By Chinedu Nwachukwu
It is an openly shared concern that the telecommunications industry should avoid the pitfalls of the petroleum industry. More than half a century after crude oil was discovered in commercial quantity in Nigeria, the bulk of exploration and production processes are still dependent on foreign technology and imported material.
People wish the nation to reap the full benefits of the telecommunications sector of the economy conferred by the economy of scale deriving from our population and market potentials.
Ebinimi Tebepah and Clement Inyambe, two Nigerian researchers have addressed this situation by posing the question: "What happens if suddenly foreign companies operating in the sector disengage? What implication will this have for the telecommunications sector?
In order to avoid the pitfalls of the oil industry reoccurring in the telecommunications sector, a conscious policy direction should be in development of human skills and technological competences to fill in the gaps in the sector. This will prevent the over-dependence on foreigners and expatriates, as well as (low indigenous technological capabilities) as evident in the oil industry from occurring in the sector.
In a paper titled "Local Content Policy Development in the Telecommunications Sector" published in the African Wireless Communications Yearbook by Kadium Publishers (United Kingdom) in 2009, Tebepah and Inyambe made the following, among other, recommendations:
Government should formulate a clear operational definition of the local content policy development of the telecommunications sector in Nigeria; Government should make conscious efforts to build the human capital in the telecommunications sector.
This should involve the restructuring and proper funding of secondary and tertiary education; research and development, training and skilled manpower development in the sector;
Government and the private operators in the telecommunications sector should establish a world class research institute that will be involved in the development of high tech innovations within the shores of the country.
This institute should be properly equipped with qualified personnel to carry out such tasks; Government should encourage collaboration between foreign operators and local indigenous companies in the area of technological development; and Government should ensure a seamless connection between the telecommunications sector and other sectors of the economy such as Power and Steel, Oil and Gas, Education, Transportation and so on.
Too often, an unstable policy environment has been cited as a major disincentive for investment – both foreign and local.
However, the environment for investment in Nigeria’s telecommunications sector is changing that perception, with the sector estimated to be worth over $25 billion in Foreign Direct Investments (FDIs).
Eugene Juwah, executive vice chairman of the Nigerian Communications Commission (NCC), puts the welcome trend down to direct effect of the Nigerian Communication Act 2003. He says of the legislation: “The power of the Nigerian Communications Act (NCA) guarantees a safe market for investors that they can indeed bring their money into Nigeria and be sure that the law is there to protect their investment.”
It has become a carrot with which foreign investors are attracted to Nigeria, to partake in an industry that has all the ingredients to make Nigeria a market leader. These ingredients include a huge population that only needs to, and inevitably will get more sophisticated and more economically buoyant.
Recent surveys have put subscription to mobile telephony at over 116 million. Meanwhile, about 47 million Nigerians have access to online internet services.
But the NCA has also armed NCC with the legal wherewithal to foster discipline,
professionalism and competitiveness in the industry. It is believed by some to be one of the most progressive laws in the country, to the extent that it allows NCC to regulate the industry according to the best global practices as enshrined by the International Telecommunications Union and other regional telecoms regulatory bodies.
The Commission is therefore in a position to undertake a variety of frequency auctions that will come up until 2015. This will give millions of more Nigerians access to telecommunication services. Juwah says: "Broadband technology will enable Nigerians enjoy data services by opening up new vistas of competition in the industry.”
However, despite all the efforts that NCC is making to encourage investment in the sector, the terrain remains dominated by foreign investors.
Of the current licensed operators of mobile telephony (GSM), only Mike Adenuga's Globacom is a Nigerian-owned business entity. The rest are owned and controlled by foreign investors.
So the question is: what are indigenous Nigerian investors waiting for before taking the plunge into an industry that is the largest and fastest growing in Africa and among the 10 fastest growing telecom markets in the world, and may remain the most lucrative in the unforeseeable future?
* Chukwu, a business analyst, writes from Lagos
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