12 Steps - Communications: Telecommunications in Nigeria (Part 3)

Internet

Nigeria has the highest number of Internet users on the African continent (10 million as of June 2008) which is a far cry from December 2000, when only 200,000 people when connected online. This represents a change in user growth of 4,900%. However as impressive as that figure is, it only represents an Internet penetration of 7.2%, as compared to the world average of 21.9%.

Much of the recent growth has been attributed to the number of people accessing the Internet using their mobile phones. According to analysts at Nielsen Online, an Internet media research group, 7.3 million Nigerians accessed the Internet using mobile phones during the second and third quarters of 2008, representing a change in 25%, while those who accessed the Internet using a PC slumped by 3% during the same period.

It is thought that the increase in mobile Internet use is due to operators offering flat-rate tariffs for data, more user-friendly handsets and improved network technology. The pattern of use also indicated that mobile users were going online to catch up on the weather, sports and news as well as access their e-mail.

The trend however belies the use of broadband Internet (high data rate Internet access) in Nigeria, when according to ITU, there are only 500 subscribers in the country, a compared to 800,000 in South Africa. The reason for the low broadband Internet uptake has been attributed to absence of last mile equipment and high cost of bandwidth.

Broadband access, which is used now being used as an economic indicator, has been shown to enhance economic growth and performance, and that the assumed economic impacts of broadband are real and measurable.

Some of the economic variables that have been measured as a result of broadband access include higher employment annual growth rate; higher housing rental rates; higher rate of growth in the number of business establishments; and an increase in the share of establishments in IT-intensive sectors.

The Federal Government has recognised the importance of providing broadband access and through the NCC has developed two programmes which aim at breaking down the barriers of broadband access for the average Nigeria – the State-Accelerated Broadband Initiative (SABI) and Wire-Nigeria Initiative (WiN).

SABI is designed to take broadband infrastructure to all the 36 state capitals of the country as well as urban and semi-urban centres. The project which is partially funded by the Universal Service Provision Fund, a fund set up by the NCC and contributed to by local telecom operators, will see private companies build fibre-optic based broadband infrastructure and deploy high speed wireless networks in and around some of Nigeria’s most populated urban and semi-urban centres. 

The project will be complemented by the Wire Nigeria Initiative, which is to provide a national backbone infrastructure which will allow multiple operators to hook on at any point to deliver quality broadband transmission services across the country It is expected that the first wireless broadband services as a result of the both projects will be rolled off by the middle of 2009.

There are some companies already offering broadband services in the country, with mobile operators offering mobile broadband access through their 3G networks and a couple of others offering WIMAX services. 

However it must be noted that as observed in other countries, particularly Malaysia and Philippines, the initial pick up for broadband services can be slow but it then speeds up. We believe that this will be the same with Nigeria, and with the landing of the Glo-1 submarine cable (bringing with it bigger and cheaper bandwidth) and the roll out the first phase of SABI later in the year, we will witnessing the beginning of the Internet revolution in Nigeria in very much the same way the mobile phone changed people’s lives.

 

We however have some recommendations in preparation for the new online society of Nigeria.

Increasing Personal Computers Penetration

The availability of personal computers has been central to the growth of the Internet in recent years. The uptake of personal computers in Nigeria is low, and has been put at just under 2% as compared to other developing nations such as the Philippines with 8.9% and Vietnam with 7.8%

The relative high cost of purchase has been identified as one of the major barriers to owning a PC as a standard mid-range computer costs between US$650 and $750. To help boost the uptake of personal computers, the government introduced the Computer for All Nigerian initiative (CANi), a Government Assisted Purchase Program (GAPP), designed to help Nigerians acquire computers at affordable and discounted prices. However the programme limits the access of the ordinary Nigerian to these computers as they are primarily targeted at civil servants in the employment of the government alone.

More tellingly, the CANi initiative was generally not locally driven as none of the local PC vendors, who are already facing stiff competition from imported brands, were excluded from the scheme. The government is also involved in One Child Per Laptop (OLPC) project, which aims each child with a rugged, low-cost, low-power, connected laptop. 

While these projects will help will increasing computer ownership, it is doubtful if there will more than scratch the surface of increasing PC penetration in a nation of 150 million. If the government will need to apply far more radical and broad reaching schemes to improve PC uptake. Some of these could include:

• Zero tax policies for local computers manufacturers/assemblers and an exemption on duties on the import of computers parts.

• Tax breaks and reduced duties for imports personal computers.

• Introduce a tax deduction scheme for employers in the private sector who provide PCs for their employees. The more employees they buy a PC for to conduct their work, they less tax they have to pay at the end of the financial year.

• Income tax deductions for families who make a PC purchase.

Developing an E-Commerce Legal Framework

An increase in Internet use should lead to an increase in e-commerce activities in the country but this could be hampered by the lack of a legal framework regarding e-commerce activities. The absence of legal protection for consumers and business for any business activities they carry out online could act as a deterrent. 

The passing of e-commerce legislature concerning intellectual property, consumer protection, contract law and dispute resolution, compliance and enforcement, taxation and classification of e-commerce transactions will go along way in creating confidence in using the Internet to carry out day-to-day business transactions.