Raheem Akingbolu writes on the challenges regulatory agencies in Nigeria contend with and their negative impact on businesses

Like many government institutions in Nigeria, regulatory agencies have also failed on many occasions in carrying out their constitutional mandates because of weak structures. From aviation to telecommunications, banking to food and drinks, operators and consumers are suffering from the inefficiency of the agencies. But rather than blaming the regulatory bodies, and their heads, a Lagos Lawyer, Miss. Osas Osaghae told THISDAY in an interview during the week that there is urgent need for government to review the act that established some of the agencies in line with global best practice.

“I share the sentiment of Nigerians who have consistently described some of our regulatory agencies as toothless bulldog but I disagree with those who hold the opinion that the management teams of the agencies are incompetent. The truth of the matter is that there is urgent need for total overhauling of the entire system, including the act that established the agencies. We should also know that poor funding of regulatory agencies will always affect quality control, hence the need to address issues related to funding and welfare of officers at the respective agencies”, she said.

According to Osaghae, just like the few deficiencies in the nation’s constitution, there are some provisions in either Consumer Protection Council’s Act or the Nigerian Communications Commission (NCC) act that are no more relevant to the current global practices. She made reference to how she often got marveled by the effectiveness and sophistication of regulatory bodies in protecting the right of consumers, while she was a law student in the United Kingdom.

She further stated: “Inherent weaknesses in the enabling law hinder an efficient implementation of the provisions of the regulatory acts to properly protect the Nigerian consumers. These weaknesses include but are not limited to non definition of consumers’ rights and inadequate provisions for their enforcement; lack of a specific institutional framework for the defense of consumers’ rights; undefined relationship with sector regulators leading to some confusion as to the role of the agency.”

The legal practitioner stated that much as it is necessary for some of the agencies to generate revenue, it is also necessary for government to give priority to disbursement of the statutory allocations meant for them. While supporting the view that agencies have the constitutional right to slam fines on operators that do not play by the rules, she urged government to make the business environment conducive for both regulators and operators.

Non-effective regulatory framework

Speaking last year on ‘Inadequate Laws, Bane of Consumer Rights Enforcement’ during the Mentorship and Business Development Programme of the Nigerian Bar Association’s (NBA) Section on Business Law (SBL) Committee, the Director General of the Consumer Protection Council, Mrs. Dupe Atoki, insisted that law is only the solution to consumer rights violation in Nigeria. The DG, whose agency was a co-host of the programme, decried the endemic impunity of business operators in Nigeria. Atoki, herself a legal practitioner, admitted that lean resources, self interest by trade associations and low level of awareness still remained some of the challenges facing regulatory bodies in Nigeria.

In recent time, many experts have attributed the challenges facing Nigerians non-effective regulatory framework. Brands have also suffered from impunity from regulatory agencies that sometime arrogate powers to themselves by promulgating laws that may not really work for the business operators. Of all the sectors, the telecom operators appear to have been the most hit by the unfriendly laws and sanctions. To this end, the operators have always found themselves between the devil and the deep blue sea. At one hand, they contend with poor infrastructural challenges and on the other hand, they get distracted by NCC’s frequent sanctions and laws that are not friendly to their operations.

It is believed that inadequate funds from Federal Government and infrastructural problem accounted for failure of regulatory agencies to adequately implement their statutory mandate on standardisation.

Telecom sector as example
Since the year 2001 when the telecommunication sector was deregulated, the contributions of the sector to the economy have been phenomenal. But despite the contribution, the sector has consistently been bashed by government and regulatory agencies.

At a recent rebasing exercise of the country’s Gross Domestic Product (GDP), the sector bagged the ‘Star Performer’ status because of its immense contributions to the country’s development.

Also at another forum in Lagos, the Executive Vice-Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Danbatta, disclosed that while the sector’s investment since telecoms revolution is in excess of $32 billion, it has equally contributed over N500 billion to government revenue from earnings majorly from spectrum administration. He added that the sector has created directly and indirectly over two million jobs.

The players in the sector, especially the telecommunications operators have claimed to pay taxes in excess of several billions of naira. For instance, from inception till June 2015, MTN Nigeria claimed to have contributed N1.370 trillion in taxes and levies.

Indeed, from a paltry 400,000 lines in 1999 to over 150 million telephones lines as at January 2016, Nigeria has crossed the 100 per cent teledensity mark and through the narrow band caters for about 100 million Internet subscribers.

