Beruflich Dokumente
Kultur Dokumente
Transformation Blueprint
(VISION 2020): Joint Economic
(ALTON)
Outline…
• The Nigerian Vision and Long-Term Goals
• VISION 20: 2020 – Objectives, Role Plays, targets
• Telecommunication Sector and VISION 2020
• A Global & African overview
• Telecommunications sector & contributions to
the economy
• Challenges
• Framework for Action
The Nigerian Vision Nigeria’s Long-Term Goals
6 A key player in the World 6 Poverty Reduction
Economy
6 Wealth Creation
6 Largest and Strongest African
6 Employment Generation
Economy
6 Value Re-orientation
MSOffice1
VISION 20: 2020 (Medium-term goals)
6 Reform Govt. & Institutions
6 Growing the Private Sector
6 Implementing a Social Charter
Slide 3
MSOffice1 All the NEEDS should be changed to VISION 2020 since they aim towards the same objectives but with a slight different methodology
, 8/20/2009
VISION 20: 2020 – Roles
Government Private Sector
6 Enabler 6 Executor
(Helping the private sector grow, create jobs and (To carry out and perform activities)
generate wealth)
6 Direct Investor
6 Facilitator (To commit capital for such activities)
(To attract private sector investment)
6 Manager of Businesses
6 Regulator (Control all the resources committed to such
(To control, supervise and ensure compliance with all activities)
laws and regulations)
General
• Mobilize long term capital investment
• Appropriate regulatory framework
• Coherent and consistent trade policy
• Regional/Global integration regime
• Specific interventions
• R&D
VISION 20: 2020 – Role
Role of Government in VISION 20: 2020:
6 Mobilization of national resources to facilitate the development of strategic
economic infrastructure
6 Economic empowerment of indigenous SME businesses
6 Providing a robust fiscal and monetary policy regime for the smooth functioning
of the economy
6 Adopting financing strategies that do not crowd out the private sector
6 Holding regular dialogue with private sector operators and playing an active role
in economic planning, based on market principles
6 Creating greater opportunities for access to appropriate financial resources
6 Progressive reduction of its direct role in economic and business activities e.g
privatization, deregulation, liberalization of key sectors of the economy
6 Development of appropriate competition and consumer protection policies
VISION 20: 2020 – Role
Role of Private Sector in VISION 20: 2020:
Macroeconomic Targets
MSOffice2 To me l think the projection should get to 2020 stating from 2007 using the same formula in arriving at the figures
, 8/20/2009
Telecommunication – Policy Thrusts
Sectoral Targets
MSOffice3
• *Tele-density from 1:40 in 2003 to 1:25 in 2007
• Improve access especially in the rural areas
• Develop a national communication and telecommunication
backbone, satellite including a national multimedia super corridor
Slide 10
© OECD
Telecoms penetration and National economic
development
March 2005 study backed by UK telecom giant, Vodafone and Centre for
Economic Policy Research , on the impact of mobile phones in Africa
established the following:
6 Mobile phone usage in Africa is growing faster than anywhere else in the
World – 5000% growth between 1998 and 2003
6 Empirical evidence of a link between social and economic development and MSOffi
the establishment of mobile phone networks
6 Mobile networks in addition to the openness of the economy, GDP growth
and infrastructure are positively linked with foreign inward investment
6 Mobile phones has enabled developing countries to leapfrog old
technologies
6 African countries with greater mobile use has seen a higher rate of
economic growth
Slide 12
MSOffice4 Recent data available should be used in order to give up to date information
, 8/20/2009
MSOffice5
Comparative Analysis of Pertinent Emerging
Markets
ITU basic indicators of Telecom growth and development provides the
means of comparing growth in various markets and establishes how
Nigeria has fared
45
40 Cote d'Ivoire
35 Egypt
30 Kenya
25 N igeria
20 Senega l
15 South Africa
10 Ta nza nia
5 Africa Avr.
0
2001 2002 2003
Slide 13
© OECD
MSOffice6
But in comparison with other markets (within the African Continent), the
Nigerian mobile market is still far from achieving its full potentials
Morocco
Mobile penetration
Kenya
South Africa
12.00% Côte-d’Ivoire
10.00% Egypt
Senegal
8.00% Cameroon
Ghana
Uganda
6.00%
Nigeria
4.00%
2.00% Tanzania
MSOffice6 I think it will be good not to use the word mobile too much in the presentation, so l suggest telephone but as you think is okay.
