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NigComSat’s Inconsistent Technology Development Policies By Femi Oyesanya Sunday, August 05, 2007
The recent controversy between NigComSat (Nigerian Communications Satellite Limited) and NCC (Nigerian Communications Commission) over Telecommunications provider license and frequency spectrum allocation is evidence of dysfunctional governance within the Nigerian Government. Two Nigerian Government agencies are now in a thug-of-war over issues related to how Nigeria’s recently procured Satellite will be managed.
After investing over $400 million in a satellite launched for the Nigerians by the Chinese government, it is socking that the Nigerian government had not ironed out the details of an effective procedural regime for managing this very important Technology Development investment.
The NigcomSat Option
The real issue of contention is NigComSat’s Mission Statement. On Nigcomsat’s Web Site, Nigcomsat defined it’s Mission Statement as, “to be the leading Satellite Operator and Service Provider in Africa”[1] To achieve this goal, Nigcomsat formed a Limited Liability Company whose leadership were stuffed with officials from the outgoing Ministry of Science and Technology Team and a handpicked set of Bank Investors.
According to one article, “Federal Government will hold only 40% of NigComSat's equity. As we write, Nigerian banks are ready to take 25% of our equity, which goes back to Nigerians who bought shares in the banks through the IPOs. The remaining 35% will be sold next year on the floor of the Nigerian Stock Exchange”[2]
An Analysis of NigcomSat’s Proposal In essence, the transformation of former officials of the Ministry of Science and Technology into a carefully orchestrated Limited Liability arrangement, is at attempt to reverse the gains of the Telecommunications Sector in Nigeria. According the Mr. Ndukwe, the Director General of the NCC, the Nigcomsat arrangement, “is totally against our regulatory environment. When we initiated this process, we all understand that the satellite solution is desirable for providing long distance transmission, and assist to take telecoms operators to remote locations. It is unusual to abandon this objective to pursue a 3G license to provide last mile solutions".[3]
If Nigcomsat were given a license to become a Telecommunications Service provider, the Nigerian Telecommunications sector would revert back to a cleverly designed Government monopoly. First, the Nigerian Government would be the majority Shareholder with 40% shares holding. Secondly, an artificial monopoly would exist, since the Nigerian Government would now hold control of the sole Satellite transmission capacity. Thirdly, offshoots from the Ministry of Science and Technology have no business managing Telecommunications asset. They are not experienced, have no telecommunications Administration training, and it is also not within the mandates of a Science and Technology Development agency, to pursue managerial aspects of telecommunications ventures. Nigcomsat officials have never ran Telecommunications Service operations in Nigeria.
The bottom line is, Nigcomsat wants to throw the free market gains of Nigeria’s Telecommunications Sector out of the window. In a statement issued by the Managing director of Nigcomsat Limited, Ahmed Rufai, the Ministry of Science and Technology’s anti-competition motivation are clear when he said, “Nigeria has the highest GSM tariff in the whole world, we now have the facility, technology and the technical know-how to crash the tariff”.[4] Foreign investors, who already find the Nigerian Telecommunications operating environment hostile, now have to contend with artificial price crashing policies. The Telecommunications sector would become even more hostile, with a government subsidized business as undermining competitive force.
Total Privatization is the Only Way In telecommunications, Nigeria should by now realize that the only business model that works, is a government hands-off approach. For years, Nigeria sank millions of dollars into NITEL, a State owned Telecommunications Company, only to privatize at a loss. The Nigerian Government does not need to go on another adventure, what needs to be done is that the Bureau of Privatization needs to fashion a strategy of selling off the satellite asset, and pay off the indebtedness.
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