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A Business Case for Telecom Tariff Reduction Elvis Eromosele

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The news media is inundated with reports that the prices of data and telecommunication services are expected to crash 40 per cent by 2025. This, according to Dr Isa Ibrahim Pantami, Minister of Communications and Digital Economy, is based on the steps taken by the Federal Government to attract huge local and foreign investments,  

According to the Minister, the government has addressed two critical challenges in the telecommunications industry, particularly Right of Way (RoW) charges and infrastructural protection and development. He explained that these activities are part of the policy measures taken by the present administration to promote the digital economy and improve the living standard of the citizenry.

The goal is admirable. This explanation, however, is too simplistic. The logic is flawed, the argument untenable and the numbers won’t add up This is definitely not how markets operate.

Someone would need to explain the sort of market dynamics that will make this possible because it is not clear to the uninitiated.

Granted, the reduction of RoW charges by seven states beginning with Ekiti is commendable. It would help to increase the pace and ease the cost of rollout. It is expected to equally attract new investment in broadband connectivity, boost the creation of new businesses, jobs, and thus by implication improve access to e-healthcare, digital education and electronic services in general.

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But the major determinant of a tariff of any sort is the cost of operation. And the cost of operation for businesses in Nigeria is certainly not going down. Most businesses would attest to this. 

For a case in point, consider a foreign exchange. The rates have been dropping faster than a hot knife through butter. And everyone knows that the bulk of telecom equipment is imported. So, the maintenance and expansion of growth are getting more expensive daily. This is a situation that is not likely to improve anytime soon.

In addition, the cost of power is rising in everywhere. The power distribution companies (Discos) are talking of increasing tariff, diesel and petroleum prices have gone up. As companies expend more resources on power, it is almost lunacy to expect prices to crash.

Take tax. The Nigerian government has increased Value Added Tax (VAT) from 5 per cent to 7.5 per cent. So, VAT has essentially gone up by 50 per cent in 2020.

The average revenue per user (ARPU), defined as the total revenue divided by the number of subscribers has been dropping every year in the last decade. ARPU is a metric that helps businesses better understand the sustainability of their operations and a possible path to profitability. In the communications sector, ARPU is dropping.

Vandalism remains a big issue. Billions are lost yearly. Monthly there are countless fibre cable cuts, thousands of generators stolen and diesel siphoned from base stations.

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All these are in addition to the exigencies of running a business in a highly competitive space like telecommunications. Operators are known to be cutting cost to improve sustainability.

Yet someone expects prices to crash?

The expectation of tariff reduction is not based on any known fact. It doesn’t add up. It is almost impossible to expect tariffs to drop when everything else is going up. 

Yes, telecom tariff reduction is desirable. But there are things that must be done to achieve this. To provide a guide, here are five things that the government can do to actually improve the chances of sustainable tariff reduction. 

First off, let the reduction in right of way charges be implemented across every state. The government at the federal and state levels must work together here. Then it would really be meaningful. Some others have suggested that there should be different tariffs for different states. This is another option worth a thought. 

Then there is the issue of VAT. There is a need to reduce VAT, revert to the previous five per cent status. The truth is that ‘VAT is cake’. You can’t eat it and still have it. 

Furthermore, there should be special exchange rates to aid and indeed facilitate the procurement of telecom equipment. Efforts should also be made to encourage, where possible, indigenous production of some components. 

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The government should also provide grants to promote investments and better-quality services in underserved areas. The Universal Service Provision Fund (USPF) was established precisely for this sort of things. One can only wonder about what is going in that space right now.

Generally, there is an urgent need to improve the general ease of doing business. This covers clearance at the ports, improvement in power supply and regulatory fairness, among other. Nigeria is currently ranked 131 on the World Bank’s Doing Business 2020 index. It can be better!

Lower telecom tariffs are truly desirable. It would greatly benefit the consumers. It would also impact the economy, positively. But it should be a business decision and not by executive fiat. 

The government needs to think holistically. Supply, demand and operating cost are near indispensable items in this discussion. 

In reality, government fiat and regulation are not the ideal ways to strengthen market competition that would lead to price/tariff reduction. Indeed, it is always better to encourage market competition, create a platform for it to thrive and promote the progress made.

This is the way to go. 

Elvis Eromosele, a Corporate Communication professional and public affairs analyst lives in Lagos.

Banking

FIRSTBANK: SETTING THE PACE IN WORLD CLASS BANKING SERVICES, CITIZEN EMPOWERMENT AND SOCIAL INTERVENTION IN AFRICA AND BEYOND

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With its over 126 years of business operations in Nigeria – indeed the first Nigerian company to be listed and broadcasted on CNN 100 club – the bank has been at the forefront of empowering the young and indigent elderly citizens, lifting the downtrodden out of poverty and hardships, rekindling hope, putting smiles on the faces of younger generation of Enterprenuers through issuance of low and friendly interest credit facility which transcend to building and promoting the small and medium scale businesses in the remotest rural areas and urban cities across the Niger.