, 8/20/2009
The Maturity Level of the Nigerian Market
The Nigerian Telecoms market is still at its infancy and is thus deserving
of adequate protection and governmental support
Developed
Markets
Africa
Nigeria
© Pyramid Research, 2004
Nitel Fxd
PTOs 3%
6%
Notes:
i) This split is as at End
January 2005
ii) Subscriber figures for © MTN, 2005
Glo, M tel, Nitel fixed and
PTOs were calculated
based on last actual
available data GSM
iii) Total M arket is about 91%
10m
Slide 17
MSOffice7 I know that currently Nitel does not have any subscriber.
, 8/20/2009
MSOffice8
30
25
20
15
10
9000
8000
7000
6000
5000
Series1
4000
3000
2000
1000
S1
0
2003 2004 2005 2006 2007 2008
CAPEX estimates from (1) operators stated budgets and rollout plans, (2) awarded contracts and (3)
BTS deployment estimates based on anticipation of capacity and market share.
© Pyramid Research, 2004
Profit does not mean Cash
300
250
PAT- Planned Reported Profit vs Cash Flow
Cash Flow-Planned
200
150
100
50
0
Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
(50)
(100)
(150)
Committing Investments in Nigeria
Investors are in Nigeria for the long haul - should not reap a return
on investment until the company breaks even i.e. not until 2016, 15
years after the commencement of business operations
6 Opportunity cost
) The cost of procuring investment funds in Nigeria – 24% to 30%
) In Europe – 2%
) Inflationary pressures on the time value of money are significant
over a period of 15 years
Slide 21
MSOffice10 By the statement in point 2, it shows that the GSM break even in 2008, whereas some PTOs' if not all are still struggling. I will suggest
a kind of cohension here.
, 8/20/2009
Committing Investments in Nigeria
Return on Investment
900
800
700
600
500 Investor recovers
total investment and
400 breaks even
300
200
100
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14
No of Years
Core Network
Power Supply
Transmission
Contributions to the Economy [2001 till date]
Generation of a rollover effect on the Nigerian economy which includes:
6 the employment of direct & indirect labour who in turn spend
their income in Nigeria and support a further tier of jobs
6 a strong demand for a wide variety of support services and
ancillary employment
6 the job creation & sustenance arising from the payment of taxes,
duties, interest payments and profits
TELECOM Operators
End Users
Contributions to the Economy
Sectoral contribution to the GDP (N'000,000,000)
2000 2001 2002 2003
Agriculture 117.95 122.52 127.72 135.99
Manufacturing 13.96 14.93 16.44 17.37
Oil & Gas 106.83 112.42 106 131.34
Transport 7.5 7.86 9.22 9.33
Communications 0.37 0.45 0.69 0.83
Finance & Insurance 17.13 17.91 23.17 20.96
% Change of Sectoral contribution to GDP
2001 2002 2003
Agriculture 3.87 4.24 6.47
Manufacturing 6.95 10.11 5.65
Oil & Gas 5.23 -5.71 23.90
Transport 4.8 17.30 1.193
Communications 21.62 53.33 20.28
Finance & Insurance 4.55 29.36 -9.54
Note: There was a 241% growth in the subscriber base between 2003 and 2004 alone. Therefore, it is
expected that there will be a tremendous increase in the impact of the communication sector to GDP in
subsequent years.
% Change of Sectorial Contribution to GDP
60
50
40
Agriculture
30
M a nufa cturing
20 Oil & Ga s
Tra nsport
10 Communica tion
- 20
TELECOM Operators
(NGN)
NCC 12.95 bn
WHT 12.79 bn
CAC 0.378 bn
Contributions of TELECOMS to the
Economy [2001 to date]
6 Contribution to National Treasury
TELECOM Operators
(NGN)
Stamp Duties 1.34 bn
License 77.41bn
TOTAL 202.56 bn
Contributions to the Economy (2001 till date)
6 Socio-economic Impact:
) National spread and rural penetration: Mobile services available in all 36
States of the Federation, over 50% of the Local Government Areas and in at
least 5,000 towns, communities and small villages
) Increased tele-access: Reduction of average waiting time from 100 days pre-
GSM era to about 30 minutes. Mobile telephony is now available to all regardless
of status or location
) Cross-Industry linkages: The development of a robust telecom infrastructure &
telecom access has a direct impact on the development of other industries in the
economy – Financial services, Oil & Gas, Agriculture, Maritime/Shipping, Trade
& Industry etc and other ancillary sub-sectors of the economy.
