12 Steps - Communications: Nigerian Media Reforms

The Nigerian media is probably the most vibrant in Africa, with government –owned media services reaching all corners of the country. All 36 states run their own radio stations, and most of them operate TV services. 

More importantly the Federal Government as of 1992 allowed private participation in the electronic broadcasting, while there is a long history of private participation in the print media. More recently there has been a move towards establishing an online presence by Nigerian newspapers and bloggers, but with the current low Internet penetration preventing them from fully exploiting the new media.

Besides the social and educational services they provide, the media has a role to play in Nigeria’s economy as they provide the medium for businesses to advertise their goods and services to a large audience.  Well placed and structured adverts have been shown to lead to increased sales, and invariably increased profits. This has not been lost on Nigerian businesses, which have been spending an increasing amount on advertising in the media.

However, high cost of operation, tight advertising revenues, frequent government interventions and a lack of a Freedom of Information Bill, along with poor pay for journalists in the country continue to hinder progress in the media sector.

Pushing through energy and transport reforms would help in reducing the operation costs for media operators in the country, while education reforms would increase the literacy rates, and invariably push up readerships for the print media and their websites. It would be equally important for the House of Assembly to pass the Freedom of Information Bill into law, which could, if anything, give journalists the confidence they seek to carry out investigative reports on government activities.

Broadcasting in Nigeria is dominated by State and Federal Government owned outfits, which had monopolised the industry until 1992, when the Nigerian Broadcasting Commission (NBC) was formed to license private broadcasters. 

The largest broadcasting companies are the government-owned Federal Radio Corporation of Nigeria (FRCN) and the Nigerian Television Authority (NTA). The NTA has two television services; NTA 1, which is distributed among Nigeria’s six geopolitical zones and NTA 2, which is distributed nationwide and is funded mostly by advertising. 

In all NTA operates about 97 stations across the country, creating the largest television network on the continent. Both organisations, NTA and FRCN, along with two other government owned media outlets, News Agency of Nigeria (NAN) and Nigeria Film Corporation, have been slated for commercialisation in 2009.

Each state also has a broadcasting company that broadcasts one or two locally operated terrestrial stations. This means that there are 39 radio stations and 37 television stations owned by the different state government across the country. Most operate partially independent of the state governments. 

There are currently about 17 private radio stations and 10 private televisions stations operating in the country. The likely explanation for the low ratio of private to publicly owned stations can be traced to the fact that both compete for the same pool of advertising revenue, while the state owned organisation have the luxury of offsetting high operating costs through public funding.

It also does not help that press restrictions are place on media outlets and with many viewed more as social and political tools rather than engines of economic growth.

However, such limitations are being worked around in order to reach larger audiences both within Nigeria with the growth of satellite television (which has long been preferred throughout the African continent due to the expensive nature of laying ground cables). The substantial uptake in Pay TV in Nigeria has been attributed to the broadcast of European football.

The reverse of private-public ownership can be found with the print media, with most of more than 100 national and local newspapers and publications being privately owned. There has also been a move in recent years by the state governments to divest from the state owned publications.

The newspaper sector has witnessed something of a mixed fortune in terms of size. While there has been an increase in the number of daily newspapers, the number of weeklies has declined at both national and regional level. The only increase in weeklies has been at local level. 

While newspapers suffer from poor investments and political interference, the increase in the number of dailies has brought about health competition in the sector, and has led to increased diversity on the range of topics being covered in their content. However many believe that the quality of reporting in country still leaves a lot of room for improvement as a lack of professionalism and poor pay remain a bane in the industry.  

Nigeria has a huge domestic media market of 150 million, and there is not doubt that with the right policies in place, the country can harness that to make itself a leading media giant on the continent and the rest of the world.

Restructure the Nigerian Press Council

The Nigerian Press Council (NPC) was established in 1992 to promote professional standards for the Nigerian Press and to treat all complaints received from the public about the conduct of journalists in their professional capacity as well as arbitrate on complaints made by the Press about the conduct of persons or organisations towards the media. 

NPC basically regulates the activities of newspapers and magazines in the country, along with the conduct of journalists in general. However the NPC is far from being an independent body as it is run as a department of the Federal Ministry of Information and Communications, with many of its staff deployed from the civil service, especially from the Ministry itself. 

