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POLICY INTERROGATION, DISCOURSE AND DEBATE BY OSELOKA H. OBAZE
Regulatory Agencies Failing Nigerians
Op-Ed, Wed. 27 April, 2016
Nigeria’s much coveted governance change will be greatly enhanced; if the nation’s regulatory agencies can be pressed into carrying out their mandates fully. Advancing President Muhammadu Buhari change agenda will require an intrusive evaluation of performance and service delivery by the regulatory agencies. The president will certainly confront some challenges and surprises, including some regulatory agencies not conforming to international best practices. It will be observed also that whereas regulatory mandates are clear, regulatory officials skirt diligent enforcement. Hence, Nigeria’s regulatory sector, despite perceptible proactivity, remains turbulent and uncharted waters. Governance works best when there is inclusivity, with consumer rights and interests protected. The absence of such protection creates challenges. For now, matters in the realm of the regulatory agencies are increasingly tense and conflictual. And despite their tortured excuses, regulatory agencies charged with communications, electricity, banking, and petroleum matters, have failed to protect Nigerian consumers fully, as per their mandates and Buhari’s change agenda. As with the old order and the contagion of past wrongs, Nigerians continue to suffer when regulatory agencies underperform or fail. Buhari’s government is also being ill-served.
Statutorily, a regulatory agency is an independent body, "with the autonomous authority to exercise authority over some area of human activity in a supervisory capacity." Regulatory commissions’ mandates are commonly adapted to national and niche imperatives. In Nigeria's case, extant and prospective consumer protection regulations seek to "protect and promote the interests and welfare of consumers by providing consumers”. Accordingly, a draft bill now before the National Assembly, seeks to redress prevailing and future shortcomings. Still, the strength and limitations of consumer regulations isn’t in the prescriptions, but in ensuring full compliance and enforcement. Nigeria is not bereft of niche sector regulators. Indeed the critical segments of the economy have existing regulations and regulators, including the Bureau of Public Enterprise (BPE), Fiscal Responsibility Commission (FRC), Securities and Exchange Commission (SEC), Nigerian Communication Commission (NCC), Central Bank of Nigeria (CBN), Nigerian Insurance Deposit Corporation (NIDC), Nigerian Electricity Regulatory Commission (NERC), National Agency Food and Drug Administration and Control (NAFDAC) and Standard Organization of Nigeria (SON), and several others. Naturally, these agencies lay claim to optimizing their mission. But in reality, their impact, where felt, is often below par, considering the din of public agitations and protestations related to their respective sectors. In fairness, however, most agencies still contend with the dichotomy between the Executive and Legislative arms, and their meddlesomeness of government, as they seek to wield influence, while failing to hold the agencies accountable.
The enormity of regulatory failings in Nigeria are best viewed from the prism of Nigeria’s debt profile. Nigeria’s national debt which stands at N12 trillion ($65 billion), remains troubling. Eighty-six percentage of Nigeria’s domestic debt, is owed by states and the federal government. While most Nigerian States remain trapped in a debt peonage, Nigeria’s indebtedness of N1.63trn to international and domestic institutions is well over 35% the FY 2016 national budget. How does a nation wrack up such debt, when the Fiscal Responsibility Commission (FRC), has oversight responsibilities on such matters? In blaming the political leadership for fiscal profligacy, commensurate blame must be assigned to the FRC, for failing to hold the States to established borrowing thresholds – a 3% borrowing ceiling in relation to their total annual revenue. Acceptably, the FRC failing is compounded by the conduct of State Assemblies that acquiesce to State Governors taking out loans without due process and due diligence.
