27 December 2012

Nigeria: NCC to Curb Capital Flight in Telecoms Sector

The Nigerian Communications Commission has expressed the need for local content development in the telecoms industry, aimed at addressing capital flight and unemployment in the country.

The commission is pushing for indigenous companies to have significant role in the provision of services and supply of materials to the telecommunications industry.

Executive Vice Chairman of the NCC, Dr. Eugene Juwah, who disclosed the plan, said that active participation of local companies in direct contract delivery to telecoms players had become critical to developing the telecoms industry on a sustainable basis.

Juwah who spoke at a recent telecoms forum organised by the Association of Telecoms Companies of Nigeria (ATCON) in Lagos, said the Nigerian telecoms industry had come a long way in the last decade, and that by allowing indigenous companies to have a space for active participation would help in creating jobs as well as curbing annual capital flight in the industry.

According to him, between 2001 and mid-2012, investment inflow into the nation's telecoms industry increased from $500, 000 to over $25 billion, but telecoms analysts have argued that while the investment into the sector had been astronomical, a larger percentage of the money, which should have remained in the Nigerian economy, was being lost to capital flight, as most infrastructure contracts were awarded to foreign firms, which repatriate the money realised in executing the projects to their respective countries.

Juwah, who noted that the industry had grown tremendously from about 400, 000 subscriber number in 2001 to over 109 million active subscribers in October, 2012, said operators depended heavily on foreign network vendors such as Alcatel- Lucent, Ericsson, Qualcoms, Cisco among others, for the provision of the critical infrastructure from switches, routers, base station controllers to base transceivers stations which require state-of-the-art technologies.

Juwah argued that some of the supply and services decisions in an industry such as the telecommunications industry in Nigeria must not only be fair but must be seen to be fair.

According to him, a situation where an operator issues services contracts to a vendor and the vendor goes ahead to, in some cases, fully sub-contract the services contract to local companies for implementation raises some pertinent questions.

"It is, however, important for local companies to have significant role in the provision of services and supply of materials to telecommunications industry if we must develop the telecoms industry in Nigeria on a sustainable basis over the long term, and provide more employment opportunities for Nigerians," he said.

The NCC boss however maintained that before the practice of local content development in Nigerian could be fully achieved, some critical issues needed to be put in place.

He listed them to include the need to ascertain areas in the provision of services to the telecoms industry where local companies have the required competence to compete in; the need to ascertain whether there are local companies that have the required organisational competence required for some services in the telecoms industry; and whether or not there are local companies with the economic capacity to deliver on such projects.

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