The Nigerian Communications Commission, NCC says it is collaborating with stakeholders for efficient usage of Forex allocation to avoid capital flight on Telecommunications Services.
The Executive Vice Chairman of NCC, Professor Umar Danbatta stated this at the Stakeholders’ Forum on Framework of Service Request in Abuja.
Professor Danbatta said that since telecommunication’s business was capital intensive and the demand for Telecommunications services is on the increase.
He said it has become important to further expand telecommunications coverage through network elements to shore up the capacities of existing infrastructure.
“To this end overseas vendors are often engaged to provide network element and services required to support national telecommunications operators where such services cannot technically be sourced locally. These services are priced by the overseas vendors/partners in foreign currencies and Nigerian telecommunication operator are required to pay for such services in these currencies thereby creating significant demand for foreign exchange to cater for such services,” he stated.
The NCC sought the assistance of the Central Bank of Nigeria (CBN) to address the demand for foreign exchange by Nigerian Telecom Industry.
According to Professor Danbatta, “By the virtue of collaboration, the NCC provides expert advice and vets invoices and international payment to oversee vendors by the Telecom companies in Nigeria in order to ensure efficient usage of the forex allocation, prevent capital fight and round tripping amongst other things. This ultimately led to the development of appropriate rule and procedure for the processing of confirmation of reasonableness of service request/applications submitted by Commercial Banks to the Commission on behalf of Nigerian Telecom.”
Professor Danbatta, who was represented by Head of Competition and Tariff Unit for Policy, Competition and Public Analysis Department of the NCC, Mr. Bashir Idris, noted that the forum was an avenue to revise the guideline for processing reasonable service request.
“What we mean by that is that there are tangible and intangible accesses being put together by operators. The Commission is in charge of accessing the pricing of the intangible access like: software, bandwidth which the operators often have to pay overseas vendors. Now it is a collaboration between the NCC and the CBN so as to prevent capital flight and all manners of infringements on our foreign exchange and reserve to make sure that whatever the operators are paying out their vendors outside the country are actually what they should be paying out, so that the country is not short changed,” he further stated.
Benefits to subscribers
If an operator is paying more that it is supposed to pay, it adds to its cost. It is important that payments are paid overseas and then we are able to ensure that they are actually putting their real cost of their services in the pricing mechanism. Secondly is the fact that we will be able to prevent the erosion of our foreign exchange reserve through this exercise.
On the status of the current review of the guidelines, Mr Idris said that “the guidelines are currently on-going and being presented as we speak now. We give them the opportunity to critic it and make their own suggestions in areas that we did not probably see problems they might see and we will resolve it. Once it is being resolved, we will circulate the final document to everybody and it will become binding on everyone with guidelines and penalties for violation.”
He said the realistic pricing would be based on realistic costing “where costing is not realistic and our foreign exchange being depleted, it has an overbearing effect on the consumers ultimately. It may not appear immediately on the pricing per say, but it ultimately affects them in the sense that their country reserve is being shipped out illegally. We are trying to prevent all manner of practices that will erode Nigeria’s foreign exchange.”
Penalties for possible defaulters
The Head of the Project explained that, “We have specified several penalties not necessarily financial because when we know that probably someone presents an inflated invoice and it is declined, first and second time; the commission may suspend further processing of that company’s claims. Which means they will not be able to pay their overseas vendors and when they are not able to pay their overseas vendors they (overseas vendors) will withdraw services from them and you know the implication on their operations.”
It is hoped that by the end of the meeting, the NCC, principal stakeholders Banks, operators and their overseas vendors would come up with ways to address the challenges so as not to put any of the parties in a difficult situation and for convenience.