These are and many more strides have distinguished FirstBank in Nigeria.

HEALTH SERVICE PARTNERSHIP WITH THE LAGOS STATE GOVERNMENT

To ensure that Lagos Residents at the grassroots across the state has unhindered access to affordable, effective and qualitative health care services, the Lagos State Health Management Agency partnered with FirstBank to utilize its over 13,000 FirstMobile Agents as payment channels for the Lagos State Health Scheme.

During the flag off ceremony, LASHMAGM, Dr. Emmanuella Zamba Said “The partnership became necessary to facilitate ease of health insurance premium transactions for Residents, especially at the Grassroot.

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Zamba however mentioned that FirstBank was selected for the partnership in recognition of its effectiveness, efficiency and large clientele.

For easy access and stress free payment of Lagos Residents’ health insurance premiums, Firstmonie payment platform was considered the best.

Dr. Zamba explained that the partnership offer opportunity to pay either N40,000 annually for family plan or N8,500 annually for individual plan via the Firstmonie Agents.

“Once the insurance premium is paid before 25th of every month, such enrollee can receive care from the first day of the following month at any public or private hospital of their choice within the scheme’s network of Providers”, Zamba clarified.

While commending the Lagos State Government, the Deputy Managing Director, Mr. Gbenga Shobo said “the initiative will have a crucial role at improving the life expectancy of Lagos Residents whilst promoting their increased contribution to the growth and development of state.

FIRSTBANK, LAGOS STATE EMPLOYMENT TRUST FUND PARTNERSHIP AND SMES

FirstBank partnered with the Lagos State Employment Trust Fund (LSETF). The scheme was launched in September by the Lagos State Governor, Mr. Babajide Sanwo-Olu and the Managing Director and Chief Executive Officer, Dr. Adesola Adeduntan.

READ  Technology will drive Lagos State Economy

It is designed to cushion the resultant effects of the Covid-19 on low-cost private schools at an attractive lending interest rate.

While delivering his speech, Dr. Adeduntan said “At FirstBank, we recognise indelible roles played by the Education sector in the growth of any economy and this underscores our partnership with the Lagos State Government for continuous development of the education services in Lagos State and the nation as a whole. The commitment by the Lagos State Government -including this partnership to enable schools is quite commendable as this will mitigate the challenges caused by the lockdown on the education sector following the Covid-19.

The 2019 KPMG’s Annual Banking industry customer satisfaction survey named FirstBank as the ‘Biggest Mover in the SME Space’. It also earned the financial institution the most popular Bank among MSMEs for deposit transactions and credit loan facilities with 20% of SMEs surveyed.

In recognition of the role SMEs play as the engine of the economy, FirstBank has been at the forefront of having them equipped with the required knowledge and information with a view to easing their sustainability. These have been achieved through several SME events including; an SME Business Clinic train that moved from Lagos to Abuja and Port-Harcourt in February.

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The Bank later embarked on virtual SME-based events, in order to adhere to the social distancing guideline essential to promoting the safety of every participant in view of the COVID-19 pandemic. These SME based webinars include SME Business Clinic in May as well as the SME Connect webinar to promote the growth of education sector held in July amongst others.

The value generated from the Bank’s unprecedented business support and development activities to the small and medium scale enterprises, especially the young entrepreneurs across the Niger cannot be quantified.

With its mantra, You First, FirstBank leaves no stone unturned in putting its customers first as it continues to deliver the gold standard of value and excellence to the banking and business climate across the world.

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Banking

US-based Nigerian billionaire to invest N3b in Fidelity Bank

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According to the News Agency of Nigeria (NAN), Mr Adigun stated that the acquisition was part of his planned investment in the Nigerian economy, adding that the process of buying Fidelity bank was almost done, attributing the little delay to the COVID-19 pandemic.

“The Fidelity bank purchase is almost done. COVID-19 delayed the process a little due to everything closing down, but the process just picked up again. I was told I have to open a bank account and will need BVN. I am planning to come to Nigeria to do that as soon as possible,” the businessman was quoted as saying in an interview published on Friday.

The Osun State-born billionaire is the owner and chief operating officer of Golden Glades Treatment Center, as well as Adigun Investment Group, with stakes in nine companies operating in commercial real estate, several e-commerce companies. as well as wind and solar energy among others.

“Mr. Peter Aletor, Managing Director for Apel Asset Limited, and a friend, Mr Tosin Afolabi, have been very helpful on the acquisition of Fidelity Bank. Afolabi will be partner in my bank venture in Nigeria with small shares,” he said of his foray into the Nigerian economy.