This brings into question the decisions of the NPC and whether it would truly be able to carry out functions that do not favour the Federal Government. There are many cases in the past, where it is the clear that the NPC has acted in favour of the Federal Government rather in the interests of the Nigerian people and journalistic integrity.

Until the NPC gains true independence, it will neither have the authority or clout to direct the development of the Nigerian Press nor attract the right calibre or people and funding it needs to carry out it functions.

Merging the National Broadcasting Commission and the Nigerian Communications Commission

Due to the convergence of technologies in the telecommunications and broadcasting industries, Nigeria will be better served having one regulatory body overseeing all telecommunication activities, which will include broadcasting. Merging the National Broadcasting Commission (NBC) and the Nigerian Communications Commission (NCC) would go a long way to preventing overlapping regulatory activities.

The merger will see to giving the resulting regulatory body independence in areas such as applications of broadcasting licenses, where the NBC currently has to forward all applications to the President, who then uses his discretion in approving the license.

There is already precedence for this around the world for a single regulatory body overseeing all the communications industries in a country. In the UK, the Office of Communications, the independent regulator and competition authority for the communication industries in the United Kingdom, was established in 2003 and inherited the duties that had previously been the responsibility of five regulatory bodies:

• the Broadcasting Standards Commission,

• the Independent Television Commission,

• the Office of Telecommunications (Oftel),

• the Radio Authority, and

• the Radiocommunications Agency.

While in the United States, the Federal Communications Commission regulates interstate and international communications by radio, television, wire, satellite and cable, including wireless telecommunications.

We would also recommend that new regulatory body seek to achieve the following;

• Establishing and securing the independence of publicly owned media.

• Encourage and support the establishment of community-based media outfits. 

• Cater and push for the establishment of independent media.

• Establish a media development fund.

• Oversee the establishment of the Nigerian Media and Film School

• Oversee the digitalisation of radio broadcasts in Nigeria.

Independence of Publicly Owned Media

The newly restructured regulatory bodies will work to ensure the independence of all publicly owned media outlets. While they might get their funding from the various levels of government, they should still be allowed to operate without any interference from those in political office. 

Any evidence of political interference, such as being overly critical of the political opposition or failing to give them any coverage, should be met with serious sanctions. In the case of persistent and heavy handed interference, the license to broadcast or publish should be suspended. Publicly owned media should be run to serve the public who pay for their funding and not be used as political tools by those in office.

Community-Based Media Organisations

The establishment of community based media, which will complement, rather than duplicate the activities of commercial media outlets, should be encouraged. The community media outlets will have to 60% of local content targeted at the community they serve, with 50% of the content produced by the members of their local community. 

The community based media outlets will be allowed to carry sponsorship messages, with some restrictions, as a means of funding their activities but will be prevented from carrying full blown adverts as that would mean encroaching on the ground of commercially operated outlets.

Community based outlets have a two fold advantage as they provide relevant and tailored content for the communities they server and have also acted as an excellent training ground for many award winning journalists and media personalities in countries that have well established community based media.

The only operational community media outfit is the non-profit, campus-based, UNILAG FM, which has been granted an experimental licence only.

Independent Media

Independent or alternative media are media (newspapers, radio, television, movies, Internet, etc.) which are alternatives to the business or government-owned mass media. Independent media tend to provide a different viewpoint than that provided by major mainstream and corporate newspapers, magazines, and other print media.

Independent media is also sometime referred to as citizen media, where ordinary members of the public can also become participants in the media using the different resources offered. This form of media reporting has bloomed with the advent of technological tools and systems that facilitate production and distribution of media. Of these technologies, none has advanced citizen media more than the Internet.

In some countries, the success of small, independent, private journalists have begun to rival corporate mass media in terms of audience and distribution. Citizen produced media has earned higher status and public credibility since the 2004 US Presidential elections and has since been widely replicated by corporate marketing and political campaigning. Independent media websites like the Huffington Post and Politico, which did not exist four years ago, gained enormous popularity and credibility covering the 2008 US elections.

With Internet penetration set to increase in Nigeria, there is no doubt that independent media will have a role to play in the Nigerian society.

Media Development Fund

The Media Development Fund (MDF) will be created a fund dedicated to the developing and training of Nigeria’s media talent. The fund will awards grants to organisations to create, deliver or facilitate media specific training. The aim is to address the skills shortage in the Nigerian media industry and promote its professions as viable career choices.

MDF will be funded by:

• Subsidies levied at all media companies in the country.

