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'Not Party Time Yet' as Nigeria grapples with telecommunications reform
Unformatted Document Text:  “Not Party Time Yet”: Nigeria grapples with Telecommunications Reform 15 thorny goal has been the development of a local telecommunications manufacturing base. This goal, as we have noted, requires the technical expertise of leading international telecommunications firms. These firms unfortunately have been largely absent from the Nigerian market. The question remains, how can they be attracted? Attracting those foreign firms depends squarely on creating an enabling environment for them. Presently, such an environment is largely absent. We have already mentioned problems with market stability, perception of regulatory unfairness, and perceived market unprofitability. The NCC under Nigeria’s democratically elected government has struggled to maintain a semblance of independence from the government, which is important in attracting credible foreign investor interest. NCC’s efforts have, however, been hampered by tainted decisions made by the Commission in its early years. Those decisions have been influenced by the Commission’s regulation by the government and its close link to the government. Ultimately, this has led to charges of regulatory unfairness and general instability in the market. It will take a long time to restore the confidence of foreign investors but the present NCC is at least restoring some credibility to its decisions. In addition, the President Olusegun Obasanjo has recently voiced his opinion assuring NCC’s regulatory independence and encouraging foreign investment in Nigeria (Ihetughe, 2002). The issue of perceived market unprofitability is complex and somewhat perplexing. Newly-licensed GSM providers have raised huge revenues in less than one year of operation in Nigeria (Aihe, 2001 and Iboma, 2002). In fact, Iboma argues that MTN’s average monthly revenue per user of $60 is almost double the global average of $34. Such revenues are mouth-watering for key foreign telecommunications investors. However, such investors must be concerned with section 26d of the 1992 Decree which gives the Nigerian regulator (NCC) the right to make regulations in matters related to tariff charged by operators. This provision essentially means that market forces alone may not determine profits. However, some legislative leaders have indicated opposition to any type of non-market price control (Ochiaka, 2002). Clearly, the restrictive section 26d needs to be rewritten by Nigerian legislators if the needed foreign expertise is to be attracted to help develop a manufacturing base.

Authors: Onwumechili, Chuka. and Okereke-Arungwa, Joy.
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“Not Party Time Yet”: Nigeria grapples with Telecommunications Reform
15
thorny goal has been the development of a local telecommunications manufacturing base.
This goal, as we have noted, requires the technical expertise of leading international
telecommunications firms. These firms unfortunately have been largely absent from the
Nigerian market. The question remains, how can they be attracted?
Attracting those foreign firms depends squarely on creating an enabling
environment for them. Presently, such an environment is largely absent. We have already
mentioned problems with market stability, perception of regulatory unfairness, and
perceived market unprofitability.
The NCC under Nigeria’s democratically elected government has struggled to
maintain a semblance of independence from the government, which is important in
attracting credible foreign investor interest. NCC’s efforts have, however, been hampered
by tainted decisions made by the Commission in its early years. Those decisions have
been influenced by the Commission’s regulation by the government and its close link to
the government. Ultimately, this has led to charges of regulatory unfairness and general
instability in the market. It will take a long time to restore the confidence of foreign
investors but the present NCC is at least restoring some credibility to its decisions. In
addition, the President Olusegun Obasanjo has recently voiced his opinion assuring
NCC’s regulatory independence and encouraging foreign investment in Nigeria
(Ihetughe, 2002).
The issue of perceived market unprofitability is complex and somewhat
perplexing. Newly-licensed GSM providers have raised huge revenues in less than one
year of operation in Nigeria (Aihe, 2001 and Iboma, 2002). In fact, Iboma argues that
MTN’s average monthly revenue per user of $60 is almost double the global average of
$34. Such revenues are mouth-watering for key foreign telecommunications investors.
However, such investors must be concerned with section 26d of the 1992 Decree which
gives the Nigerian regulator (NCC) the right to make regulations in matters related to
tariff charged by operators. This provision essentially means that market forces alone
may not determine profits. However, some legislative leaders have indicated opposition
to any type of non-market price control (Ochiaka, 2002).
Clearly, the restrictive section 26d needs to be rewritten by Nigerian legislators if
the needed foreign expertise is to be attracted to help develop a manufacturing base.


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