It’s known that Nigerians GSM users, consumers of electricity, petroleum products and bank customers are routinely subjected to arbitrary charges. The choice is to either accept such high tariffs or do without the services. Challenges persist across board, but the successful deregulation of Nigeria's aviation sector and the GSM telephony system and the proactive role of NAFDAC attest to what is possible. Yet, the negative impact of government’s meddling was highlighted recently, by the regulatory impasse between NCC and MTN over the latter’s 5.1 million unregistered SIM cards. Though the NCC imposed a N1.04 trillion ($5.4 billion) fine on MTN for non-compliance with Regulations 19 and 20, Section 15(2) of the Registration of Subscription Regulations, Act 2011, the Federal government intervened, accepting N50 billion as a "good faith deposit". President Buhari then blamed MTN as “complicit in the country’s fight against the deadly Boko Haram sect by not dealing decisively with unregistered sim cards which were thought to have been utilized by terrorists”.
The regulatory performance challenges confronting the Buhari administration are inherited. But change continues to elude the niche sectors, even as Buhari's 'change' mantra becomes intense. Prevailing shortcomings in just three key sectors, electricity, petroleum and banking, attest to the underperformance of our regulatory agencies. Nigeria's electricity supply remains epileptic just as electricity tariff pricing and cost of meters to consumers remains outrageous and contentious. In 2013, Nigeria's eleven Discos contracted with the NERC and BPE to bridge the 3 million metering supply gap. Three years later, the Discos have barely managed an incremental installation of 152,000 meters, a paltry 4.5% increase, even as the balance of 251,531 has been financed by Nigerian consumers, via the Credited Advance Payment for Metering Initiative (CAPMI). The confused state is best attested to by the National Assembly wading in last February, and directing NERC to rescind its 45% increase in electricity tariffs. Likewise, petroleum processing, distribution, pricing and management are yet another failed remit of our regulatory agencies. Nigeria was recently embarrassed as its acute fuel shortage gained international notoriety. Despite the best efforts by Minister of State for Petroleum, Dr. Ibe Kachikwu, Nigerians are still being gouged with PMS selling up N400 per liter, instead of the prescribed N87 per liter. Besides enforcement failure, what is most appalling is the policy deficit that translates to the absence of national strategic petroleum reserve. Still the present challenges reflect a throwback to warped public policies, including huge sectoral leakages and malfeasance in the Petroleum Trust Development Fund.
Nigerians have also not benefitted from banking regulators as they should. Combined, CBN, NDIC and FRC regulations and even the establishing of a CBN Consumer Protection Department in 2012, did little to stem corporate non-compliance and excessive bank charges passed on to unsuspecting consumers as Cost of Transaction. With over 6,000 public complaints of unauthorized bank charges in 2015 alone, CBN compelled Deposit Money Banks (DBMs) to refund N6.2 billion to consumer. Inexplicably, after CBN abolished COT charges, it introduced Monthly Current Account Maintenance Fee and a Stamp Duty charges. By arbitrarily scheming off unfathomable bank charges from poor Nigerians, Nigerian banks diminish their disposable income and purchasing power. Likewise, the SEC is failing to assist Nigerians cash in their N90 billion unclaimed dividends, by letting those banks seeking to shore up their capital base to frustrate the process by imposing stiff charges, some times as much as N2,000 to validate the e-dividend forms. Such conducts are the inverse of regulatory objectives. Oddly, regulatory bodies and banks do so without taking responsibility for advantages they gain by damaging government’s cashless policy.
Why are Nigerian regulatory agencies underperforming? First, the agencies are increasingly self-serving and self-administering, despite vouchsafing due diligence and commitment to protecting public interest. Government is also not respecting fully the statutory independence of the agencies. Conflicting interests linked to the appointment of political cronies into the agencies, further undercut their diligence and efficiency. Given the vested interest of public servants in corporations that the agencies oversee, government bureaucrats often allow regulators to slither out of their obligations. But Nigerians are also partly to blame for not asserting their rights; a fact further compounded by the low threshold of public awareness. Finally, because constitutional dictates prohibit the removal of statutory agency appointees, unless if found criminally liable, officials of most commissions inherited by President Buhari will stay until their tenure run out. That period offers the president ample time to scout for and vet those who can efficiently fill the positions. But he must resolve not to use the vacant positions for political patronage.
-------- Obaze, MD/CEO of Selonnes Consult Ltd., is the immediate past Secretary to the Anambra State Government.
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