• Grants from governments, organised private sector and international donors.

• Capital market investments

The Fund will be registered as a company limited by guarantee and operate independently of the government and regulatory bodies. 

The Fund will be administered and managed by a Board of Trustees representing various interests in the public and private sector and will be completely isolated from the management of the NCC and NPC.

The Fund will be required to release quarterly reports on the how much of its funds are being spent and how is being spent on any of the operations is it financing.

 

Nigerian Media and Film School

The Nigerian Media and Film School will be established mainly to train new talent in the areas of media and film production. The idea behind the school is to have a nurturing environment dedicated specifically to training students for the media industry. 

The school will be equipped with its own studios and will form alliances with various media schools around the world such the National Film and Television School in the UK. The school will be partly funded by Media Development Fund and grants from governments and international donors. The school will also seek funding by striking sponsorship deals with key local and international media corporations.

The school will be registered as a company limited by guarantee and managed by a Board of Trustees representing various interests in the media industry.

Digital Radio

While 2012 has been slated for the conversion from analogue to digital terrestrial transmission for television services in Nigeria, not decision yet has been made for digital radio transmission.

This is probably due to the vast array of digital radio technologies out there in the market. 

Digital radio broadcast offers many benefits, such as allowing for the broadcast of many radio stations offering more choice to listeners, better sound quality and the potential to introduce new data and information services that will be displayed on the radio’s small screen. For example, a station could send background information about a band when that band’s music is playing. Advertisers could send information about discounts and sales. Listeners could program their radios to receive customized weather reports, news, or stock quotes. 

Efforts should be made in selecting a digital radio technology that would be suitable in Nigeria, and plans drawn up to roll out the services in country.

Privatisation of NTA and FRCN

As the two largest media organisations in the country, the Nigerian Television Authority and the Federal Radio Corporation of Nigeria are far from setting the pace in the media industry. Both organisations are in need of investments and restructure to achieve their potential. 

It is unlikely that this will be achieved under the current commercialisation plans. Both organisations have been running commercial activities for most of their existence, so unless the government plans to invest heavily in new equipment, especially with the pending transition to digital transition for terrestrial broadcast, it is unlikely the quality of broadcast will change.

Privatising both outfits will bring in the much needed investments they crave as well as instil a level of professionalism that a lot of state owned organisations lack. It will also hopefully bring in new management, who will provide new direction in broadcasting standards for both organisations.

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.

12 Steps - Communications: Telecommunications in Nigeria (Part 2)

Telephones

The increase in the number of phone subscribers over the past five years in Nigeria has been above 40% on a year-on-year average. However most of that increase has been in the mobile phone services and the level of penetration is just about 30%, as compared to a more mature market like South Africa where it is 70%.

It is however a different with fixed lines where there were under 1.5 million active subscribers in Nigeria up from 900,000 in 2003. It is unlikely that the fixed number lines numbers are going to be anywhere what is being seen with the mobile phone subscribers. 

Nigeria does however have the most competitive fixed line market in Africa, featuring a second national operator and over 50 other companies licensed to provide fixed telephony services. The alternative carriers, besides the national carrier NITEL, combined now provide over 95% of all active fixed lines. Majority of the new lines were implemented using wireless technologies and that gave network operators the opportunity to enter the lucrative mobile market under a new unified licensing regime. This has also helped them to secure hundreds of millions of dollars in investments from local and foreign investors. 

Several microwave and fibre-based national backbone infrastructures are being rolled out by various companies, and three new international submarine fibre optic cables are scheduled to reach Nigeria’s shores in 2009, 2010 and 2011, which will deliver a major boost to the country’s underdeveloped Internet and broadband sector.

Fixed wired phone systems are expensive are construct even more so when fibre optics rather than copper wires are used. It is a lot cheaper to set up a mobile phone system than a modern day fixed line system. There is also a growing trend from around the world where consumers are beginning to ditch their fixed lines in favour of the more versatile mobile phones lines.

While fixed phone lines have their advantages including that of security and price, for now it seems the drive with phone operators in African countries is to focus more on providing mobile phone services.

Shortly after taking over the reins of the Ministry of Information and Communications, the new minister, Professor Dora Akunyili laid out her 10 point agenda for improving services in the communications sector of the economy. The agenda is primarily aimed at improving phone services in Nigeria and is listed below:

1. Dropped Calls: Telecom operators will be held accountable for providing uninterrupted connections to their phone calls made on their network as a basic prerequisite.

