Telcos constrained by currency volatility as NCC selects 72 domains for local content development
Contrary to claims by the Central Bank of Nigeria (CBN) that the weakening in the value of the naira was caused by the failure to send funds abroad by the Nigerian National Petroleum Company Ltd, new facts have shown that NNPC handed over N2.7 billion. in its accounts with the CBN from January to June this year.
Reacting to the slump in the value of the naira, CBN had said that the NNPC’s non-remittance of dollars precipitated the forex crisis.
In a report titled “The Forex Issue in Nigeria – Fact Sheet,” CBN said there had been “zero dollar payout to the country’s foreign exchange reserve by NNPC.”
However, checks revealed that NNPC Ltd paid $2.7 billion to CBN in the first six months of this year.
In addition, the country’s inability to stem the fall of the naira against the dollar over the past five years has continued to hamper the development of the telecommunications sector.
Stakeholders, who said volatility in the foreign exchange market has killed several telecom projects, called on policymakers to make the dollar available to local players.
Stakeholders took the floor this weekend at the third edition of the Policy Implementation Assistance Forum (PIAFo), on the theme: “Establishing traceable measures for the development of the indigenous telecommunications sector of the Nigeria”, organized by Business Metrics Nigeria.
Records showed that of the $2.7 billion NNPC paid into its CBN accounts, $645 million came from dividends paid by the Nigerian Liquefied Natural Gas Company Ltd, while $1.786 billion came from operational activities. of the NNPC.
A breakdown of remittances showed that funds in the accounts arrived as follows: $18,770,418.97 (January 2022), $194,563,276.49 (February 2022) and $373,232,875.20 (March 2022).
The other payments were: $247,884,295.52 (April 2022), $591,565,425.41 (May 2022) and $880,906,761.81 (June 2022).
CBN Governor Godwin Emefiele has been in the eye of the storm following the weakening naira.
Last Wednesday, the Senate decided to invite Emefiele to explain the development and offer a way forward.
Following a motion sponsored by Senator Olubunmi Adetunmbi, the Senate, in addition to summoning Emefiele, also instructed its Banking, Insurance and Other Financial Institutions Committee to critically examine CBN intervention funds intended to support certain sectors of the economy.
In his motion to summon Emefiele, Adetunmbi said CBN’s earlier ban on selling currency to Bureau de Change (BDC) operators had caused the exchange rate to spike.
He said that a few people benefit from the import-export window intended to meet the foreign exchange needs of commercial enterprises.
According to him, even the Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) are not accessible, as less than 20% of the total foreign exchange demand from travelers and businesses is met by the CBN.
The CBN blamed the rapid depreciation in the value of the naira on so many factors, while exonerating itself.
In 2018, Emefiele blamed the forex crisis on the importation of items which he claimed should have been made in Nigeria, leading to a ban on foreign exchange allocation for 41 items.
In 2021, Emefiele blamed BDC operators, who he accused of illegal forex trading.
He pointed the finger at ‘Aboki FX’, claiming that its activities were responsible for the depreciation of the naira, thus reducing the allocation to BDCs.
This year, the CBN blamed the forex crisis on money laundering and the activities of those who allegedly financed terrorism, as well as politicians.
MEANWHILE, a telecommunications player and COO of Estream Networks Ltd, Martins Akingba, said access to forex is not balanced with big players as they are able to shift spend in dollars to foreign subsidiaries.
“Despite this, they are still competing with smaller operators in the same space. Virtually all of these foreign players are members of consortia of submarine cable operators. And yet they will be competing with local players in the same market space at retailers,” Akingba said.
He noted that five years ago, 80 percent of operators’ input costs were denominated in US dollars, but today that figure has fallen to less than 20 percent.
“The types and depth of investments that local operators can make have a major role to play in their growth. Without a doubt, our ability to raise much-needed capital is one of the main reasons why local telecom operators go bankrupt. The volatility in the foreign exchange market also aggravated the situation, as it killed several telecommunications expansion projects.
“How can we survive if we access the dollar at the recent rate and pay back double a few years after the project started, because the naira continues to depreciate daily?” He asked.
Akingba instructed policymakers to make dollars available, in particular, for local players in the ICT sector, stressing, “The regulator must give us access to capital that allows us to compete effectively with foreign players.”
In his opening address to the forum, the Executive Vice-Chairman (EVC) of the Nigerian Communications Commission, Prof. Umar Danbatta, said the commission had so far identified 72 action points to promote the indigenous content in the telecommunications sector.
He added that the commission had convened at least 30 stakeholders at the roundtable to map out pathways for effective implementation of the National Policy Promoting Indigenous Content Policy in the Nigerian Telecommunications Sector (NPPIC).
Represented by the Head of the Nigerian Office for Advancement of the Indigenous Telecommunications Sector (NODITS), Babagana Digima, the EVC said the entities include Ministries, Departments and Agencies (MDAs), Mobile Network Operators (MNOs), SIM card manufacturers, tower and mast manufacturers, and original equipment manufacturers (OEMs).
He said: “At a higher level, the commission had identified time-based measures for NPPIC, which it categorized as immediate, short-term, medium-term and long-term. These include activities such as the creation of NODITS, dedicated to policy guidance; creation of the local content steering committee; engagement with relevant internal and external stakeholders and commissioning of baseline studies on the level of indigenous content in the Nigerian telecommunications industry.
Others, he said, include developing regulations, tracking and enforcing key performance indicators (KPIs) and methodologies; development of implementation guidelines; continuous efforts in research and development (R&D) and monitoring, evaluation and application.
The CCN boss noted that the NPPIC requires more targeted and direct actions than those taken so far.
He noted that the commission is already implementing some of the action points and plans through NODITS.
In his remarks, the head of PIAFo, Omobayo Azeez, highlighted the need to domesticate inputs in the telecommunications sector to ease the pressure on the Nigerian economy.
Acknowledging that the sector has become an indispensable economic catalyst for the country and its people, he noted, unfortunately, that it remains largely dependent on foreign inputs, which, at the end of each year of operation, leads to leakage of capital exceeding $2.16 billion.