Senate Worried over Poor Broadband Services

Fri, Feb 27, 2015

By publisher

5 MIN READ

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DESPITE the number of undersea cables running across the country and the huge investments channelled into broadband services, the Senate has described the poor access to broadband by Nigerians as worrisome. Gilbert Nnaji, chairman, Senate Committee on Communications, stated this when Eugene Juwah, executive vice chairman, Nigerian Communications Commission, NCC, led the management team of the agency to defend its 2015 budget proposal.

Nnaji noted with concern that the country finished the year 2014 with just eight per cent broadband penetration, having stagnated at six per cent from 2011 to 2013. He said the directive by the Central Bank of Nigeria to the telecommunication operators to source foreign exchange only from the interbank market had constrained their efficiency level and hampered their expansionary drive, with the attendant effect on quality of services.

The senator noted that there was a remarkable improvement on the capital project proposal of N21.1billion for the NCC in 2015 compared to N15billion last year. He, however, said that “this cannot be said of the total amount proposed for special projects, which is N2.1billion in 2015 as opposed to N3.4billion in 2014. In other words, while there is a greater emphasis on capital projects in 2015 as against 2014, special projects in 2015 do not appear to enjoy the same attention,” he said.

Nnaji promised that his committee would look critically into the issue of the State Accelerated Broadband Initiative, which falls under special project. The senator wondered how the NCC would carry out its task when it had a significant role in assisting the private sector to build and run broadband infrastructure in all state capitals and selected major cities across the country when its budget proposal for special duties had been reduced.

Responding, Juwah explained that the NCC would propose a bill to the National Assembly, with a view to tackling the challenges in the sectors. “We have, in conjunction with the National Assembly, plan a bill on telecoms-critical infrastructure, which we hope will be presented to the two chambers and be given accelerated hearing. We hope that most likely, it will be in the interest of telecoms firms and this committee in particular if this bill is passed during this parliamentary session.

“This bill will deal with vandalism of telecommunication infrastructure and fibre cuts due to road networks, shutting down of services by state governments, planning permit restrictions and right of way restrictions. We hope that if this bill is passed as a federal legislation, all these problems will be reduced and there will be a remarkable improvement in the quality of service,” he said.

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Provide Re-finance Facility to Investors – LCCI

THE Lagos Chamber of Commerce and Industry, has said the closure of the foreign exchange window, the Retail and Wholesale Dutch Auction Systems, RDAS, by the Central Bank of Nigeria, CBN, will compound the challenges facing the real sector. It urged the CBN to provide a refinancing facility of N200 billion for investors with high forex exposure.

The group, in a statement said real sector operators, particularly the few that had access to the forex window, were the first victims of the closure of the RDAS. It noted that the forex window was aimed at providing support for the real sector of the economy because of its strategic importance to the development process, job creation and inclusive growth.

Remi Bello, president, LCCI, said in the statement that the CBN should urgently provide a refinancing facility as a lifeline for investors in the economy, who have high foreign exchange exposure.

He noted that the sustainability of this class of businesses is currently at risk. “We recommend a minimum refinancing facility of N200bn to be provided at single-digit interest rate and five-year tenor. It will result in the escalation of production cost for firms that had access to this forex window. Such firms will experience cost increases of up to 20 per cent. This will impact on sales performance, profit margins and ultimately capacity utilisation of their firms. Import duty and other port charges, which are computed as a percentage of import costs, will also correspondingly increase. This implies additional pressure on operating costs for erstwhile beneficiaries of the CBN RDAS forex window,” Bello said.

According to the group, firms, funding requirements in naira will increase to reflect the new exchange rate and this has implications for the cost of funds. “Many firms, especially manufacturers with high foreign exchange exposure, have been thrown into loss positions as a consequence of the depreciation of the naira over the last couple of months and the eventual closure of the RDAS window. This is a major challenge currently being faced by many real sector operators, especially the medium and large firms.”

As part of the mitigating measures, the chamber proposed that all critical raw materials and other imported inputs of manufacturing firms should now attract a zero import duty. Although the LCCI noted that it might be difficult to fault the decision of the CBN, it stressed the need for mitigating measures to cushion the effects of the policy on investors with high forex exposure and ensure the continued survival of the real sector.

The CBN had on Wednesday, February 18, said all demands for foreign exchange should be channelled to the interbank market in a bid to stem round tripping, speculative demand, rent-seeking, spurious demand and inefficient use of scarce forex resources.

— Mar. 9, 2015 @ 01:00 GMT

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