Emma Okonji reviews the performance of the telecom sector in the first quarter Gross Domestic Product figures released recently by the National Bureau of Statistics
Few weeks ago, the National Bureau of Statistics (NBS), released its Gross Domestic Product (GDP) statistics for quarter one (Q1) 2021, which showed a sharp decline in the contribution by the telecoms and Information services sector.
The development which was worrisome to telecoms industry players has been attributed to several dwindling which includes harsh policy formulation as well as implementation of certain regulations.
Specifically, telecoms industry players attributed the development to the implementation on SIM registration, SIM-NIN synchronisation, initial suspension on the sales of SIM cards that led to loss of over 15 million subscribers within a space of five months, the directives on IMEI mobile phone number, and the effect of COVID-19, among others.
Since the inception of Global System for Mobile (GSM) communication in Nigeria in 2001, the sector’s contribution to GDP has been on a steady rise and it reached its peak in 2015, when the investment in the Nigerian telecoms sector, reached $70 billion, and had since surpassed that figure.
According to statistics obtained from the website of the telecoms industry regulator, the Nigerian Communications Commission (NCC), in 2015, telecoms contribution to GDP was 8.50 per cent, in 2016, it rose to 9.13 per cent.
In 2017, it reached 9.16 per cent, and in Q1 of 2018, it rose to 9.19 per cent and in Q2 of 2018, it rose again to 10.43 per cent. In 2019, it was 11.39 per cent, and in 2020 it further rose all high to 14.30 per cent before sliding to 11.66 per cent and later to 7 per cent in Q1 2021.
The statistics showed that decline in GDP contribution set in from 2021, shortly after the Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, ordered the suspension of Subscriber Identification Module (SIM) registration last December.
Suspension of SIM card registration
On December 9, 2020, the Nigerian Communications Commission had suspended further sales and activation of new SIM cards.
It had stated that the suspension would last till the completion of the audit of the Subscriber Registration Database, which sought to achieve global standards and quality in the issuance of SIM cards.
The Director, Public Affairs at NCC, Dr. Ikechukwu Adinde, who announced the suspension in a statement issued by the Commission, had said the action became necessary in line with the federal government desire to consolidate the achievement of the SIM card registration exercise of September 2019.
The objective of the audit exercise was to verify and ensure compliance by Mobile Network Operators with the set quality standards and requirements of SIM Card Registration as issued by the Federal Ministry of Communications and Digital Economy and the Commission.
NCC had further warned MNOs that non-compliance with the directive would be met with strict sanctions, including the possibility of withdrawal of operating license.
Although the suspension was later lifted by the federal government in April 2021, but within the five months suspension, the telecoms sector had lost over 15 million subscribers across networks, the number in the porting of subscribers from one network to another also dropped and revenue generation for telecoms operators was adversely affected because new SIMs were not sold.
This affected revenue and some subscribers lost their SIM cards to banditry, kidnapping and armed robbery and could not SIM replacement because of the suspension order, which also slowed down revenue drive for telecoms operators because majority of the subscribers were disenfranchised and could not buy airtime for data and voice calls, a situation that impacted negatively on GDP contribution.
Pantami thereafter lifted the ban in April.
He had said the implementation of the policy and issuance of new SIMs and other suspended activities would resume on the same date, provided that verification had been completed and the guidelines fully adhered to.
But before the lifting of the ban, so much damage had been meted in telecoms operations, which adversely affected revenue generation and contribution to GDP.
USSD Imbroglio
Another indices that affected telecoms contribution to GDP between 2020 and 2021, was the tussle between telecoms operators (telcos) and the banks over Unstructured Supplementary Service Data (USSD).
Both the telcos and and banks were at loggerheads over non-remittances of money charged for USSD service by banks, which the telcos said accumulated since 2019 to N50 billion as at June. This, they stated had further stated affected revenue generation and contribution to GDP in the
Telecoms operators said the accumulated money charged by banks for USSD, which the banks failed to remit to telecoms operators since 2019, rose from N42 billion in March this year, to N50 billion as at June 1, 2021.
Although the banks denied accumulating such huge amount of money from USSD charges, they insisted that they do not charge for USSD service.
