Telecoms Operators Seek Direct FX Allocation From CBN

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  • Telecoms Operators Seek Direct FX Allocation From CBN

The Association of Licensed Telecommunications Operators of Nigeria has called for direct Foreign Exchange allocation for the telecommunications sector.

ALTON Chairman, Mr Gbenga Adebayo, in a statement on Saturday, said that the sector deserved to be supported with such allocation from the Central Bank of Nigeria.

Adebayo said that operators faced challenges while trying to purchase FX from Interbank Market to fulfill obligations to Equipment Suppliers and Foreign Vendors.

According to him, this situation is adversely impacting on ALTON members’ network operations and urgent assistance is needed from the Nigerian Communications Commission.

He said that the prevailing scarcity had made the operators not able to obtain FX for an upward period of six months, despite the submission of pre-requisite documentation for such transactions.

Adebayo decried the exemption of the telecommunications industry from the CBN’s intervention window.

“In November 2014, the CBN excluded telecommunications equipment from the Retail Dutch Auction System, where the exchange rate was N155 per dollar.

“ALTON members were mandated to purchase FX from Inter-bank at the rate of N199 per dollar.

“The CBN subsequently introduced a floating FX regime at the inter-bank market and cleared three months backlogs at N280 per dollar, and this technically moved the exchange rate from N199 to N280 levels.

“CBN then issued another circular mandating banks, effective Aug. 22, 2016, to sell 60 per cent of all FX availability, irrespective of source of inflows, to the manufacturing sector and the balance (40 per cent ) to other sectors.

“This directive tactically closed FX inflows even from ALTON’s members, thereby exacerbating the impact of the liquid FX market on our members operations and the industry at large.”

Adebayo said that on Oct 14, 2016, CBN further requested banks to submit all outstanding FX requests for the manufacturing, agriculture and airlines sectors, to enable it sell two months forwards.

He said that the equipment imported by the telecommunications industries, either via Letters of Credit or Certificate of Capital Importation (based on deferred payment terms), were excluded from the intervention.

He said, “Telecommunications service providers are similar to manufacturing firms and deserve to be treated in the same manner.

“The core network equipment and other auxiliary equipment procured for providing voice and data services are equivalent to plant and machinery acquired by the manufacturing firms.”

He said that the telecommunications sector was termed ”infrastructure of infrastructures” and the ”Social Overhead Capital”, which propelled productivity in other sectors of the economy.

According to him, the multiplier effects of efficient and reliable telecommunications services on other spheres of the economy cannot be overemphasized.

He said, “In the light of the foregoing, ALTON respectfully requests the Nigerian Communications Commission to fast-track the ongoing engagement with the CBN.

“NCC should include telecommunications equipment, both visible and invisible ones, among the list of items to be allocated from the 60 per cent FX availability by the banks, regardless of source of inflows.

“This is to ensure the continued provision of world class telecommunications services to the consumers.”

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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