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Multiple Taxes, RoW, Others Stagnate N21.45tn Telecom Investment

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  • Multiple Taxes, RoW, Others Stagnate N21.45tn Telecom Investment

Telecom stakeholders are expressing fears that the government’s policies will not only scare away potential investors, but can make the industry to crumble, OZIOMA UBABUKOH writes

Investment inflow into the Nigerian telecommunications industry is witnessing a lull without appreciable Foreign Direct Investment since the industry hit the N21.45tn ($70bn) investment mark last year, according to investigations.

The development is coming following the various challenges confronting the industry, which are becoming intractable for the telecom umpire, the Nigerian Communications Commission.

The challenges stifling the FDI and local investment inflows into the industry include multiple taxes, multiple regulations and Right of Way problems.

According to the President, Association of Telecommunication Companies of Nigeria, Mr Olusola Teniola, mobile operators currently pay on the aggregate 23 different taxes to various agencies of government at the federal, state and local levels.

“The challenges are also going to conspire against the six infrastructure companies already licensed by the NCC to deepen broadband penetration, because they won’t be insulated from the challenges facing existing operators in the industry,” he said on Sunday.

This also explains why the plan by the NCC to hit the 30 per cent broadband penetration by end of this year remains dicey, according to industry watchers

The industry has only been able to reach 22 per cent broadband penetration till date, though far above the minimum threshold of 20 per cent set for countries around the world to be met by 2018 by the Broadband Commission of the International Telecommunications Union.

The Director, Legal and Regulator Services Department, NCC, Mrs Yetunde Akinloye, bemoaned the various threats affecting the industry’s growth, especially the issue of multiple taxes and regulation.

According to her, after approval is given by the state authorities to telecom companies to build their infrastructure, operators still face challenges of having to deal with the payment of all kinds of frivolous levies imposed by local authorities and the so-called ‘area boys’.

“Refusal to do their bidding means the operators won’t be given the permission to peacefully lay out their infrastructure,” she said, noting that despite this, “demand for telecom services continues to grow in the face of infrastructure that is not growing.”

Akinloye said, “Government authorities and different agencies impose these levies in order to boost their revenues and we have met with the Nigerian Governors’ Forum to educate them on the implication of not allowing operators to build infrastructure in their states.

“This is because they are asking them to pay all sorts of taxes and levies, majority of which are not backed by any law in the country.”

The RoW is another problem facing the operators and which is putting pressure on their readiness to roll out more infrastructure, according to findings.

Right of Way is the permit given to a mobile network operator to lay fibre optic cables along the road and to build base stations in order to improve service delivery.

On this, findings showed that operators had not been able to make appreciable mileage in the area of more fibre optic deployment and base station roll-out

Information obtained from the Association of Telecommunications Companies of Nigeria showed that most state governments were denying the operators access to build additional base stations, while the already built ones were being shut down indiscriminately.

In Abuja, for instance, as in many states, findings showed that most operators had not been allowed to build additional base stations in the last five years, whereas building additional base stations is a sine qua non for improved service delivery across networks.

The PUNCH recalls that the Executive Vice Chairman of the NCC, Prof. Umar Danbatta, had in the last one year visited some state governments and pleaded for the RoW to enable the telcos to build base stations as well as reopen shut stations.

However, few months after, some of the state governments have gone back to either shutting the already existing base stations or denying the telcos access to build more.

Danbatta stated, “This singular action of not granting Right of Way will not only keep stagnating telecom investment, it will also not help in deepening broadband penetration.

“We need to engender a more robust conducive regulatory environment that attracts foreign investors into the country’s current $70bn (N21.45tn) telecom industry, release more spectrum to drive wireless Internet communication, license more players in the broadband infrastructure space and work with stakeholders to ensure that the challenges facing operators are obliterated.”

Teniola also called on the government to remove obstacles facing telecom operators in the course of deploying Internet infrastructure.

Teniola said, “We need increased support for telecom companies and other players in the entire Information and Communications Technology spectrum so that they can roll out infrastructure that can help us deepen Internet accessibility and availability faster.

“Aside from the 23 different taxes and levies that telecom companies currently pay, they are also faced with the perennial cases of vandalism, indiscriminate closure of their Internet infrastructure, denial of Right of Way as well as lack of direct access to foreign exchange.”

