Aboki: With Increased Access to Telecoms Services, Incoming Govt Can Enrich All Nigerians
Aliyu Yusuf Aboki is the Executive Secretary of the West Africa Telecommunications Regulators Assembly (WATRA). He is a telecommunications engineer and policymaker with over 22 years of experience working in Nigeria, Ghana and Indonesia with Ericsson and MTN. Aboki has advanced degrees and training in Communication Engineering, Business Administration and Artificial Intelligence from the University of Manchester, University of Warwick and MIT. He speaks, in this interview with Kunle Aderinokun, on the power of telecommunications and its adroit regulation to create jobs and prosperity in Nigeria and the Economic Council of West African States (ECOWAS) region. Excerpts:
What is the purpose or mandate of WATRA?
WATRA’s mandate is to shape the development of the telecommunications industry in West Africa by facilitating the harmonization of policies and creating consistent regulatory frameworks among members, that is the 15 members and Mauritania. And by ensuring the efficient use of telecommunication services and resources like spectrum within the region. So WATRA facilitates the exchange of information and expertise among its members. A single regulatory rule or practice can have so much impact on driving up investment and driving down the cost of telecommunications services. It is WATRA’s job to work with members so that they adopt such regulations as quickly as possible.
Nigeria has over 40 federal and state telecom taxes and levies. How does Nigeria compare to other countries in the West African region and globally in terms of taxes on telecom services?
In 2011, Nigeria had taxes as a proportion of the Total Cost of Mobile Ownership (TCMO) at less than 5 per cent. Taxes as a proportion of the Total Cost of Mobil Usage (TCMU) was also one of the lowest in the world. These low rates of taxation were a key reason why telecommunications investment and services expanded in Nigeria. Between 2012 and 2020, the contribution of the telecoms sector to Nigeria’s GDP doubled from 7.7% to about 14.3 per cent . Taxes and levies have crept up in Nigeria. So, we need to be careful. The scope to use telecommunications to create new economic activities and make virtually all aspects of the economy much more productive has been drastically expanded compared to 10 years ago. The digital economy is transforming livelihoods and creating vast economic opportunities. We should not limit the potential of this economic transformation by raising taxes. The more people have access to technology, the more access to the service, the more we have an increase in economic activity. Telecoms should be seen as a driver for growth not a source of economic revenue. The government will end up getting far more revenue when it stimulates investment and innovation, and the use of technology by SMEs, and individuals intensifies.
How strong is the evidence that telecom companies will invest in expanding services and keep the cost of services low when taxes are low? Is there any evidence of that?
Lower taxes and levies provide companies with additional funds to invest in their operations, expand their networks, and improve their services. This will lead to keeping the prices low for consumers. This is a general principle. For governments all over the world, the telecommunications sector is a huge source of revenue. But smarter governments have learned not to tax the telecommunications industry directly, but get more revenue from the much broader growth across different sectors of the economy which the intensive use of telecommunications drives. Foreign investment in the telecommunications sector is now a major source of FDI. The economic growth driven by the digitalization of economic activities could with time deliver taxes that rival the revenue that Nigeria gets from oil.
The evidence is clear that the expansion of the digital economy has a positive spillover impact on economic growth. Imposing a tax that hinders the growth of this economy could delay the emergence of its benefits and potentially hinder tax revenue by impeding economic growth. Smart policymakers and regulators are always looking for ways to reduce the cost of services. In 2020, an influential body, the Alliance for Affordable Internet, recommended lowering taxes on low-cost devices as a way of reducing the cost of mobile usage. You really increase the potential of the telecommunications sector when you reduce the tax burden. Countries that do so avoid delays in the deployment of new equipment and technology and the expansion of services by mobile network operators. When you delay, you are delaying the transformative impact services could have on the economy, citizens, and small businesses in various areas of the country.
One might argue that high telecom taxes and levies are a form of income distribution given that the services are used mainly by urbanites. Do you agree with this?
Taxes do help the government generate revenue, no doubt about that, but they can also have a regressive effect on income distribution. Taxes you apply may disproportionately affect low-income households, they tend to spend a higher proportion of their income. These services are standard across forms so the low-income earners would be negatively impacted so the spillover effect must be considered. This occurs because telecom services are utilized in many other sectors and can enhance productivity in those areas. By the time you carry out any activity that impacts the telecoms sector, then be ready for the ripple effect. So, it certainly impacts other sectors and enhances productivity. I just wanted to highlight this broader impact on overall growth, national incomes, and future revenues of those sectors. If you negatively impact those sectors, those sectors will be hindered and cannot grow optimally.
What is WATRA doing to increase internet penetration, particularly in rural areas?
Let me quickly highlight to give some background because we follow events in West Africa closely. So despite the general growth in demand for internet usage, there is an increase in the digital divide between urban and rural areas. Some countries have an absence of rural coverage. WATRA is working closely with member states to encourage increased partnerships between operators and governments to improve rural coverage. WATRA is sharing best practices for expanding rural coverage from experiences in similar markets in Southern Asia and Latin America. This includes incorporating coverage obligations in license awards and renewals and strengthening the universal service fund mechanisms. WATRA has promoted the Latin American policy of pay or play which entails using funds to deploy networks in rural areas rather than paying the universal service fund. WATRA is also facilitating roaming agreements between operators and streamlining civil engineering processes for deployment to reduce costs. All these things play a significant role in facilitating the deployment of rural solutions in areas that are unserved or underserved.
