• Business Day (South Africa): Emerging markets

Telecommunications, however, is an economic success story. Since deregulation, it has been Nigeria's fastest growing sector. Millions of Nigerians previously lacking communication services are now connected by cell phones. The picture remains far from ideal, however. Despite privatization, service provided by the national telephone company has deteriorated. On the cellular side, infrastructure has not always kept pace with growing demand, leading to service problems. Internet connections are widely available, but expensive and unreliable.
Financial Sector
Nigeria's financial sector has undergone a major restructuring, with new capital requirements forcing a consolidation of the banking sector from about 150 or to just 25 banks. The banking sector still deals with only a limited sector of the Nigerian economy'mainly those sectors like oil an gas with international involvement. Insider trading and the concentration of loans in a few sectors and to a few players present significant risk.
Concomitantly, the Government has reduced the external debt burden to low levels, liberalized foreign currency dealing, introduced regular Treasury bill auctions, and is now working to develop a secondary market. Many Nigerian banks are developing foreign partnerships. New regulations have gone into effect for pension funds and insurance companies, and many officials are focused on changing land tenure law to allow real estate to be used as collateral, and thus allow development of both the mortgage market and greater banking activity in the domestic economy in general.
China
Many U.S. businesses are intrigued by the role that China will play in Nigeria's development and in Nigeria's commercial ties to America. Nigeria's ties with China are complex, even if they are strong and cordial. About 20,000 Chinese live and work in Nigeria. China has now eclipsed the United States as Nigeria's major import partner, with 11% of the trade. (The United States holds over 8%). The average Nigerian resents the use of Chinese laborers in construction projects and perceives the Chinese as harsh employers. Nigeria's pharmaceutical and textile industries are suffering from what appears to be "dumping" of Chinese pharmaceutical and textiles and from counterfeit goods originating in China. Abductions targeting Chinese in the Delta are a growing concern. On the other hand, China is committed to strengthening ties, investing or offering to loan billions of dollars in oil block, railway and road projects. Nigeria's infrastructure clearly could benefit from Chinese aid, but the Chinese are discovering that their largest, and most highly touted, proposed infrastructure projects have not even broken ground because of cultural and market misunderstandings, bureaucratic hurdles, and corruption. We encourage Nigeria to pursue all public tenders in a manner that promotes transparency and competition and likewise also encourage China to promote transparency and competition for its own long-term interests throughout Africa. We believe that China's trade relationship with Nigeria can improve opportunities for economic development and need not be seen as a zero sum competition for U.S. businesses.
U.S. Trade and Investment
Last but not least, I wish to stress the importance of the U.S. - Nigeria trade and investment relationship. Over the past seven years, the United States has provided 53% of Nigeria's foreign investment: an impressive $11.2 billion. Many people do not realize that Nigeria is our second-largest market for the export of U.S. wheat. Opportunities to expand bilateral trade and investment are encouraging in the sectors of oil and gas equipment, healthcare services and medical equipment, electrical power generating equipment, computer hardware/software, telecommunications equipment, automobile parts and accessories, construction, earth moving equipment, agricultural products and equipment, and franchising. In June 2006, Nigeria expressed interest in a Phytosanitary Standards Agreement and a Bilateral Investment Treaty (BIT), which could help stimulate and "lock in" reforms related to basic protections for investors. We want to work with the Yar'Adua administration and interested U.S. businesses to facilitate improvement to the trade and investment climate. On another positive note, several U.S. carriers will be competing for traffic on new direct flights between the United States and Nigeria by Christmas.
Conclusion
These developments point to the need for robust bilateral engagement, despite the enormous challenges. We are encouraged by President Yar'Adua's public and private commitments to these types of reform, but recognize that he is operating in a complex political environment. Our goal is to help Nigeria establish itself as a fully democratic, free-market reformer. I am glad to have had this chance to highlight Nigeria's importance as a strategic partner of the United States, note those areas where we are working to improve the trade and investment climate, and answer your questions. As you consider Nigeria as a place to do business, we look forward to partnering with you for mutual success.
Thank you. Released on August 1, 2007
Document STDP000020070802e38100002
Vanguard (Nigeria) - AAGM: For NigComSat and NCC, a Needless War, Diversion of Vision.
Okoh Aihe

