COMMUNICATIONS-NIGERIA: New Telephone Fees Discourage Investors

By Toye Olori Reprint | | Print |

Toye Olori

LAGOS, Nov 16 1999 (IPS) - Nigeria’s decision to slam a new licence fee of 100 million US Dollars on private companies wishing to operate cellular telephone business may affect the government’s plan to provide telephone service to every Nigerian. The new fee, introduced on Oct 26, is about 1,000 percent higher than the 350,000 US Dollars announced a year ago when the firms involved in the cellular telephone business, using the Global System for Mobile (GSM), were granted permission to operate in Nigeria. Announcing the policy, Mohammed Arzika, Minister of Communications, said the old fees paid by GSM operators was still too low compared to similar rates paid by operators in other African countries, like Egypt and Morocco where, he said, licence fees have been pegged at 516 million US Dollars and one billion US Dollars respectively. The policy has sparked a heated debate in Nigeria, with members of the House of Representatives Committee on Communications accusing the minister of unveiling the policy without the consent of parliament. Ernest Ndukwe, President of Association of Telecommunications Companies of Nigeria (ATCON), says he prefers the spreading of the licence fees over a period of time to enable “serious” businesspeople to invest in Nigeria’s telecommunications industry. Before the new policy, Nigeria’s state-owned Nigeria Telecommunications (NITEL) had announced plans to install three million new lines, both fixed and mobile, into the network in the next two years. More than six billion US dollars investment is required to meet immediate targets of more than two million fixed lines and two million cellular lines in the next two years in the West African country of 110 million people, according to government officials. The government in September ordered the installation fee for fixed telephone line reduced from 50,000 naira (about 500 US Dollars) to 20,000 naira (about 200 US Dollars) as a means of making Nigerians to have access to the service. The government, believing NITEL’s report that 300,000 lines were awaiting subscribers, had reduced the fees. But it turned out that there were 6.75 million applications on the waiting list.

Foreign firms who have invested millions of dollars in Nigeria’s telecommunications industry are worried about the new policy.

Eric Chamchoum, Managing Director of Motorphone, a telecommunications firm which claims to have invested 53 million US Dollars in Nigeria’s telecommunications industry, said they were interested in making telecommunications services affordable to Nigerians by providing lines to those on the waiting list within two years if given the right environment.

Chamchoum also called on the government to pursue a more liberal investment policy.

Steve Chapman, Managing Director of G.S. Telecoms, another company that has invested millions of US Dollars in the telecommunications business in Nigeria, has appealed to government to desist from frequent changes in policy.

Following the outcry, Haruna Elewi, Minister of State for Communications, called for calm. “An implementation and review committee is being set up (to probe) the policy and their views and recommendations would be respected”, he told journalists in Lagos last week.

The House of Representative’s Committee on Communications is also expected to hold a public hearing on the policy in the Federal capital of Abuja this week.