Industry analysts say the National Broadband Plan 2013-2018, being implemented by the Federal Government through the telecom regulator, is further helping in deepening broadband penetration.

According to data from the NCC, broadband penetration increased from six per cent in 2013 to 21 per cent in 2016 and with a target to reach 30 per cent penetration by end of this year.

“We have to create a veritable platform for aggressively increasing access to true broadband services, whose availability has greater impact on the nation’s economy,” the Chief Executive Officer, MainOne Cables, Ms Funke Opeke, said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

Nigeria’s Public Debt Hits ₦121.67 Trillion as Borrowings Surge – DMO

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The Debt Management Office (DMO) of Nigeria has announced that the country’s total public debt has risen to ₦121.67 trillion ($91.46 billion) as of March 31, 2024.

This represents an increase of ₦24.33 trillion from the ₦97.34 trillion ($108.23 billion) recorded at the end of December 2023.

The surge in debt is attributed to both domestic and external borrowings by the Federal Government, the 36 state governments, and the Federal Capital Territory (FCT).

The DMO’s report reveals that Nigeria’s domestic debt now stands at ₦65.65 trillion ($46.29 billion), while the external debt is ₦56.02 trillion ($42.12 billion).

The DMO noted that the rapid increase in public debt is largely due to new borrowing to partially finance the 2024 Budget deficit and the securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria (CBN).

“The increase was from new borrowing to part-finance the 2024 Budget deficit and securitization of a portion of the ₦7.3 trillion Ways and Means Advances at the Central Bank of Nigeria,” the DMO stated.

Despite the rising debt, the DMO remains optimistic about future debt sustainability, contingent on improvements in government revenue.

“Whilst borrowing, as provided in the 2024 Appropriation Act, will continue, we expect improvements in the Government’s Revenue to enhance debt sustainability,” the DMO added.

The increase in debt comes at a time when President Bola Tinubu is preparing to present the 2024 Supplementary Budget to the National Assembly.

This follows the President’s approval of the ₦28.7 trillion 2024 Appropriation Bill on January 1, 2024, which was ₦1.2 trillion higher than the budget originally proposed in November 2023.

The 2024 budget, dubbed the “Budget of Renewed Hope,” set ambitious targets, including pegging the oil price at $77.96 per barrel and estimating daily oil production at 1.78 million barrels.

However, the naira has faced severe depreciation, plunging to nearly ₦2,000/$1 in February, before stabilizing around ₦1,500/$1.

Economic analysts warn that the escalating debt and currency depreciation could pose significant challenges to Nigeria’s economic stability.

The government’s ability to manage its borrowing and stimulate revenue generation will be critical in navigating these fiscal pressures.

As Nigeria grapples with these economic realities, the focus remains on finding sustainable solutions to manage the growing debt burden while fostering economic growth and stability.

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Banking Sector

Federal High Court Sets Date for Contempt Hearing in GTB vs. AFEX Loan Case

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The Federal High Court in Lagos has scheduled June 27, 2024, for the next hearing in the ongoing contempt suit filed by Guaranty Trust Bank Plc (GTB) against directors of AFEX Exchange Commodities Limited.

The case revolves around a disputed N17.81 billion loan obtained under the Central Bank of Nigeria’s Anchor Borrowers’ Programme.

Presiding over the court, Justice Chukwujekwu Aneke set the date following a session where arguments were presented by the plaintiff’s lead counsel, Mr. Ade Adedeji (SAN), and the respondent’s counsel, Prof. Olawoyin (SAN).

The core issue pertains to the alleged disobedience of a court order by the directors of AFEX Exchange Commodities Limited.

GTB, through its counsel Ajibola Aribisala (SAN), has accused AFEX and its directors—Ayodele Balogun, Jendayi Fraaser, Justin Topilow, Mobolaji Adeoye, and Koonal Ghandi—of contempt for failing to comply with a court directive.

The bank alleges that these directors did not appear in court as mandated, which led to the initiation of contempt proceedings.

During the latest session, Adedeji emphasized the necessity for the directors to appear in person, stating, “My lord, the parties in contempt are not in court. The contemnors cannot sit in the comfort of their homes and send a lawyer to court in contempt proceedings. The law is trite that they must appear before the court.”