1,280 words

1 August 2007

Vanguard (Nigeria)

AIWVAN

English

The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. Vanguard (Nigeria) (c) 2007 All rights reserved
A needless war is brewing between two government agencies that if not quickly checked may distract the organizations from performing their much needed roles in the country's development.
NigComSat which recently pioneered the country's efforts at sending a satellite into space via China is unhappy with the Nigerian Communications Commission, NCC, for reportedly not allowing it to take last mile cocktail of services, including telecommunications, to the rural folks.
Obviously frustrated with a matter that has seethed in private, NigComSat management last week in a paid advert stated their case. Titled Setting the Records Straight: Irrefutable facts of the Dispute between the Nigerian Communications Satellite (NigComSat) Limited and Nigerian Communications Commission, NCC, the management said: "On 5th May 2007, Mr. President approved specific spectrum allocation to NigComSat Limited and "total" frequency license for any telecommunications service NigComSat may wish to offer. It is germane to state that under the extant regulations, NigComSat as government owned company is required to apply to the Federal Ministry of Information and Communications or the President for Spectrum allocation and not to the Nigerian Communications Commission, NCC. However, since Mr. President's approval has been communicated to the NCC, the NCC ought to comply with Mr. President's directives."
NigComSat listed a number of other satellite providers which are also into telecom operations. Some of them are: Intelsat, Eutelsat, Telenor Network, Singtel/OPTUS, ASTRA, and Thuraya.
"In any case we are not providing GSM services. We are deploying 3.5G to 4G multimedia network which guarantees our customers unfettered access to voice, data and video services on their handsets anytime, anywhere," NigCom Sat stated.
Some of the services to be offered are also listed in the advert and they include: Tele-education, Community Telephone Centres, Rural Telephony, ICT backbone and a host of others.
Part of the burning desire of the organization is to knock down the price of telecom services in the rural areas. So much patriotism brims in the NigComSat statement. Such patriotism is easily discernible in the face of Engr T. Ahmed Rufai anytime he has an opportunity to speak. In fact that was one of the qualities pointed out by the New York Times which in a front page story on May 24, quoted him as saying: "We want to be part of the digital economy. We are trying to diversify the economic base of the country."
Recently in Abuja, at the Nigerian GSM Strategic Conference, Rufai easily left with the crowd after he spoke about NigComSat and the kind of capacity it can provide the telecommunications industry.
However, the dispute is unnecessary. The advertorial is ill-advised and extremely uninformed. Reason being that since 1992, the telecom industry has been deregulated with powers given to the NCC to superintend the sector. There is hardly any telecom transaction in the industry that does not pass through the NCC.
July 8, 2003 Act of the National Assembly has this to say of the NCC:
The primary object of this Act is to create and provide a regulatory framework for the Nigerian communications industry and all matters related thereto and for that purpose and without detracting from the generality of the foregoing, specifically -
a. Promote the implementation of the national communications or telecommunications policy as may from time to time be modified and amended;
b. Establish a regulatory framework for the Nigerian communications industry and for this purpose to create an effective, impartial and independent regulatory authority;
c. Promote the provision of modern, universal, efficient, reliable, affordable and easily accessible communications services and the widest range thereof throughout Nigeria;
d. Encourage local and foreign investments in Nigerian communications industry and the introduction of innovative services and practices in the industry in accordance with international best practices and trends;
e. Ensure fair competition in all sectors of the Nigerian communications industry and also encourage participation of Nigerians in the ownership, control and management of communications companies and organizations;
f. Encourage the development of a communications manufacturing and a supply sector within the Nigerian economy and also encourage effective research and development efforts by all communications industry practitioners;
g. Protect the rights and interest of service providers and consumers within Nigeria;
h. Ensure that the needs of the disabled and elderly persons are taken into consideration in the provision of communications services; and
i. Ensure an efficient management including planning; coordination, allocation, assignment, registration, monitoring and use of scarce national resources in the communications sub-sector, including but not limited to frequency spectrum, numbers and electronic addresses, and also promote and safeguard national interests, safety and security in the use of the said scarce national resources.
The act also empowers the NCC with the management and administration of frequency spectrum for the communications sector and assisting the National Frequency Management, NFM, Council in developing a national frequency plan.
Enforcing the law strictly since 2001 has set out the country's telecom sector as one of the best regulated in the world and this has in turn attracted a lot of direct foreign investment, FDI, into the country. GSM operators paid a lot of money because of good regulation which guarantees their investments, Fixed Wireless Operators and other operators have continued to pay huge sums of money because of the security in the business environment.
This year alone government got a billion dollars directly from licenses -$600m from 3G licenses and another $400m from Mubadala. For most telecom experts it was quite exciting that an industry which already has over 30m lines could attract such investment. In this kind of environment, it is no more business as usual. The President cannot just issue a license without sending the wrong message to the operators and the international community that have continued to hail the country's regulatory environment. That function is now performed by the NCC which has a board and there are processes to go through before securing a license.
There may have been issues concerning quality of service in the country but that is largely traceable to the absence of a backbone which former national monopoly could not provide and the failure of government to provide relevant social infrastructure.
NigComSat cannot therefore offer last mile services without breathing the air belonging to a law abiding operator. To put it correctly, that 3.5G to 4G mentioned earlier actually belongs to government and can only be administered through the NCC.
Although the path taken could have been better in order to give Nigerians the hands-on feeling of building and launching a satellite, NigComSat is a very salutary project. There is prestige in joining the space club but from all indications this goes beyond prestige. There is so much need for NigComSat, which is why the organization should be more concerned with creating capacity. There has been so much talk about launching the second one. This is what should be pursued, to ensure that Nigeria has enough capacity up there to serve the country's needs and those of other African countries.
Then attention should shift to marketing in order to break the exclusive hold of entrenched Satellite owners. They always nearly shut out new comers into the business. Read that story of the New York Times again. The guys are bitter that America did not take that business but instead allowed China a foothold into space and permitting a hold on developing countries who want to join the space club.
Putting ephemeral hubris aside, last mile service will be a major distraction to the larger vision of NigComSat.
Distributed by AllAfrica Global Media. (allafrica.com)
FVAN57725638
Document AIWVAN0020070801e38100004