2. Poor Voice Signal Quality and Poor Reception: Operators will be held accountable for poor voice signals and reception of service anywhere in the country.

3. Lack of Adequate Interconnectivity or Its Partial Blocking: Operators will be tasked to work more on providing adequate connectivity to their rivals’ networks.

4. Tariffs: Policies will be implemented to reduce the current tariff and billing within the market to more competitive prices, passing savings to the Nigerian consumers.

5. Infrastructure Sharing: Efforts will be made to get operators to jointly own and share various telecommunications facilities, wherever it is practical and prudent to do so. This is aimed at reducing capacity building costs for the operators and invariably passing those savings to the consumers. 

6. National Roaming: Operators will be encouraged to sign local roaming agreements to enable subscribers roam from one network to another whenever there is no service fro their primary network. 

7. Number Portability: A number portability framework will be implemented to enable subscribers keep their numbers when moving from one network to another. This will ensure that a subscriber is not penalised for leaving an uncompetitive network.

8. Convergence of Technology and Services: The possibilities and potential benefits of convergence between information technology, telecommunications and broadcasting will be explored.

9. Deployment of Fixed Lines: More fixed lines would be deployed for their full benefit of fixed, more stable, cleaner, safer and cheaper calls.

10. Adequate Rules Enforcement:  NCC will fully enforce adopted international regulations and guidelines for all operators in deployment of facilities. It will also collate existing and proposed optic fibre network plans of various operators into a national transmission plan to achieve a harmonised transmission network. Finally the NCC will facilitate the establishment of the unified national emergency communication system and work with all authorities to facilitate the eradication of multiple taxes.

If properly implemented, the Minister’s agenda should bring about an improvement in the quality of telephone services as well as a reduction in the mobile phone tariffs. The Minister has a reputation for getting the job done and only time will tell if her efforts will make a difference. We would however like to make a recommendation of our own, which would be urgent reversal in the fortunes of the current National Operator, NITEL. 

Reprivatisation of NITEL

NITEL which enjoyed a monopoly for decades in the telecommunications industry was sole provider of fixed phone lines from its inception in 1985 till 1999 when where the market was deregulated and other operators were licensed.

Unfortunately, being run as an extension of the government department, NITEL failed to capitalise on its position and only managed to provide 450,000 subscriber lines for a population of 120 million. In a bid to increase its reach and efficiency, the Federal Government decided to privatise the outfit and has followed a long arduous route to have it done. 

The process of privatisation started in 2000 but was stopped two years later, when Investor International London Limited (IILL), the then investor failed to pay the $1.317 billion it offered. In 2003, Pentascope was appointed by government to run a three year contract to prepare the sleeping giant for sale but this failed following alleged embezzlement and incompetence. 

In 2006, Orascom of Egypt offered $260 million but this was rejected by the federal government on the ground that it was ridiculously low. Transnational Corporation of Nigeria

 (Transcorp) came in with a better offer of $500 million in November, 2006.

However, following the failure of Transcorp to revive NITEL’s fortunes, the government revoked the sale agreement and now in the process of revaluating the worth of the company and seeking new partners to provide much needed investment in the nation’s National Operator.

However the sale reversal has also been plagued with legal problems and it is unclear whether the government will be able to meet the February, 2009 deadline it has set for completing the sale reversal process.

NITEL’s fall from a dominant position in the market has been nothing short of surprising. According to NITEL, as of June 2004 it had 720,000 lines installed, although only around 500,000 were activated. This figure represented around 85% of the total fixed lines in the country. As of September, 2008, NITEL only had 60, 000 active subscribers, representing 5% of the total number of subscribers.

NITEL and its mobile phone subsidiary Nigeria Mobile Telecommunication (Mtel), have an advantage of their rivals in terms of already existing, though decaying infrastructure and a considerably larger phone line capacity. However it organisation suffers from a poor reputation resulting from the poor delivery of services and the reputation of its staff. It still however represents an exciting opportunity for potential investors, more especially in the fixed line market, which still has considerable room for growth. 

With the right amount of investment and management in place, NITEL can become competitive in an already vibrant sector. However the longer this is left, the more ground NITEL loses to its competitors, and the more likely it is to become a failed corporation.

