Ben Uzor Jr
In spite of the
significant growth recorded in Nigeria’s telecommunications industry after it
was successfully liberalised in 2001, very little of the $18 billion Foreign
Direct Investment (FDI) in the sector over the years has been retained in the
country, industry analysts have said. This, according to the industry analysts,
is due to the dearth of a local content law in the sector, and has resulted in
enormous capital flight. London-based research firm, Pyramid Research,
highlighted that revenues generated by the telecoms industry amounted to $8.6
billion in 2010. This, according to the research company, shows an increase of
6.7 percent over the revenues generated by telecoms operators the previous
year.
Going forward, Pyramid
Research predicted that revenues would hit $11 billion (N1.7 trillion) by 2013.
Beyond this, Nigeria’s highly competitive telecoms (ICT) sector is clearly
dominated by foreign players, which according to industry analysts accounts for
the huge capital flight recorded in the sector. There are strong reservations
in the telecoms industry that what Nigerians derive from this industry has been
diminishing over the years due to low levels of local participation in the
sector. Industry analysts have however criticised the Federal Government’s
failure to formulate and implement enabling policies geared towards
strengthening local content and encouraging the patronage of locally
manufactured ICT products.
But more importantly,
industry watchers have called for the formulation of a telecoms version of the
Petroleum Industry Bill (PIB), which is essentially aimed at enhancing
increased local participation in the oil and gas industry. BusinessDay further
gathered that the country’s ICT landscape loses N68.4 billion annually to
bandwidth purchase from organisation and businesses abroad. Omobola Johnson,
Minister of Communication Technology, had earlier disclosed that Nigeria’s
purchase of foreign-made phones, SIM cards, computers and software maintenance
had gulped over N59 billion. BusinessDay investigations reveal that the fences
used to secure the telecoms masts (base transceiver stations) are imported into
the country by operators. Emmanuel Ekuwem, past president of the Association of
Telecommunications Companies of Nigeria (ATCON) confirmed this, saying, “It is
a worrisome situation for us in this country. It is true the fences built
around telecoms mast are imported. Do you know that some of the network
components that could be manufactured locally are imported? Just think about
the spin-off jobs that could be created by manufacturing some of these things
locally.
“It is a shame because any
serious nation that intends to take its place in the comity of nations must
develop IT products and solutions. “The bad news is that very little of the
much talked about $18 billion investment remain in Nigeria because of very low
local content contribution to the sector. “The industry is import-intensive. We
keep on carrying cartons of manufactured products into the country. There is an
urgent need for Nigerian content development in the ICT industry. We need an
equivalent of the PIB in the ICT/telecoms industry. What is good for the
petroleum industry is also good for the ICT industry. Our governments at all
levels must begin to patronise made-in-Nigeria ICT goods. We must patronise
Nigerian experts. Very often, we pay them peanuts, while paying their foreign
counterparts that we engage a hundred times over.”
Lending her view to the
issue, Funke Opeke, chief executive officer, MainOne Cable Company, told
BusinessDay that Nigeria remains largely a consumer of telephony services. “Nigeria
contributes minimal local content to the services enjoyed. Telecom has become a
larger part of our Gross Domestic Product (GDP), so it creates some jobs and
income; however, the significant gains from providing the initial capital,
network and subscriber equipment, software and specialised services are gained
offshore. This trend, in all honesty cannot foster discernible economic
growth.” For Dagogo George of the National Office for Technology Acquisition
and Promotion (NOTAP), it is disturbing to the discerning mind that what
Nigerians celebrate as huge FDI in telecoms may have in actual fact led to
unrestrained capital flight.
“Yes, it is true that
through FDI, investible funds, technical and managerial expertise, as well as
know-how are brought into a country but the receiver-nation must have the
‘magnet’ to absorb and retain some of the funds, the expertise and the know-how
in order to depend less on importation and fast-track the development of its
economy. Without such a ‘magnet’ a country cannot benefit from FDI, no matter
how huge it may worth. This is why Nigeria has not benefited much from the said
$18 billion FDI in the telecoms sector”, he explained.
Industry analysts are all
agreed that the wholesale importation of ICT products used in the country is a
vivid indication that Nigeria is not benefiting much from the huge FDI at its
disposal. The Federal Government, through the Ministry of Communications
Technology had only recently released a draft National ICT Policy aimed at
fast-tracking growth in the industry. The policy states that inadequate local
content development is one of the challenges facing the nation’s ICT industry. The
draft policy document further states, “ICT local content is grossly
underdeveloped in Nigeria. This has resulted in over-dependence on the foreign
importation of software and hardware and diminished opportunity for capacity
building in ICT content creation. In addition, there has been the related drain
on the Nigerian foreign exchange.”
To tackle the challenges,
the policy document specifies that efforts must be made to ensure that local
content, including the production of local software and hardware, is properly
developed through appropriate local content laws; content development in
indigenous languages; and encouragement of the industry to focus on solutions
and services that meet the needs of the society.
First published on Business Day Media, Tuesday 05, 2012
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