For NigComSat and NCC, a Needless War, Diversion of Vision
by Okoh Aihe

1,279 words

1 August 2007

05:31 AM

All Africa

AFNWS

English

(c) 2007 AllAfrica, All Rights Reserved
Lagos, Aug 01, 2007 (Vanguard/All Africa Global Media via COMTEX) --
A needless war is brewing between two government agencies that if not quickly checked may distract the organizations from performing their much needed roles in the country's development.
NigComSat which recently pioneered the country's efforts at sending a satellite into space via China is unhappy with the Nigerian Communications Commission, NCC, for reportedly not allowing it to take last mile cocktail of services, including telecommunications, to the rural folks.
Obviously frustrated with a matter that has seethed in private, NigComSat management last week in a paid advert stated their case. Titled Setting the Records Straight: Irrefutable facts of the Dispute between the Nigerian Communications Satellite (NigComSat) Limited and Nigerian Communications Commission, NCC, the management said: "On 5th May 2007, Mr. President approved specific spectrum allocation to NigComSat Limited and "total" frequency license for any telecommunications service NigComSat may wish to offer. It is germane to state that under the extant regulations, NigComSat as government owned company is required to apply to the Federal Ministry of Information and Communications or the President for Spectrum allocation and not to the Nigerian Communications Commission, NCC. However, since Mr. President's approval has been communicated to the NCC, the NCC ought to comply with Mr. President's directives."
NigComSat listed a number of other satellite providers which are also into telecom operations. Some of them are: Intelsat, Eutelsat, Telenor Network, Singtel/OPTUS, ASTRA, and Thuraya.
"In any case we are not providing GSM services. We are deploying 3.5G to 4G multimedia network which guarantees our customers unfettered access to voice, data and video services on their handsets anytime, anywhere," NigCom Sat stated.
Some of the services to be offered are also listed in the advert and they include: Tele-education, Community Telephone Centres, Rural Telephony, ICT backbone and a host of others.
Part of the burning desire of the organization is to knock down the price of telecom services in the rural areas. So much patriotism brims in the NigComSat statement. Such patriotism is easily discernible in the face of Engr T. Ahmed Rufai anytime he has an opportunity to speak. In fact that was one of the qualities pointed out by the New York Times which in a front page story on May 24, quoted him as saying: "We want to be part of the digital economy. We are trying to diversify the economic base of the country."
Recently in Abuja, at the Nigerian GSM Strategic Conference, Rufai easily left with the crowd after he spoke about NigComSat and the kind of capacity it can provide the telecommunications industry.
However, the dispute is unnecessary. The advertorial is ill-advised and extremely uninformed. Reason being that since 1992, the telecom industry has been deregulated with powers given to the NCC to superintend the sector. There is hardly any telecom transaction in the industry that does not pass through the NCC.
July 8, 2003 Act of the National Assembly has this to say of the NCC:
The primary object of this Act is to create and provide a regulatory framework for the Nigerian communications industry and all matters related thereto and for that purpose and without detracting from the generality of the foregoing, specifically -
a. Promote the implementation of the national communications or telecommunications policy as may from time to time be modified and amended;
b. Establish a regulatory framework for the Nigerian communications industry and for this purpose to create an effective, impartial and independent regulatory authority;
c. Promote the provision of modern, universal, efficient, reliable, affordable and easily accessible communications services and the widest range thereof throughout Nigeria;
