cards by the Federal Government last year.

She explained that the locally produced SIM cards had been ordered by various telecommunications companies putting an end to the importation of SIM in Nigeria. She noted that through the Nigeria Telecommunications Indigenous Content of the NCC, the country could serve as the SIM manufacturer hub for West Africa. Following this development, the Commission said the country was working towards becoming a hub for the supply of SIM cards to other West African countries.

While noting that the Nigeria Telecommunications Indigenous Content policy was put in place to encourage innovation among the youths and promote the digital economy, Sola-Ogunsola said: ‘’There is the need to ensure individuals, businesses, and the nation harness derivable benefits and the opportunities offered by the emergent digital culture, to improve quality of life, grow businesses, and leapfrog the national economy.”

Danbatta, at a forum, recently disclosed that investment in local production of Subscriber Identity Module (SIM) cards had grown to the tune of N55 billion. He stated that the country had been recording achievements with its local content policy in telecommunications. He noted that since the government banned the importation of SIM cards last year, local production had witnessed tremendous growth in terms of investment.

“This ban has not only eased the burden on our demand for foreign exchange but has also created business in excess of N55 billion for the local SIM card manufacturers in Nigeria which in turn has created direct and indirect jobs,” he said. The NCC boss said the Commission was fully committed to the drive of the Federal Government to place Nigeria’s economy on a sustainable pedestal through all the necessary policies put in place.

He said: “When we created the Nigeria Office for Development of Indigenous Telecoms Sector (NODITS) as a Special Purpose Vehicle under the Commission to drive the National Policy for Promotion of Indigenous Content in the Nigerian Telecommunications Sector in July 2021, the Office was given four areas of focus: Manufacturing, Human Capacity, Research & Development (R&D) and Software & Services development for the telecoms sector.

“I am happy to inform you that NTICE is one of the achievements of NCC through NODITS because it has served not only to promote Pillar number 5Sez (Strategic Partnering) of the Strategic Management Plan SMP 2020- 2024 of the Commission but has also become the flagship indigenous content event for the industry. “The Commission has also incentivized the manufacturing of Corrugated Optical Duct (COD) that will be used to protect our fibre infrastructure from the incessant cuts experienced by our service providers.

The Commission is equally committed to continuously supporting Micro, Small, and Medium Enterprises (MSMEs) and Innovators to promote our talented young persons and ventures through Angel Investments, R&D support, exposure to investors, and sponsorship of local and international tech events. “Nigeria with its rich history of innovation, resilience, and creativity as well as our diverse culture, talents, and perspectives has birthed solutions that uniquely cater to our challenges and aspirations.

The NTICE 2023 platform is a celebration of these achievements, a testament to the Nigerian spirit of ingenuity. “NTICE is also a place to nurture and support the burgeoning talent pool within Nigeria. “By showcasing indigenous innovations and providing opportunities for young entrepreneurs, we are not only nurturing our local talents but also encouraging a culture of entrepreneurship and creativity that will propel Nigeria onto the global stage of technological leadership.”

5G/Finance

In financial terms, the telecoms sector has continued to make a significant contribution to the national economy. A report from the National Bureau of Statistics (NBS) indicates that telecom and information services added a substantial N2.508 trillion to Nigeria’s GDP in the first quarter of 2023, representing 14.13 per cent. One of the sector’s forward-looking strategies is the adoption of 5G technology, positioning Nigeria as one of the early adopters in the global digital economy.

This bold move paid off handsomely, generating $820.8 million for the federal government from 5G spectrum license fees paid by operators like MTN, MAFAB, and Airtel. The recent launch of Starlinks broadband services, a satellite-based wireless broadband offering with nationwide coverage potential, is another feat by the NCC under Danbatta. This service, made possible by the NCC’s issuance of a license to Elon Musk-owned SpaceX, is already available in various parts of the country.

Mobile subscription

Under Danbatta’s leadership, the number of telephone users in Nigeria has surged to 218.9 million, while internet subscribers and broadband users now stand at 159.5 million and 88.7 million, respectively. These figures, coupled with the creation of jobs, both direct and auxiliary, during a period when other sectors were shrinking, have earned Nigeria the respect of international bodies like the International Telecommunication Union (ITU).

Stakeholders said Nigeria can draw inspiration from the telecom sector’s success story, saying if the goal is to elevate Nigeria into the ranks of the world’s top 20 economies, the Federal Government must replicate the triumphs of the telecom sector in other industries. Danbatta’s leadership has shown that with vision and dedication, Nigeria can indeed achieve greatness. “In the grand scheme of economic transformation, the telecoms sector’s journey under Danbatta’s stewardship has been nothing short of awe-inspiring.

Beyond its undeniable contributions to the GDP and job creation, it has paved the way for profound advancements in entertainment, banking, agriculture, e-commerce, and various primary sector frontiers. The steady rise in quarterly GDP contribution, now at a phenomenal 16 percent, means that the telecom sector has successfully insulated itself from the socio- economic and political vagaries that have stymied growth in other sectors. “So, how did Danbatta and other stakeholders in the telecom industry achieve this remarkable feat?

It’s a question that warrants deeper exploration. How did telecom transition from mere kilobytes to terabytes in growth, market size, and innovativeness in an environment where electricity supply remains horrendously erratic? How did it rise above the divisive forces of ethnicity and religious affiliations that have plagued the nation’s public discourse and rendered it ineffective? The telecom sector’s resilience in the face of challenges like Right of Way (RoW) disputes, fiber cuts, high capital requirements, multiple taxations, infrastructure vandalism, and complex regulations deserves a closer look.

“The answers to these questions lie in the unwavering commitment of Dan- batta and his team to finding innovative solutions and actively engaging stakeholders for the greater good of the sec- tor and the larger economy. They have demonstrated that a robust regulatory environment, coupled with visionary leadership, can lead to extraordinary growth and prosperity,” they said.

Last line

Meanwhile, there are a lot of things to be done to position Nigeria’s telecoms sector among the globally recognised industry.

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