USSD is a critical channel for delivering financial services, particularly for the underserved and the financially excluded, offered by telecoms operators to banks. Banks use different USSD codes to support transfer of money through the use of mobile devices, without internet data connectivity.
The earlier disagreement between banks and telecoms operators led to the introduction of a new USSD rate of N6.98 kobo from the initial N10.50 kobo rate for every USSD transaction.
Although the new rate has not been implemented by the banks, since it was arrived at in April this year, THISDAY gathered that the banks have now commenced implementation of the new rate.
It was gathered that some banks recently sent notices to their customers, informing them that the banks have commenced deduction of N6.98 kobo for USSD.
THISDAY also gathered that the meeting to discuss the sharing formula on the N6.98k USSD charge, would soon be conveyed.
Teledensity and number porting
From the data obtained from NCC’s website, teledensity, which measures the percentage of the total number of telephone lines per 100 inhabitants in an area at a given time, dropped from 108 per cent to 100 per cent during the duration of the suspension.
As at November 2020, the total number of telecoms subscribers reached a peak of 207.9 million, with a teledensity of 108.92 per cent, which later dropped to 204.5 million with a teledensity of 107.14 per cent in December 2020, and further dropped to 200.2 million with a teledensity of 104.89 per cent in January 2021.
By February and March 2021, subscribers’ number further dropped to 196 million and 192 million respectively, while teledensity also dropped to 102.72 per cent and 100.80 per cent respectively. Telecoms operators also attributed the drop to unfavorable policy implementation.
For number porting, the statistics from NCC’s website showed that number porting dropped between 2020 and 2021. As at October 2020, the total number of subscribers that ported from one network to another, was 19,771, which dropped to 16,342 in November 2020, and to 4,085 in December 2020. In January, February, and March 2021, all networks recorded zero porting as well.
Broadband penetration
Broadband penetration in the country which had grown from less than than six per cent in 2015, to 45.93 per cent as at Q1, 2020, also witnessed a decline to 41.18 per cent between December 2020 and March 2021, which was the period that Nigerians suffered SIM card ban.
Statistics showed that the number of Nigerians with access to broadband (internet high-speed) services on their mobile devices as at Q1 2020, which stood at 87.6 million, reduced to 78.6 million by the end of March, 2021.
During the same period, basic active internet subscriptions also dropped from 154.8 million to 144.9 million, according to statistics obtained from NCC’s website.
Nigeria had surpassed the 30 per cent broadband penetration as at December 2018, in the first Nigeria National Broadband Plan (NNBP), which spanned from 2013 to 2018. By 2020, Nigeria came up with a second National Broadband Plan from 2010-2025, with a target of 70 per cent broadband penetration, but industry analysts have said that could only be achieved if the right policies are put in place.
NIN registration
The National Identity Management Commission (NIMC), the government agency in charge of registration of the National Identification Number (NIN), has been facing challenges in registering Nigerians and in issuing our NIN slips, as a result of improper funding of the agency by the federal government, a situation that has slowed down registration process across NIMC’s office across the country.
Nigerians, including NIMC staff have expressed concerns over the inadequate funding of NIMC operations.
They are of the view that NIMC must be properly funded in order to offer the best of national identity management services to Nigerians.
The Director General of NIMC, Mr. Aliyu Aziz, also recognised the need for adequate funding, had said national identity management required the political will of government and adequate funding to succeed.
The Chairman of Chams Plc, Demola Aladekomo, had said that Nigeria lost about $2.5 billion in the last 45 years due to poor implementation of several failed national identity projects.
The inadequate funding of NIMC operations across the country, was however aggravated in December last year, when Pantami ordered the linkage of all registered SIMs with NIN, within a short period of two weeks, an order that generated a lot worries among subscribers who felt it was ill-timed, given the fact that it was Yuletide time, when people travel.
Even though the initiative was laudable, Nigerians felt the short time limit of two weeks was not achievable.
Although the federal government had shifted the deadline severally, the latest being from May 6 to June 30, 2021, but the continuous shift in dates also affected effective planning on the part of subscribers and operators, which analyst said, also slowed down telecoms growth and development.
If wrong policies could affect operations and revenue generation, it then becomes obvious that government must come up with policies that will enhance growth in the telecoms sector.