What’s the internet penetration rate in Nigerian rural areas?
Right now, we are around 30-40% for basic telecoms services so there’s a lot of room to improve in those areas. We are not talking about internet service, 3G or 4G which are higher-order technologies, we’re talking about basic 2G GSM. There’s a lot that needs to be done.
How can government promote the usage of digital technologies by small businesses that constitute the majority of businesses in Nigeria?
There are successful models for encouraging the use of digital technologies to improve opportunities amongst underprivileged communities and small businesses even in advanced countries. Governments encourage the design and roll-out of training programmes on the adoption of digital technologies working with many industry associations. There are also many initiatives from different government departments to digitalise their engagement and services. Governments also foster partnerships between tech companies and SMEs. Regulators also play a role. Nigeria’s NCC for instance introduced a very important intervention- value-added services aggregator license-that has made telecos share more revenue with providers of value-added services. These service providers are not only small businesses, they also provide services that are essential to the operations and growth of millions of small businesses. Government intervention could also be useful in areas such as promoting the adoption of e-comemerce platforms by small businesses. The potential here is massive. Women for instance could make pots or traditional clothing. The global market for ethnic clothing in 2021 was estimated at $89.3 billion dollars. Our music has proven that we can sell our culture to a global market. Technology can enable us sell tangible products inspired by our rich culture to wider markets. We should look on the bright side- the thousands of young Nigerians who are creating brands and selling tailoring services for instance completely online.
From WATRA’s data, how do you think the digital economy has generated jobs for Nigerian youths? How can it generate more?
The digital economy has a huge potential to generate a lot of jobs for Nigerian youths in several ways such as eCommerce, digital marketing, app development, and technical support for businesses that rely on technology. It is important to know that telecoms serve two purposes to the economy, it serves as a supply means to other sectors as a lot more trade is being performed via the internet. I mean a lot of mobile connection transactions plus a high volume of banking activities are carried out online. Recently, you could see the exponential growth, the sector is a distinct circle in the economic system. And we’ve seen the impact when we had this Naira redesign, what role technology plays. Let me first refresh our minds with some statistics just for context on the impact of ICT on the economy. In 2022, ICT contributed N21.15 trillion (16.51%), making ICT the second highest contributor to Nigeria’s GDP after the agricultural sector. Of the N21.15 trillion, the telecoms sector contributed 82.17%, this is really to show you how much the telecoms sector is contributing to the GDP of Nigeria. Now, there’s no limit to how much employment potential the sector possesses really. For example, there is a shortage of software engineers worldwide, a gap Nigerians can easily fill. We have very talented youth.
There are an estimated 120,000 software engineers in Nigeria, the number can go up with increased access to the Internet through increased broadband penetration in the country. These actions government should take are directly related to jobs in this sector. The sector could employ if service providers join hardware makers to set up firms to serve the Nigerian market. For example, if you look at all these phones that are coming in. Imagine all these are been assembled and manufactured here in Nigeria, with almost 200 million phones used in Nigeria including over 120 million smartphone users. The demography favours us and we’ve got the skills. Getting the telecoms sector as a source of employment will involve the government reducing the tax burden on the sector. That’s why I mentioned that I wouldn’t advise any increase in taxes and this allows players within the sector to increase investment. It’s all about creating an environment that would allow the private sector to invest, employ more staff and provide cheaper internet services. So there is a virtuous cycle when you look at the telecom services in Nigeria.
Is the economic growth in Nigeria driven by digital technology inclusive?
There’s no straightforward answer to this issue, the question is a bit complex. On one hand, the digital economy has the potential to increase economic growth, create new opportunities in new areas for businesses, and create new entrepreneurs and individuals who can benefit from the overall economy. On the other hand, inclusivity in digital economy growth depends on various factors which include access to technology, skills, infrastructure, and policy framework. So there must be certain efforts to ensure the benefits of the growth driven by the digital economy are inclusive. There must be concerted efforts by policymakers to create an environment where everyone has equal access to technology, opportunities to develop digital skills, as well as access to finance and resources. Additionally, policy should aim to create new jobs and support those impacted by the transformation. Some jobs would be lost, but there will be more jobs based on new ways of working. Inclusivity is a global problem, however, but how the government intervenes and manages it is the difference. As I said earlier, the digital economy impacts other sectors. So other sectors need to realize that whatever they do, they need to consciously put inclusivity in their policies and regulations to ensure they don’t have this digital divide.
What have been your key achievements at WATRA?
I’ve been in this role for the past 24 months. My key achievements have been centred chiefly on reviewing the institutional and governance framework of WATRA because I believe this is the foundational element. We need to ensure we have the right foundation; the foundation needs to be revamped and strengthened and be in tune with the rapid telecoms industry evolution. As you know over the past decade, there’s been a lot of changes, a lot of new technologies, and a lot of ways of working that have come up. So it has been about starting from the foundation. And these achievements include reviewing the organization’s operating model to improve its functioning and its suitability to fulfil its mission. This touched on restructuring the organogram itself, roles and responsibilities and upskilling of staff.