12 Steps - Communications: Telecommunications in Nigeria (Part 1)

Telecommunication is an important part of modern society. In 2006, estimates placed the telecommunication industry's revenue at $1.2 trillion (USD) or just under 3% of the gross world product. Its importance on economic and social development cannot be underestimated and it direct effects include;

 

• Modern telecommunications provide a cost effective and time efficient medium for accessing and diffusion of new ideas and knowledge which have been identified by economists as key elements for stimulating economic growth rate.

• Availability of telecommunication services help to improve information flow between rural and urban regions and help reduce the gap of economic development between them, the same can be applied to developed and developing countries.

• While telecommunication services are to some extent a low cost substitute for information handling labour and have very low substitutability with other traditional inputs such as capital, production, labour and materials, they can however help businesses by increasing the productivity of each of these traditional inputs and thus increasing the efficiency of the entire production process. 

• By facilitating information flow and by enhancing the communication between buyers and sellers, telecommunications increases the efficiency of market operations. 

• Besides its direct contribution to end-users, telecommunication networks and their use generate significant spill over effects in other sectors of the economy. Once the telecommunication infrastructure is built in any nation, it is available to all sectors of the economy and some of its benefits include the lowering of transaction costs, the ability to search widely or the ability to control a greater pan of production and organizational activities. 

As a result, the social rate of return on telecommunications is expected to be much higher than its return just on the telecommunications investment itself. Studies done by the United Nations Economic Commission for Europe, ITU and the World Bank, recognize the role of telecommunications in stimulating efficiency and growth of other sectors in the economy.

• The easy acquisition and transfer of information among economic units, and the facilitation of rapid two-way communications over distance helps in the coordination of economic activity. This provides a platform to improve the capability of business managers to communicate with each other and make better decisions and business plans. Telecommunications help to remove, to a great extent, the physical constraint on organisational communications in all sectors of the economy. 

However it is a mistake to view the impact of telecommunication as purely economic. Telecommunication facilitates emergency medical assistance, long distance consultation, and quality assurance to remote locations, easing the cost of providing medical care throughout the nation subject to a tight national budget constraint. 

Telecommunications also helps to spread education to remote locations, with voice, data and video services through high bandwidth allowing effective distance learning. Recent development of Inter networks as a layer on telecommunication networks is making this effort more cost effective.

For decades the telecommunications market in Nigeria was dominated by, Nigerian Telecommunications (NITEL), a government monopoly. NITEL began operations in 1985 when the Nigerian External Telecommunications and the Telecommunications Division of the Post and Telegraphs (P&T) Department were merged.  

Prior to this development, it was the P & T that was responsible for the provision of domestic telecommunications services, while the Nigeria External Telecommunication (NET) provided international services.

Although deregulation of the telecommunications sector in Nigeria began in the late 1990s with 11 companies given license to provide fixed-line services to end consumers (so-called “last mile services”), it was not until the arrival of mobile phone operators in 2000 that the Nigerian telecommunications market took off.

In a short time the number of mobile phone subscribers surpassed the number of fixed lines and year-on-year growth of over 40% saw the Nigerian telecommunications market emerge as the most vibrant on the African market and the largest ahead of South Africa in 2008, with close to 60 million digital mobile subscribers and just under active 1.5 million fixed lines.

The Nigerian telecommunications sector is one of the better performing sectors of the Nigerian economy and one of the fastest growing employers of labour in the country. As of 2004, the sector had an impact of creating 5000 jobs directly and more than 400,000 indirectly. Its rapid growth has seen some project that the industry will be worth US$ 10 billion by 2010.

Despite the recent boom, the industry is still blighted with relatively high tariffs, poor quality of service including dropped calls, poor voice signal quality and lack of adequate interconnectivity; and poor penetration, serving only a third of the Nigerian population (The more developed South African market has a higher penetration rate of 76%). 

Even with operators facing a hostile business environment which includes high operating costs, the constant threat of vandalism to their equipment and a reduction in the Average Revenue Per User (ARPU), the Nigerian market still remains one of enormous potential and growth.

The Nigerian market is probably the most liberal and competitive market on the African continent and is likely to remain that way in the next few years due to the following;

• Globacom, Nigeria’s Second National Operator and the one of the largest mobile operators in the country has announced that it expects to commission its international submarine cable, Glo-1, for commercial services in March 2009. The multi-billion dollar infrastructure will connect the West African region to the United Kingdom, providing a major boost to Nigeria’s bandwidth requirements.

