March 19, 2014

Is talk cheap? Nigerians spend N447.8bn on recharge cards monthly’

Is talk cheap? Nigerians spend N447.8bn  on recharge cards monthly’


A workshop organised by the Nigerian Communications Commission, NCC, weekend, to educate Nigerian Legislators on some intricate parts of telecom business/investments, incidentally exposed that Nigerians make a massive monthly investment of over four hundred billion naira on recharge cards alone.


This whopping sum, may have demystified the age long cliché that ‘Talk is cheap’. Besides, the investment on recharge cards, surprisingly dwarfed the ones made on House Rent, Petrol, Kerosene and electricity –options, known to have squeezed the economies of average Nigerians for several decades.

From the statistics of an ICT expert, Mr. Gbenga Oyebode of Aluko &Oyebode law firm, Nigerians spend 149.1bn on House rent, 128bn on Petrol, 144.8bn on Kerosene, and 91.8bn on electricity monthly.

At the workshop themed: “ICT infrastructure as key driver for economic development: what role for the legislature?” Oyebode reeled out these figures to postulate the impact of ICT infrastructure on economic development.

However, he noted that “a study by the Organisation for Economic Co-operation and Development, OECD, shows that broadband penetration contributes significantly to economic growth. But notwithstanding all of the potential of ICT to GDP, Nigeria still lags behind due to insufficient development of ICT infrastructure. Today, broadband penetration is estimated at 6% in Nigeria.

Another facilitator and Principal Partner, Kayafas Konsult Ltd, Mr Stephen Bello, also echoed Oyebode’s view that broadband is at its infancy in Nigeria with less than about 2% of the population having access to it.

He however added that the cost is still exorbitant even for corporate bodies. “We are still far from ITU targets which recommend that 50% of citizens and 40% of households by 2015 should have access to broadband. However, the recent policy framework and spectrum auction by NCC are designed to boost broadband availability in Nigeria.”

Meanwhile, the Executive Vice Chairman of the NCC, Dr. Eugene Juwah while briefing the legislators at the workshop said that the Nigerian National Broadband Plan seeks to promote broadband deployment, increase broadband adoption and usage, and ensure the availability of broadband services at affordable prices. Juwah argued that the effect of this would be an increase in competition in the industry, a downward impact on prices, and improved quality of services to subscribers.”

The workshop also provided operators the opportunity to give their perspectives on the Open Access Model of the NCC, meant to deepen broadband penetration. In a paper titled:Broadband and Infrastructure development in Nigeria: Operators’ perspective of the Open Access Model, Executive Officer, MainOne, Ms. Funke Opeke, contended that “operators have had a mixed reaction to the Open Access model. Large, incumbent operators with most of the existing infrastructure have not been very enthusiastic about the plan. Since open access will drive convergence of infrastructure costs to a common benchmark, it will become increasingly difficult to gain benefits from proprietary infrastructure, higher tariffs,  which make it difficult for new entrants/smaller players to participate in the telecoms value chain in Nigeria. Currently, the bigger you are, the more you can maximize value across the entire value chain, from value added services like ring tone, content distribution, to network connectivity services, corporate connectivity, Internet service.”

She also added that “open access implies barriers to entry will not be as high and thus new players could come into the market if they think they can do better without having to build out and replicate the infrastructure owned by any of the big boys. Smaller players are excited at the opportunity – but daunted by the challenges and need support. The example of Superflux is a good one. Indigenous entrepreneurs that are raising money locally will need support if we do not want to stifle their growth. This is a proven model in other parts of the world, so we need government to support them.”

Joseph Tegbe of KPMG, also made a case for the Open Access Model. Based on the various challenges in the country and the trend of deployments in other jurisdictions, he sought to convince the lawmakers that the Open Access Broadband Deployment Model is suited for Nigeria as it wouldthe gaps in broadband deployment, through the deployment of new fibre and leveraging existing fibre infrastructure;available the new network infrastructure and services to all telecom operators on a fair and non-discriminatory basis at a regulated price; minimise duplication of rollout and unnecessary environmental impact; Help realise the objectives of the National broadband plan with a minimum broadband speed of 1.5 Mbps to the general population; Facilitate faster and wider broadband penetration nationwide andsharing of infrastructure.