d. Encourage local and foreign investments in Nigerian communications industry and the introduction of innovative services and practices in the industry in accordance with international best practices and trends;
e. Ensure fair competition in all sectors of the Nigerian communications industry and also encourage participation of Nigerians in the ownership, control and management of communications companies and organizations;
f. Encourage the development of a communications manufacturing and a supply sector within the Nigerian economy and also encourage effective research and development efforts by all communications industry practitioners;
g. Protect the rights and interest of service providers and consumers within Nigeria;
h. Ensure that the needs of the disabled and elderly persons are taken into consideration in the provision of communications services; and
i. Ensure an efficient management including planning; coordination, allocation, assignment, registration, monitoring and use of scarce national resources in the communications sub-sector, including but not limited to frequency spectrum, numbers and electronic addresses, and also promote and safeguard national interests, safety and security in the use of the said scarce national resources.
The act also empowers the NCC with the management and administration of frequency spectrum for the communications sector and assisting the National Frequency Management, NFM, Council in developing a national frequency plan.
Enforcing the law strictly since 2001 has set out the country's telecom sector as one of the best regulated in the world and this has in turn attracted a lot of direct foreign investment, FDI, into the country. GSM operators paid a lot of money because of good regulation which guarantees their investments, Fixed Wireless Operators and other operators have continued to pay huge sums of money because of the security in the business environment.
This year alone government got a billion dollars directly from licenses -$600m from 3G licenses and another $400m from Mubadala. For most telecom experts it was quite exciting that an industry which already has over 30m lines could attract such investment. In this kind of environment, it is no more business as usual. The President cannot just issue a license without sending the wrong message to the operators and the international community that have continued to hail the country's regulatory environment. That function is now performed by the NCC which has a board and there are processes to go through before securing a license.
There may have been issues concerning quality of service in the country but that is largely traceable to the absence of a backbone which former national monopoly could not provide and the failure of government to provide relevant social infrastructure.
NigComSat cannot therefore offer last mile services without breathing the air belonging to a law abiding operator. To put it correctly, that 3.5G to 4G mentioned earlier actually belongs to government and can only be administered through the NCC.
Although the path taken could have been better in order to give Nigerians the hands-on feeling of building and launching a satellite, NigComSat is a very salutary project. There is prestige in joining the space club but from all indications this goes beyond prestige. There is so much need for NigComSat, which is why the organization should be more concerned with creating capacity. There has been so much talk about launching the second one. This is what should be pursued, to ensure that Nigeria has enough capacity up there to serve the country's needs and those of other African countries.
Then attention should shift to marketing in order to break the exclusive hold of entrenched Satellite owners. They always nearly shut out new comers into the business. Read that story of the New York Times again. The guys are bitter that America did not take that business but instead allowed China a foothold into space and permitting a hold on developing countries who want to join the space club.
Putting ephemeral hubris aside, last mile service will be a major distraction to the larger vision of NigComSat.
Document AFNWS00020070801e381000gq
POLITICAL DYNAMICS AFFECTING BUSINESS CLIMATE IN NIGERIA
2,376 words