• Main One Cable Company is also expected to start services on it submarine cable in 2010, and the ACE (Africa Coast to Europe) submarine cable by Orange and France Telecom expected in 2011.

• The Federal Government has revived the stalled Rural Telephony Project, which was designed to provide telephone service in 96 rural communities in Nigeria. The project, which is partly funded by a $500 million loan from the Chinese government, was recently awarded to five telecommunications companies in announcement recently made by the Minister for Information and Communications.

• 2008 saw another player, Etisalat, throw its hat in the Nigerian market as a mobile phone operator. Etisalat is a telecommunications service provider in the United Arab Emirates since 1976 and has operations in 16 countries traversing the Middle East, Asia and Africa. In Africa, Etisalat’s operations span 10 African nations including Sudan and Zanzibar. Since its entrance into the Nigerian market, the company has gone a nationwide marketing blitz to advertise it services and win over customers of its more established competitors.

• In October, 2008, Daar Communications launched its direct-to-home digital satellite multi-channel television platform, DAARSat. The digital TV platform, which has the capacity for 120 channels, started off offering about 45 channels from around the world to consumers. Its entrance into the market is expected to introduce competition and reduce the prices for consumers, as well as speed the transition from analogue to digitalised terrestrial broadcasting in line with the global deadline of 2015 set by the International Telecommunications Union (ITU).

One major drawback for the telecommunications industry however was the loss of the Nigerian space satellite to a solar flare. The satellite is expected to replaced by insurers, but an exact date of when that will happen is not known,

Before looking at the individual services offered by the telecommunications sector in the country, we look like to put forward some proposals to maximise the potential of the Nigerian market and take advantage of the recent growth spurt in the industry. 

Energy Reforms

Telecommunications operators in Nigeria are faced with the high cost of doing business in the country and one of the major challenges they face is the erratic power supply. The operators have cited this as the singular most contributory cause for the poor quality of service (QoS) offered by all operators. Operators have to generate their own power and that adds a significant cost to their overhead costs, which they then pass on to consumers. For instance MTN, the leading mobile phone operator in the country, has a power generation in comparison to the public power supply, of 3 to 1.

There are also the added costs of providing security for their power generating equipment as there is a high demand for them in the country. The equipments are a target for armed bandits who already have an establishment market to sell on to.

By prioritising energy reforms, the Federal Government can ensure constant power supply to many of the operators’ infrastructure leading lower costs in operations and an increase in the quality of service offered.

Education Reforms

Industry leaders have cited that an emphasis on the provision of science and mathematics education provides an edge in closing the technology gap between develop and developing countries. The global call has been spearheaded by Bill Gates, founder of technology giant, Microsoft, who through his foundation, the Bill and Melinda Gates Foundation has made philanthropic contributions to educational causes around the world.

Technological advancements, and indeed the telecommunications industry, are dependent on the basic understanding of mathematics and science and then applying them to solve complex everyday problems. By placing an emphasis on the teaching of sciences at all levels of education, it is possible for a nation to make it competitive on the global stage and indeed challenge many of the more established nations. 

Indeed this was one of the approaches of the Asian Tigers (Malaysia, The Republic of Korea, Taiwan, Hong Kong, and Singapore), who increased the student enrolments in science, engineering and technical-related courses so as to intensify the production of manpower with scientific and technical knowledge.

A similar approach in Nigeria is likely to have the same effect and provide a steady flow of talent from which technology related industries, including the telecommunications industry could benefit immensely from. More importantly, Nigeria can replicate the success of these countries in providing value added services, not only for the local Nigerian telecommunications market but the global market as well.

Prioritisation of ICT

The Federal Government will need to place more emphasis on the use ICT to promote its use in the Nigerian society. Though the government some moves towards providing e-Government services to its citizens, a majority of its dealings are still non- electronic, and it has been slow in implementing some of the earlier promises made under the National e-Government Strategies. 

Embarrassingly, even the Government’s official website (www.nigeria.gov.ng) was shut down for several months in 2008. Perhaps even more disheartening for many IT practitioners in the country are the plans of the Federal to merge the IT sections of federal ministries with the departments of Planning and Statistics. 

By aggressively embracing e-government, the Federal Government can easily place itself as one of the largest consumers of telecommunication services in the country. Given the role that technology has to play in today’s modern economies, it is imperative that the pushes a technology initiative as much as it would any health, education or agriculture initiative.