In response, Olawoyin argued that he had only recently been briefed on the matter and was not fully aware of the prior developments.

He noted that some of the individuals listed as directors were no longer with the company, adding that one current director, Mr. Akinyinka, was present in court, while another was on pilgrimage.

The contempt case traces back to a suit marked FHC/L/CS/911/2024, where GTB sought to recover the loan amount through legal measures.

On May 27, Justice Aneke granted an interim Global Standing Instruction (GSI) injunction, which directs over 20 banks to transfer funds credited to AFEX into its account with GTB until the debt is settled.

Also, the court authorized GTB to take possession of AFEX’s 16 warehouses across seven states and sell the commodities stored within, as these were procured using the CBN’s loan facility.

The N17.81 billion loan comprises N15.77 billion in principal and interest outstanding as of April 17, 2024, and an additional N2.04 billion covering recovery costs and incidental expenses.

As the court prepares for the next hearing, the financial and legal communities are closely watching the proceedings.

The outcome will significantly impact not only the involved parties but also set a precedent for handling similar cases in the future.

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Banking Sector

CRC Credit Bureau Celebrates 15 Years with Record 14% Credit Penetration in Nigeria

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CRC Credit Bureau Limited celebrated its 15th anniversary with a record 14% credit penetration rate.

The occasion was marked with the CRC Finance and Credit Conference 2024 held in Lagos, where key industry stakeholders gathered to reflect on the bureau’s journey and discuss future trends in credit risk management.

Founded in January 2010 and licensed by the Central Bank of Nigeria (CBN), CRC Credit Bureau has played a pivotal role in enhancing access to credit across Nigeria.

Dr. Tunde Popoola, the Group Managing Director/CEO of CRC Credit Bureau Limited, highlighted the bureau’s journey, noting that from its inception with a single product, CRC has expanded its offerings to 18 products covering all aspects of the lending value chain.

Speaking at the conference, Dr. Popoola underscored the bureau’s contribution to Nigeria’s financial sector, stating, “CRC Credit Bureau has been instrumental in transforming access to credit in Nigeria over the past 15 years. We started with a vision to simplify credit access through reliable data and have since grown to serve millions of Nigerians.”

The event focused on the theme “Sustainable Financing Options: Innovations in Credit Risk Management,” emphasizing the importance of sustainable finance amid economic challenges.

The conference provided a platform for stakeholders to discuss strategies for mitigating risks and enhancing the efficiency of credit operations in Nigeria.

Reflecting on the current state of credit penetration, Dr. Popoola noted that while Nigeria has made significant progress, the 14% penetration rate still falls below global benchmarks.

He highlighted that CRC Credit Bureau currently holds credit scores for 33 million Nigerians, facilitating over 29.4 million searches in 2023 alone, with an additional 10 million searches conducted in the first quarter of 2024.

Joel Owoade, Chairman of CRC’s Board of Directors, acknowledged the economic headwinds impacting businesses in Nigeria but stressed the importance of sustainable financing to mitigate risks associated with lending.

“As we navigate economic fluctuations, sustainable financing remains crucial to fostering economic stability and growth,” Owoade remarked.

The conference also featured insights from industry experts on leveraging artificial intelligence (AI) in credit risk management and regulatory frameworks to support AI-driven innovations.

Olaniyi Yusuf, Managing Partner of Verraki, highlighted the potential of AI to create jobs and enhance economic productivity, calling for supportive regulatory environments that balance innovation with risk management.

Representatives from the Central Bank of Nigeria (CBN) emphasized the regulator’s efforts to promote sustainable credit practices.

Dr. Adetona Adedeji, Acting Director of the Banking Supervision Department at CBN, outlined initiatives such as the National Collateral Registry and Global Standing Instruction aimed at enhancing credit access while minimizing risks.

As CRC Credit Bureau looks ahead, Dr. Popoola expressed optimism about the future, stating, “We remain committed to driving greater financial inclusion and expanding credit access in Nigeria. Our focus is on leveraging technology and strategic partnerships to deliver innovative solutions that meet the evolving needs of consumers and lenders.”

The celebration of CRC Credit Bureau’s 15th anniversary underscored its pivotal role in Nigeria’s financial sector, marking a milestone in the nation’s journey towards broader financial inclusion and sustainable economic growth.

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