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More Africa NewsPolicy & RegulationTelecoms: Bracing for AfCFTA revolution

November 21, 2019by myles

Nigerian telecoms operators, among other businesses, face fresh challenges as well as opportunities once the Africa Continental Free Trade Area (AfCFTA) agreement is implemented. However, stakeholders said adequate preparations for the challenges would put the businesses at a vantage position to profit from the opportunities. SAMSON AKINTARO reports

In July, President Muhmmadu Buhari signed the Africa Continental Free Trade Area (AfCFTA) agreement, putting an end to months of waiting by stakeholders.

AfCFTA is an initiative of the Africa Union with the main objective of creating a single continental market for goods and services, in addition to facilitating free movement of investment and people across the entire African continent.

Interestingly, the telecommunications business is one area the AfCFTA is expected to impact, by making it easier for Africa’s telecoms operators to enter other markets and compete.

According to the Nigerian Communications Commission (NCC), under this agreement, Nigeria would cease to be known as Africa’s largest telecommunications market as the continent’s market would be viewed as one.

It is against this backdrop that the NCC recently organised a two-day workshop in Lagos, where experts discussed the implications of AfCFTA on telecoms business.

According to participants at the workshop, the implementation of the agreement will be a mix of challenges and opportunities for telcos in Nigeria

Telecoms liberalisation

Similar to the liberalisation that took place in Nigeria in the year 2001, which allowed the likes of MTN and Airtel to play in the Nigerian market dominated by monopolistic NITEL, the AfCFTA prescribes a liberalised Africa telecommunications market, whereby operators from across the continent would have easy access to operate in all the countries.

Speaking at the workshop, the Acting Director-General of Nigerian Office for Trade Negotiations (NOTN), Mr. Liman V. Liman, said the liberalisation presented opportunities for competition in the market, thereby reducing the cost to the consumer.

“It also presents an opportunity for the government to impose universal service obligations to telecommunications service providers to ensure that even poorer areas are provided with telecommunications services. This can be imposed as part of the licensing conditions,” he said.

The framework

Liman noted that the Assembly of Heads of States of the African Union had resolved that the liberalisation of trade in services in the AfCFTA shall be negotiated in two phases.

According to him, phase one shall involve liberalisation of what is referred to as priority sectors, telecommunications being one of them.

“The negotiations on the liberalisation of telecommunications have not yet begun. It is however expected that the framework of the telecommunications sector in the AfCFTA will include: regulatory disciplines, data transmission, cellular telephone, fixed telephone, mobile satellite, value-added data services, and other services to be determined by the negotiating parties,” he said.

He added that the AfCFTA did not intend to harmonise telecommunications regulation, nor is the intention to usurp the function of the national regulator, but rather, it is to ensure that amongst others, there is a minimum standard of treatment or regulatory principles: competition to avoid abuse of dominance; interconnection to guarantee fairness; independence of operators; universal service requirements; transparency provisions; technical standards; licensing criteria and procedures; and qualification criteria and procedures.

“The telecommunications section of the AfCFTA will include what is referred to as a schedule of telecommunications services commitments, which sets out the scope and depth of market opening that is offered (market access), national treatment obligations and any additional commitments to be offered,” Liman said.

Challenges

According to the NOTN DG, the process of liberalisation would significantly affect smaller mobile network operators as they risk being crowded out of the market by big players.

“These few operators will increase their market share and have the power to influence prices,” he said.

Based on that, Lima said a strong regulatory institution must be established in order to prevent unfair competition in the market.

“Although the AfCFTA will establish a minimum set of standards in this regard, the role of national regulators will remain critical,” he said.

Investment in infrastructure

Despite the huge investments recorded in the past years, the level of telecommunications infrastructure in the country is still relatively low, thus giving room for other African operators with big financial muscle to take positions in the market.

To avoid being crowded out of the market, NCC said operators in the country would need to invest more in infrastructure to remain competitive in the liberalised African market, which also offers them the opportunity of providing services for 1.2 billion people in the continent.

Also speaking on the implications of the agreement on telecoms business,  the Board Chairman of NCC, Senator Olabiyi Durojaye, said: “At the Nigerian Communications Commission, we recognise that the Continental Free Trade Agreement means that we now have access to extend communications services to 1.2 billion people across the African continent.

“With a larger proportion of this population made up of young people, whose hunger for data and mobile services continues to grow, there is no limit to achievement by innovative operators/investors in terms of business opportunities.

“Just the way we recognise the opportunities for investors in the African market, we also know that there are challenges not to say threats. Operators and investors within the Communications ecosystem must fully appreciate these dynamics, in order to ensure that they prepare adequately for them. Hence, the need for this sensitisation workshop.”

The NCC chairman added that the commission would continue to strive to improve the performance of the rapidly-evolving industry by encouraging more investments in the industry, engaging stakeholders on issues of common interest, and charting viable courses for the growth and development of the industry/economy.

Speaking earlier, Executive Vice Chairman of NCC, Prof Umar Danbata, noted that with the ratification by 22 member states of the African Union, the Continental Free Trade Area was now the largest trading bloc in the world in terms of participating countries, since the creation of the World Trade Organization (WTO).

“What all these means, therefore, is that, with the AfCFTA agreement, the hitherto business algorithm in Africa is going to change, as it will become difficult for any country to be regarded as the largest market in Africa, since the African continent is now going to be seen as one single international trade bloc,” he said.

Danbatta, who was represented at the workshop by NCC’s Director of Policy and Authorisation, Mallam Mohammed Babajika, said the workshop was aimed at examining how it could improve the competitiveness of the over $70 billion Nigerian communications sector market for the continental free trade.

NOTN DG also added that to remain competitive in the AfCFTA era, telecom operators in Nigeria would need to invest more in building infrastructure.

“In order to be globally competitive, telecommunications infrastructure will require a significant amount of investment both by domestic and foreign investors. 

“A significant challenge will be to ensure complementarity between the AfCFTA telecommunications regime – the regulatory principles and the market access commitments – with the telecommunications legislative and regulatory frameworks at national levels,” he said.

Last line

To benefit from the opportunities in AfCFTA agreement, all stakeholders, including the operators, the regulators, and government must be ready to play their roles and prepare ahead of the implementation.

Opening the country’s borders to all businesses without the capacity to derive commensurate value from other markets would spell doom for the nation’s economy.

Source: New Telegraph