Contributions to the Economy (2001 till date)
Socio-economic Impact:
) Economic empowerment: Mobile services has made businesses more
productive. This has led to growth in the small & medium scale business (SMME)
segment thereby boosting National GDP. This includes the informal sector of the
economy such as artisans, transporters etc.
) Business efficiency: Mobile services has significantly improved the operations
and logistics of businesses; reduced unproductive trips/travel times and
associated risks; provides instant access to relevant business information;
enhances faster and more efficient decision-making which positively impacts
National productivity
) Family/social relationships: Mobile telecom access has improved family and
social relationships tremendously – provides means of staying in touch with
family and friends without having to embark on journeys.
Contributions to the Economy (2001 till date)
Macroeconomic Climate
Cost Structure for GSM Operators - MTN
End 2001 End 2002 End 2003 End 2004 Average EX Rate (01-04)
Macroeconomic Climate
6 Inflation: 4yr average : 16.13%
Inflation Rates
Inflation
Macroeconomic Climate
Revenue / Pricing Structure for TELECOM Operators - MTN
Macroeconomic Climate
Average Weighted Airtime Charges
140
120
100
NGN
80
National
60 Intermational
40
20
0
2001 2002 2003 2004
VISION 20:2020 – Framework for Action
Macroeconomic Climate
- Implications
6 Increase in expenditure due to rising costs even though price has been
driven down due to competition.
6 The double–digit bank lending rates increases the cost of funds for
investment, and therefore hinders the growth rate of the sector.
Challenges – Communication Sector
Challenges
CHALLENGES
6 Telecom operators and other stakeholders in the telecom industry used over MSOffic
5,600 generators of different capacities in 2003. These generators had an
aggregate estimated value of NGN 9.5 billion, and most of them are used
for the direct operations of the four (4) players.
6 In 2004 alone, about NGN 6.4 billion was spent on the maintenance of
generators and figure is expected to rise to about NGN19.27 billion in 2007
Slide 42
MSOffice14 The figure on consumption of fuel needs to go up. "Telecom Operators and other stakeholders in the Industry" replaced the GSM
, 8/20/2009
MSOffice13 VISION 20: 2020 – Framework for Action
6 GSM operators rely only 16.87% on NEPA today – with the projected 138%
increase in power generation by 2007 under the power sector reform
process vis-a-viz the projected mobile industry growth rate, the GSM
operators will be relying even less on NEPA by 2007 thereby incurring
huge additional expenses with a larger network to manage
Slide 43
End 2001 End 2002 End 2003 End 2004 4 yr price change (01-04)
70
60
50
NGN
40
Pe r Litre Ra te
(D ie se l)
30
20
10
0
2001 2002 2003 2004
VISION 20:2020 – Framework for Action
Inadequate Power Supply – VISION 20:2020
Targets
The Power Sector and VISION 20: 2020
6 The operators must go through not less than 15 processes which take
about 30 days; even before actual clearing processes start
6 The duty concession has since been withdrawn for most operators
since August 2003
VISION 20:2020 – Framework for Action
6 The industry generates a GDP contribution of R313 Billion per year and 3.6
million jobs depend on the mobile services industry
6 There is still an ongoing clamour for Government to further minimize the tax
incidence on operators to boost operations in the sector and economy as a
whole
VISION 20: 2020 – Framework for Action
• Custom Duties
• Reduced duties for specified capital goods for use in the ICT sector e.g.
PCs, magnetic tapes/discs, e-glass & optical fibre cables
• Full exemption for specified goods for the manufacture of
telecommunication grade optical fibres; cables and specified infrastructure
equipment for basic/cellular/internet, V-Sat equipment; mobile switching
centres imported by cellular mobile telephone service providers &
universal access service providers
• Excise Duties
• Reduction of duties on PCs & standalone CPUs
• Exemption for VCDs/DVDs, some TVs & mobile phone parts e.g. cathode
ray tubes & plasma display panels
VISION 20: 2020 – Framework for Action
Lack of Fiscal and Financial Incentives –
COUNTRY EXPERIENCE – INDIA
6 Over 95% of Telecom equipments are imported into the country due to
lack of local manufacturing capacity
6 The primary tools were Government investment, grants, loans, tax holidays, subsidies,
and PPPs :