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Adigun expressed willingness to bring his airline company, healthcare, technology as well as solar and wind energy to Nigeria in the future.

He narrated how his previous efforts to purchase failing Polaris Bank in Nigeria was thwarted, on the grounds that he was not known in Nigeria and being an investor from Southern Nigeria.

Adigun is an alumna of Olivet Baptist High School in Oyo, Miami Dade college, Florida Atlantic University and Walden University.

He has served in several US organisations as a police officer, substance abuse counselor and clinical director before he opened his first business in 2017.

Meanwhile, Nneka Onyeali-Ikpe assumed office as the bank’s chief executive officer/managing director on January 1. She took over from Nnamdi Okonkwo.

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Brands and Company

Dangote completes Nigeria’s longest concrete road

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Road

The Dangote Group has completed Nigeria’s longest rigid pavement located in Kogi State.

 

It is the first of its kind, top engineers say.

 

The 43KM Obajana-Kabba road constructed by Dangote Industries Limited (DIL), as 

been described by motorists as the country’s most strategic highway that is aiding travelers between the North and the South.

 

Olatunbosun O. Kalejaiye, the Project Director, said he was excited that the Corporate Social Responsibility Project is being delivered for use by Nigerians, adding that while the rigid pavement has been completed, the company was dressing the shoulders.

 

Site Engineer Samuel Obosi assured that the dual carriage way will be durable and less susceptible to potholes and repairs like asphalt road, adding that it would crash the rate of road accident in the country.

 

Motorists said it is now one of the busiest roads linking the two regions in the country.

“Thank God it is a concrete road. It can withstand any heavy duty vehicle,” Alhaji Lamidi Sikiru, a driver expressed optimism.

 

John Moses, a member of the National Union of Road Transport Workers, said his taxi business is booming compared to when the road was very deplorable with potholes and barely used by motorists.

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A community leader of Apa Bunu Kingdom and spokesperson for the community Sam Omosayil commended the Dangote Group, saying that the road has attracted a lot of businesses along the road.

 

Traditional and community leaders eulogized the President of the Dangote Group.

The Bajana of Obajana Land, King Idowu Senibi described the project as gigantic and the first of its kind anywhere in Nigeria.

 

“Dangote is our son. We would protect his huge investment and gigantic concrete road. I am happy that this is happening in my lifetime and in my Kingdom. This is a great opportunity for us and many generations to come. Our society will be opened as you can see vehicles and commercial activities have started coming up. May God Almighty bless Dangote and all his staff.”

 

Speaking in the same vein, the traditional head of Akpata Land Frederick Durojaiye Balogun said his people were very proud of Alhaji Aliko Dangote, adding that the Dangote Cement, Obajana plant, which is the single largest cement plant in the world, has brought honour and respect to their Kingdoms.

 

“His presence has brought a total turnaround in our lives. Also permit me to appreciate the Federal Government for this joint effort. We are very grateful,” he said.

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Speaking, the King of Okebunku Land in Kabba Bunu Local Government, Timothy Omonile commended the President of the Dangote Group and charged other philanthropists to emulate him, adding that that is the only way Nigeria can develop its economy and infrastructure.

 

 

He said the construction of the road has helped cut down the rate of criminality in the state, while describing the Group President of Dangote Group Aliko Dangote as God sent.

Rechel Olatunji, a businesswoman said she makes more money now and that business is booming because of the road.

Another businesswoman Veronica Samuel prayed fervently for the Dangote Group, adding that the new road has changed her life, and enabled her to sponsor her children to school.

 

Worried by the huge sum of money used in road repairs, President of the Dangote Group Aliko Dangote had said plans were afoot to revolutionize Nigerian roads with concrete, stressing that resources used in road repairs and maintenance would be channeled to other more important needs of the nation.

 

“We are going to be building concrete roads in the country so that anytime we build a road, we do not have to go back to repair after the third raining season, but move on and use the resources to address other pressing needs of Nigeria,” Mr. Dangote had said.

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It would be recalled that as part of its Corporate Social Responsibility (CRS), the Dangote Group had earlier commissioned the 26 km Itori-Ibese Concrete Road.

 

At the commissioning, the Minister of Power, Works and Housing, Babatunde Raji Fashola, had noted that the stride by the Dangote Group demonstrated the unwavering commitments of an indigenous investor towards the industrialization of Nigeria.

 

A statement from the Corporate Communications Department of the Dangote Group said: “Concrete road last longer than asphalt roads and do not have potholes. It does not require frequent maintenance as asphalt roads. It saves fuel for motorists and protects tyres from wear and tears.”

 

The statement said it is part of the Group’s determination to support government and Nigerians in order to grow the economy and facilitate ease of doing business.

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