At this stage we would recommend splitting the Ministry of Information and Communications into two distinct organisations;

• Ministry of ICT – This would oversee regulation of all information and communication technology activities in the country, including telecommunications and postal services. It will also implement all of the Federal Government’s ICT strategies.

• The Press Office - This would be under the supervision of the Office of the Presidency and will be merged with the Office of Public Communications. The new body will handle all the public relations for the Federal Government. 

 

Stimulate Local Telecommunications Manufacturing Base

Developing a local telecommunications and computer manufacturing base in Nigeria will go a long way in developing and maintaining growth in Nigeria’s telecommunications market. 

Creating a conducive environment for foreign investments (tax breaks, enabling environment, constant energy, adequate security and quality graduates from the educational system) for the local manufacturing of telecommunications equipments will not only help in reducing the cost of operations for many of the service providers in the country and provide cheap communication devices such as mobile phones to the Nigerian consumer, but possibly create a new line of export for the country, bringing in valuable foreign currency.

12 Steps - Communications: Reforming Nigeria's Postal Service

Postal services are typically restricted to the transmission of information and tangible objects, wherein written documents, typically enclosed in envelopes, and also small packages, are delivered to destinations around the world.

However in some countries, the postal system also has some authority over telephone and telegraph systems and it others, they also provide additional services such as savings accounts and handling applications for passports.

While postal services can be privately or publicly owned, governments all over the world often place restrictions on private postal delivery systems. Since the mid 19th century national postal systems have generally been established as government monopolies with a fee on the article prepaid. However many of the publicly owned postal services run on deficits are often used as examples of government inefficiencies.

Plans of privatisation of national postal system to make them more efficient and cost effective are usually met with fierce opposition by groups who will like the government to still play the traditional role of owning and operating the postal service because of the peculiar nature of the postal system also providing a social service to the communities it serves. 

However, Holland’s TNT, Japan’s Japan Post and Germany’s Deutsche Post are examples of where the government has relinquished its role to the private sector and the resulting companies have gone on to become successful companies.

Postal services in Nigeria dates back to the 19th century when the first post office, a branch of the London General Post Office, in the country was opened by the former British Colonial Masters in 1851. This was followed by a private company, the Royal Niger Company and the British Post Office operating their own postal systems in the country.

Governmental role in the Nigerian postal system came in 1900, when the Southern Nigeria Government took over the responsibility of running the postal system in the entire country. At the time of independence the postal services was administered jointly with Telecommunications as a government department with 176 Post Offices, 10 sub Post offices and 1,000 Postal agencies were in the country.

Since then the postal service has grown in leaps and bounds with the establishment of the Nigerian Postal Service (NIPOST), as a government-owned and operated corporation responsible for providing postal services in Nigeria. It has more than 20,000 employees and runs more than 5,000 post offices.

NIPOST is also responsible for the regulation of all postal activities in the country, including that of the courier services, which are being provided by private local and multinational companies.

However the organisation, like a lot of publicly owned enterprises is besot with its problems, with lost mail, poor public opinion of the postal service, poor infrastructure and high operating costs, abysmal debt collection, and operational inefficiency being some of the challenges it faces.

Nigerians face significant social opportunity costs that arise from an inefficient postal sector, and the government through its Bureau of Public Enterprises (BPE) contracted a Dutch company, NethPost, in 2004 to make recommendations on reforming the Nigerian postal industry.

The key notes of the recommendations made by NethPost included:

• The formulation of Postal Sector Policy/Strategy;

• The design and development of new postal sector legislation;

• Establishment of an independent sector regulatory agency;

• Restructuring of NIPOST into New Business Units (NBUs); and

• Privatization of the NBUs. 

NIPOST has already begun to implement some of the recommendations made including;

• Adding new services such as the Parcel Post Venture (a parcel delivery service), PostCash (a domestic money transfer service) and Cash4Africa (an international money transfer service).

• Trimming the workforce, as the organisation announced plans in March, 2008 to lay off 4,000 of its 9,000 workforce.

• Providing e-Business services and creation of a virtual private network for 1500 of its post offices across the country through an agreement signed with Galaxy Backbone Plc in September 2009.

• Improving debt collection drive through the setting up a committee specifically dedicated to going after debtors.

The BPE has also pushed plans to bring about changes in the postal sector legislation and drafted the Postal Act 2007, which also proposed the to expand the reserved service advantage currently enjoyed by NIPOST and levy private courier companies to subsidize postal services it provides. The act has yet to be passed in the National Assembly.