I also ensured we developed processes and procedures regulating the interactions between the different bodies of WATRA. We’ve got the executive committee, we’ve got the council of regulators and we’ve got the members. This has been adjusted to create more collaboration and broader engagement. WATRA thrives on collaboration, cohesion and cooperation from members. This is what we tried to establish. We also developed a new membership framework for dues which has been our lifeline in running the affairs of the organization. We have an agreeable framework now. Recently, we ratified a four-year strategic plan that I spearheaded when I assumed this role. A four-year strategic plan to steer the objectives of WATRA into 2025.
The last time there was a strategic plan was in 2012, so this was a priority that I put for myself, and I was supported by the members. We achieved this too following extensive discussions and negotiations with all members because this is not a strategic plan of the WATRA secretariat. WATRA secretariat, yes but WATRA as members to ensure that we got that interest and commitment from members. We had a lot of their input to identify common challenges and opportunities. During my last 24 months, I’ve been able to get renewed active participation of all WATRA members following their increased belief in the organization’s value.
We have also ensured that we digitally transformed WATRA operations. We’ve digitized all our records. Before I joined, everything was manual. Right now, our processes and procedures, accounting, finance, and HR processes have all been digitalized for increased efficiency and transparency. We believe that as a regional body, to ensure we’ve got the right standing that will be listened to on the national scene, we need to ensure that we have got the right kind of institution. One that is transparent and able to deliver on its mandate. I’ve also been able to enjoin members to revise the WATRA constitution. It’s not fully ratified yet, but we’re almost there. The constitution was ratified in 2002, however, it’s only now that we are reviewing it to be in tune with 21st-century requirements. I’ve also developed a brand new operational manual of WATRA that would govern how the WATRA bodies would work. We would now have working groups that would serve as the engine of WATRA. These working groups would be manned by members themselves.
This is a new dawn for WATRA because it never really used to be that active. Importantly, I’ve increased staff motivation to unprecedented levels through review of their packages, exposure to WATRA functions, regional, and international, governed by proper performance fee frameworks because I believe that as an organization, you need to get these things right to be able to sustain whatever you build. Externally, WATRA in collaboration with the ECOWAS commission developed a revised ECOWAS regional roaming mechanism. The roaming regulation was ratified in 2017, but up till now, we’ve not fully achieved that. We’ve got renewed engagement and action from different members. We’ve had increased regulatory compliance from these members, so we’re making progress following our intervention as WATRA. I’ll say WATRA is becoming more prominent on the international scene, however, there’s still more work to be done. I think we’re just starting, however, we’ve been able to make modest achievements.
How do you think e-governance can be a reality in Nigeria and West Africa as a whole given the low literacy level across West Africa?
Implementing e-governance in Nigeria and West Africa, in general, will be challenging given the low literacy rate. In my role as ES, I’ve had the opportunity to traverse West Africa moving into lots of urban areas as well as rural areas. So I’ve been able to understand how low these literacy rates are. However, the challenge is manageable, it’s not insurmountable. Some areas should be strongly considered. First and foremost, increase internet access to allow people access to government services. And ensure you put mechanisms that would increase the adoption of the internet itself. Through making efforts such as reducing data costs. Data cost is one issue, and affordability is one of the major issues that we want to address because whatever you do, if you do not address issues that would tackle affordability, for example, providing free internet access in public places, then we’ll not make progress.
Internet access is one element. Now, bridging the literacy gap by providing adequate training in digital skills and knowledge. We have to train, retrain, enlighten, and create awareness and this is very crucial. It’s a continuous effort that is crucial in bridging the literacy gap in digital skills. Collaboration of community leaders and decision-makers in different societies. For example, when you go to communities, you need to ensure you have the buy-in of the heads to key in and build trust because it’s not easy to change people who are used to doing things manually by telling them technology will do it better.
There must be a lot of engagement at different layers to build trust in e-governance services. I think the government must continue investing to some certain extent in creating user-friendly interfaces, as simple as possible with local languages, and local content, and these use cases must be done in such a way that it’s tailored to localities. And of course, encouraging innovative solutions, not just typing or voice applications, are ways to simplify e-governance. And there’s a lot we can borrow from India. I’ve needed to research and study how India has removed their citizens from poverty and technology has played a significant role.
Do you have any advice for the incoming government on how to use technology and the digital economy to deliver their promises on the economy?
To recognize the role of digital technology to leapfrog some of the challenges we have faced when it comes to education, health, micro and medium scale enterprises, and how much that could be used to impact and drive the growth of the economy. For example, there’s already a national broadband plan that has been developed. I think sticking to that plan and executing it to the letter could achieve a lot because a lot of industry experts came into play here. Ultimately, bringing down the cost of services would have a ripple effect in other sectors of the economy. I think the government needs to pretty much understand that ICT is a driver of growth and attention needs to be given to it and not sort of overtax the sector.