This landmark growth really did not come without its many challenges. While the operators have not been able to find a lasting solution to the perennial issue of poor quality of service that has resulted in increased drop calls, credit depletions, unsolicited SMS, among others, the operators, especially the quartet of MTN Nigeria, Airtel, Globacom and Etisalat have not feigned ignorance to these challenges. They have come out individually and collectively to lament several challenges to their operations in the country.

While government and its agencies appeared to have seen these operators as ‘cash cows’ through multiple taxations, the operators have decried the spate of theft and vandalisation of their facilities at several parts of the country. Vandalism of telecommunications infrastructure and inadequate spectrum has been described as the greatest challenge facing Mobile Network Operators (MNOs) in Nigeria.

At a point, MTN Nigeria was reported to have to have experienced series of fiber optic cable cuts, which it attributed to construction and possibly vandalism in the Eastern part of the country. This, it claimed, has subsequently resulted in a loss of service to that region.

Beyond vandalism, sanctions by the regulatory body –NCC, appear to be a major challenge facing the sector. It got to the peak last year when MTN was fined $5.2 billion, which was later reduced to $1.7 billion. Like a drama, the news generated by the fine almost damaged the company’s reputation and brand equity. Millions of Nigerians who are either employees or investors in the company became agitated because of fear of the unknown.

Another instance was in the early days of 2014, when the regulatory body issued sanctions against three of the leading mobile telecommunications operators namely: MTN Nigeria, Airtel Nigeria and Globacom for poor quality of services (QoS) and for not meeting up with the key performance indicators (KPIs).

The Commission sanctioned the three major mobile network operators for various breaches. The sanctions were contained in separate letters dated February 19, 2014, addressed to each of the affected MNOs. NCC had asked Globacom, MTN and Airtel to pay N277.5 million, N185million and N185 million respectively for the month of January of that year.

Before the fines, in December 2013, the same commission had issued a ’Notice of Intention to Sanction’ to all Mobile Network Operators (MNOs) to improve Quality of Service and meet set Key Performance Indicators (KPIs) by December 31, 2013 or face regulatory intervention.

In May 2012, NCC fined all the four Global System for Mobile Communications (GSM) operators including MTN, Glo, Airtel and Etisalat nearly N1.17 billion for failing to meet up with the minimum standard of quality of service (QoS) for the months of March and April 2012.

Airtel, MTN, Glo, and Etisalat were fined N270 million, N360 million, N180 million and N360 million respectively. The sanctions were communicated to the mobile operators in letters dated May 10, 2012 and stated that the four GSM operators failed to keep up with the Key Performance Indicators (KPIs) as specified in Schedule 1 Table 2 of the Quality of Service Regulations 2012.

Few years ago, the big hammer of NCC also came down on the four companies for contravening the provisions on pre-registration of subscriber identification module (SIM) cards in Nigeria. The four operators were fined a total of N53.8 million with each of such pre-registered SIMs attracting a penalty of N200,000. They were asked to pay the fines within seven days. The mobile operators were fined accordingly: Airtel N8.6 million, Etisalat N5 million, Globacom N11 million, while MTN was to pay N29.2 million.

All these have continued to worry stakeholders because despite the effort being made by agencies to get the best from the operators, government appears to have done but little about infrastructural challenges facing the operators and weak framework under which the regulators are operating.

Reacting to the way the operators are being fined by the NCC, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Engr Gbenga Adebayo, was once reported to have condemned the attitude and urged government to address contentious issues in the industry.

“My worry is that the NCC is failing to regulate the industry. It does appear that NCC is non-populist. The latest fine shows that the NCC is high-handed. No regulator will unilaterally impose fines on the operators without trying to find out why things are the way they are.

He said: “NCC has failed to conduct a peer review of the telecom industry; it has not made a joint effort to address the problems causing poor QoS. NCC just stands on one leg and penalise the operators without trying to contribute to solving the QoS problem.”

Adebayo who was miffed by the latest round of fines asked, “Is it NCC that is suffering from poor QoS or the subscribers? It does appear that the NCC is more interested in imposing fines and enriching the coffers of government.
“My fear is that one day the people of Nigeria will rise up and ask NCC if it really is there for their interest or for government”, the ALTON boss said.

Aside regulatory problem, one factor that may also helps the telecom sector is in the area of beefing up securities in some volatile parts of the country. Often time, operators lament the heightened insecurity in some parts of the country which has limited their ability to carry out routine maintenance and emergency repairs. They have also deplored the continuous vandalisation of telecom infrastructures as well as destruction of fibre cables by road construction companies causing the quality of service to drop.