Plans are also afoot to bring about the establishment of a regulatory body for the postal sector as the Postmaster-General of the Federation and Chief Executive Officer of NIPOST, Mallam Ibrahim Mori Baba, announced in November, 2008 that a draft of the bill to pass the body’s creation into legislature was being sent to the National Assembly.

With the reforms being undertaken by the Government for the postal sector to prepare NIPOST for commercialisation, we would like to mention a few factors that should be taken into consideration;

• First, developments such as e-mail, wireless communication devices, and the Internet are transforming business and communication patterns, calling the future of letters into question. 

• Second, postal operations themselves are evolving due to developments in information systems, postal automation and retail services, logistics, and distribution technology. Modern postal services now see themselves as logistics and distribution companies, rather than a social service provider.

• Third, with growing globalization of the sector, national postal services face increased competition from domestic and foreign entities.

• An efficient transport system will play a crucial role in producing an efficient postal system. The more efficient the transport system, the quicker and cheaper it would be to deliver postal services. At the moment it takes NIPOST more than three days to deliver a N50 stamped letter anywhere in the country despite its origin at an average cost of N1, 000.

• The current low postal volume in Nigeria, less than half a mail sent or received per person per annum which less than a lot of developing countries, has been attributed to the loss of confidence in the postal service. A more efficient and reliable postal system is likely to bring about an increase in the postal volume within the country.

We will at this point like to make a few recommendations of our own which we will hope will provide fresh impetus for reform in a long mismanaged sub-sector of the economy. We would recommend the following;

• Speed up the setting up of the Postal Regulatory Commission: This should help in eliminating the role that NIPOST plays as both operator and regulator in the postal service industry. It would be extremely difficult for any organisation to regulate itself since it is hardly going to enforce or create rules that threaten its position in the market and favour its competitors. 

To create a truly competitive environment where everyone has a fair chance of succeeding, an independent regulatory body will need to be formed, backed with all the powers it needs to pursue offenders, including NIPOST, to the full letter of the law.

• Continue the push towards commercialising/privatising NIPOST: The push to give the NIPOST its own autonomy independent of government interference and restrained commercial mandates will go a long way in making NIPOST a commercial viable entity. 

The postal industry in Nigeria is estimated to worth about N100 billion but currently generating only N5 billion through NIPOST. The lack of infrastructure, political interference and inefficiency has been blame for the lack of NIPOST to achieve its potential. Around the world, commercialising or privatising postal operations have been successfully implemented where the postal service was treated more as a business concern than a social service.

Commercialising and then eventually privatising NIPOST will allow it to pursue a strategy of aggressive growth and efficiency, diversification, and internationalization, and possibly turn it into one of the Africa's preeminent postal and communications operators. 

• Demonopolise the postal sector: A gradual elimination of the monopoly that NIPOST currently enjoys for all postal articles below 500 grammes as enacted in the Nigerian Postal Service Decree in 1992 would help foster competition in the postal sector. Competition usually leads to increased efficiency by operators within any business sector and invariably lowers cost of operations, which leads to improved services and lower costs for the customers.

This was the case in Germany where Deutsche Post's exclusive right to deliver letters less than 50 grams in Germany expired on 1 January 2008 following the implementation of European legislation. A number of companies are vying to challenge Deutsche Post's near monopolistic hold on letter deliveries, including Luxembourg-based PIN Group and Dutch-owned TNT Post

• Universal Service Obligation: The BPE proposed in its draft of the Postal Act 2007 that NIPOST be compensated from a fund contributed to by all operators in the postal industry for carrying out the function as the universal service provider (providing a baseline level of services to every resident of a country at just, reasonable, and affordable rates). We believe that other companies who are willing to perform the role a universal service provider should also be allowed to participate in the scheme. 

The interested companies would apply for licenses from the Postal Regulatory Commission, who will make a determination of the type of services and localities to be covered, as well as the level of compensation on a case by case basis. Failure to provide a universal service, which will be reviewed on a periodic basis, will result in fines or withdrawal of the license.

Ongoing reforms in the postal sector will need to take in the scope of traditional postal monopoly of NIPOST being reduced or eliminated to provide for more competition. NIPOST, and indeed future private postal operators, will have to respond to these changes in the regulatory environment by, for example, reducing costs and improving service.