31 July 2007

States News Service

SNS

English

(c) 2007 States News Service
The following information was released by the U.S. Department of State:
Assistant Secretary Sullivan, Vice President Gadbaw, and esteemed guests, I am honored to discuss with you today the political dynamics and business climate in one of Africa's most pivotal countries and one of our most important strategic partners--Nigeria. Both the challenges and the opportunities are enormous.
Overview
A prosperous Nigeria remains vitally important to our security, democracy, trade, and energy needs and objectives. Nigeria is one of our most dependable African allies on a wide array of diplomatic initiatives including Darfur, peacekeeping, counter-terrorism, to HIV/AIDS--where recent data indicates that prevalence rates for AIDS in Nigeria actually may be declining. As an emerging market of 140 million people, Nigeria welcomes U.S. investment and technology. Nigeria now accounts for 11% of U.S. oil imports and is currently our fourth largest exporter of crude oil to the United States. Most Nigerians are positively disposed toward the United States and have a strong affinity for U.S. products. Nigerian businesspeople are eager to form partnerships with U.S. counterparts. Nigeria has a bright future on the world stage, but the notable macro-economic reforms achieved over the past few years must be translated into improvement in living standards for all Nigerians, who comprise about one-fifth of Africa's population. Nigeria also must become more competitive in attracting foreign investment, and do more to improve road, rail and port infrastructure, power generation, and to remove various barriers to trade.
Yar'Adua Administration
I'd like to start by discussing the biggest new political development in Nigeria, the election of President Yar'Adua. Although it is too early to predict the performance of his administration or his recent cabinet picks, there is no reason to believe Nigeria's policies of macroeconomic reform and close ties with the United States will diminish. In fact, President Yar'Adua seems to be taking a series of deliberate steps to establish his independence and credibility. Ironically, a flawed electoral process appears to have brought to power a man of integrity. This result is important. The United States shares with Nigerians their disappointment over the conduct of the April 2007 elections, and some critics will no doubt urge us to isolate Nigeria. But the stakes are too great to walk away. In our judgment, the best way to nurture Nigerians' fragile democracy is for the United States to engage on the very issues at risk: political reform; regional security; and economic opportunity. As our recent Ambassador John Campbell told the Nigerian press, democratic culture has grown in the past three years, and the United States will continue to walk beside Nigeria on its pilgrimage to democracy. We will continue to support the Nigerian government and civil society in their efforts to strengthen and improve electoral law and tribunal system, to promote judicial and legislative independence at the national and state levels, and to fight corruption.
Niger River Delta
Of course, one of the biggest challenges facing President Yar'Adua and the other new political leaders is how to address the unrest in the oil-rich Niger River Delta. The problems there are real and, while they may seem daunting, they can be addressed and resolved. We acknowledge the legitimate aspirations of the people of the Niger Delta and would like to offer development and other expertise to help pursue goals such as controlling piracy, corruption, and other crime. However, a strict "top-down, outside-in" approach to development has not worked in the past, and we don't have reason to believe it would work better in the future. Solutions to these challenges reside not in Washington, London or Beijing but in the cities and villages of the Delta. The issue at hand is not a lack of resources or talent. It is the commitment and willpower of the federal and various state governments.
However, we must face the fact that forces resistant to change will continue to attempt to hinder progress. Nigeria's institutional foundations have been hollowed from decades of neglect and corruption that will continue to make the country susceptible to recurring crises in the coming years. The government has not stemmed lawlessness and insecurity, and Nigerians are demoralized from worsening living conditions. We have often said that the greatest obstacles to Nigeria's advancement are deeply entrenched poverty and unemployment, continued pervasive corruption, ineffective governance, and the need for electoral reform. Decades of unaccountable rule have eroded health and education infrastructure, suppressed democratic institutions, and stifled job creation.
