The Association of Licensed Telecommunication Operators of Nigeria (ALTON) has urged the country and Telecommunication regulator, the Nigerian Communications Commission (NCC) to expand the scope of Foreign Exchange (Forex) allocation negotiation with the Central Bank to include telecom equipment.
The Association which made this call in a statement requesting priority allocation of foreign exchange noted that the demand was borne out of present challenges faced by its members in “purchasing foreign exchange from interbank market to fulfill obligations to equipment suppliers and foreign vendors.” It recommends that the allocation should be made from the 60 percent foreign exchange availability by the Banks regardless of source of inflows.
According to the memo, the prevailing scarcity of forex has occasioned a situation where the banks are unable to obtain forex for an upward period of six months despite the submission of pre-requisite documentation for such transactions. It will be recalled that the CBN in August 2016 issued a circular mandating banks to sell 60 percent of all forex availability irrespective of source of inflows to the manufacturing sector; and the balance of 40 percent to other sectors.
This directive tactically closed forex inflows even from parent companies of ALTON members, thereby worsening the impact of the forex market on members’ operations and the industry at large. The statement from the Association lamented the exclusion of equipment imported by the telecommunications companies either via Letters of Credit or Certificate of Capital Importation, based on deferred payment terms, from the CBN intervention that requested
Banks to submit all outstanding Forex requests for Manufacturing, Agriculture and Airlines Sectors to enable it sell 2 months Forwards from October 2016. ALTON noted that telecommunication equipment are same in operation as manufacturing equipment as they are used for productivity. “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 for the production of goods and services in the country.”
According to ALTON, the exemption of telecommunications equipment and services from items to be accorded priority in the allocation of Forex by the banks has adversely impacted the industry and has occasioned increase in operating cost, unfavourable credit terms, delayed implementation of network enhancement and improvement initiatives which will adversely affect the National Broadband plan.
The Association further noted that the prevailing scarcity of FX in the country has made it very challenging for its members to honour their obligations to foreign vendors as at when due. “This has occasioned delayed payment to Equipment Suppliers and other foreign vendors, who have now resorted to imposing unfavourable payment terms on Telecommunications Service Providers in Nigeria. Some of the Foreign Vendors had issued.
Notice of Disconnection of service, which could disrupt service availability with attendant impact on customers’ experience.” ALTON is of the view that if proactive measures are not taken to ensure easy access to FX, the National QoS Fixing Project is likely to be adversely impacted to the detriment of the masses and the economy.
The Association listed RF Coverage Equipment, Core and Media Gateway Equipment, Transmission Equipment, Customer Contact Equipment and Network Tools as some of the classifications of plants and machinery procured and imported into the country by the Telecommunications service providers.
“In addition, Telecommunications Sector is termed “infrastructure of infrastructures” and Social Overhead Capital which propels productivity in other sectors of the economy. The multiplier effects of efficient and reliable telecommunications services on other spheres of the economy, such as banking, aviation and hospitality cannot be overemphasized.”
ALTON is of the opinion that the Telecommunications Sector deserves to be supported through direct FX allocation from the CBN interventions. This will facilitate the deployment of pervasive broadband network nationwide and ensure that the country retains its prime position, as the largest Telecommunications market in Africa ahead of South Africa in terms of subscriber base.