However, we believe that the U.S. private sector, by building partnerships with local communities, non-governmental organizations, and the oil majors can do more to create more jobs, reduce more poverty, and generate more wealth than any public sector initiative can achieve. In this regard, we are urging Nigerian authorities to work with the U.S. private sector to provide opportunities for profitable agricultural livelihoods, technology development, constructive use of currently "flared" natural gas, enhancing refining capacity, cultivating biofuels, promoting environmental remediation and clean drinking water, building greater public access to telecommunications networks and health care, developing information technology and aviation transport, and curbing oil theft. By offering a variety of education, training, and mentoring programs, private enterprise could be the engine that creates a sense of ownership and control for the people of the Delta over their own resources and fate. This is key to lasting peace.
Let me now spend a few minutes highlighting the current situation in the energy, power, infrastructure, and financial sectors.
Energy
The problems in the Delta are inextricably linked to Nigeria's energy picture. Globally Nigeria is a major petroleum producer, with large reserves and growing production. At the beginning of 2006, production capacity was about 2.5 million barrels per day (bpd). Since that time, it has grown to about 3 million bpd and is set to grow further this year. Unfortunately, violence in the Niger River Delta has thrown over 600,000 bpd off-line. Although most new production is off-shore, militants have shown they are able to attack off-shore facilities. Despite Nigeria's growing capacity, the recurring attacks on oil infrastructure mean that Nigeria's actual production is somewhat erratic and unpredictable. While there is hope that the new administration will bring a new focus and attention to the problems afflicting the Delta, it is unlikely there will be a quick resolution.
Production is limited most significantly by the Government of Nigeria's ability to finance its own investments in the sector. The majority of Nigerian oil and natural gas projects are funded by joint ventures with the national petroleum company (NNPC) as the major shareholder. (Deepwater offshore projects are funded through production sharing contracts.) As a result, private sector oil companies are limited to investing amounts that the government can match each year. NNPC is exploring other avenues, in addition to direct government funding, to finance its share of projects and increase the pace of new investment.
The lack of qualified technical staff is a constraint. Violence in the Delta has made recruiting expatriate staff increasingly difficult, especially for the oil services companies. We understand that the oil majors estimate that over a thousand positions are unfilled, slowing progress on new projects.
Nigeria also has large reserves of natural gas and has several Liquefied Natural Gas (LNG) projects underway. The first of these has begun shipping gas to the U.S. and shipments are projected to grow rapidly. Europe is looking at Nigerian gas as a supplement or back up to Russian supplies. LNG projects face the same difficulties in attracting qualified staff as oil projects, though natural gas projects have not yet faced the kinds of attacks that oil facilities have.
The long-delayed, World Bank-assisted West African Gas Pipeline, which now will not be commissioned until June 2008, continues to face physical security issues, environmental degradation, and especially securing reliable gas supplies for export, given Nigeria's looming domestic energy crisis, fueled by price supports.
Despite abundant oil and gas, the Nigerian domestic market is poorly supplied. The country's four refineries function erratically or not all, forcing Nigeria to import most, if not all, refined products. Supply infrastructure for both petroleum products and natural gas are regularly vandalized, not only affecting supply but also creating serious health and environmental problems.
Power
Nigeria's power infrastructure is in dire straights. Of about 7500 megawatts of installed capacity, Nigeria's plants produced merely 1500-2300 megawatts last year. Estimated demand is 15-25 times as high as production. It is not surprising that Nigeria leads the world in amount of power produced by private generators. Perhaps the biggest issue has been securing fuel to new plants. There are also a host of regulatory and collection issues that need to be resolved. The lack of power is a major hindrance to better economic and social development in Nigeria.
Infrastructure
Nigeria faces other infrastructure constraints. Road transport is difficult and expensive because of poor conditions. The railway system is moribund. The ports are crowded and not automated. The government interferes with independent civil aviation safety and security oversight. The World Bank has estimated that it is more costly to ship a container within Nigeria than from Europe to Lagos. Real progress has barely begun to address shortfalls in each of these areas.