Department of political science and international relations covenant university, ota, ogun state, nigeria

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CHIDOZIE, Felix Chidozie (PhD)



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LAWAL Promise Odunayo




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AJAYI Olumuyiwa Olutosin




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This study investigates the deregulation of the Nigerian Telecommunication Sector within the precinct of Imperialism and development. This is premised on the fact that Nigeria’s Telecommunication sector has not only been moribund over the years but has more importantly been dominated by foreign and local bourgeoisies after its deregulation in 1999. In view of this, the study borrows from Structural Imperialism which argues that the elites in the Centre and Periphery states connive, indeed conspire to undermine development in the latter. It relies heavily on the use of secondary data, by virtue of the nature of the work, thus probing the dynamics of these Centre/Periphery trajectories. Findings reveal that certain levels of development have been recorded in the Telecommunication sector particularly in terms of contribution to the Nigerian economy through the ubiquitous provision of telecommunication lines, especially the mobile phones. Similarly, jobs have been created within this sector in terms of its contribution to Nigeria’s GDP profile. However, beneath these efforts, the predatory and materialistic character of the foreign and local bourgeoisie, a permanent feature of the post-colonial Nigerian state remains the greatest bane of the growth of this sector. The study concludes that until this “unholy alliance” between the foreign and local bourgeoisies is demolished, the deregulation effort of the federal government will remain a mirage. To this end, it recommends an immediate measure to increase the legislative oversight of the regulatory body, Nigerian Communication Commission (NCC) over the activities of the foreign mobile operators in Nigeria, while not neglecting, indeed promoting the indigenous operators of the telecommunication services in the country.

KEYWORDS: Imperialism, Development, Deregulation, Telecommunication Sector

1 Introduction

As at the time of her independence, the Nigerian state was just beginning her journey into development. To undertake this journey, the government intervened and established its presence significantly in the economy. This was prompted by the fact that government was perceived to be a driver of economic development, expected to provide infrastructure and services, provide capital that could not be afforded by the private sector which was still undeveloped to take advantage of market opportunities. As a result, government established State Owned Enterprises (SOEs) in various sectors of the economy such as petroleum, telecommunications, power, aviation, steel, media and transportation.

The management of such extensive public structure was facilitated by the oil boom of the 1970s and 1980s (Jerome, 2008). However, these SOEs proved detrimental to the economy of Nigeria, as they were characterized by poor performance due largely to gross mismanagement; were in precarious financial position with huge debts and losses. This made them heavily dependent on financial support from the government, through direct and indirect means such as grants, discounted loans and monopoly privileges. Adoga (2008) described the state of SOEs thus:

At the same time, annual profit of these corporations plummeted due primarily to corruption and inefficiency...excessive bureaucracy, defective ownership structures, gross incompetent management, complacency, defective capital structures, lack of effective control and supervision by the government, outdated technology, nepotism, international competition e.t.c (Adoga, 2008:10)

By mid-eighties, the international crash in oil prices, due to oil market glut resulted in reduced income for Nigeria, and the usual huge amount being pumped into these corporations could no longer be sustained by the government. The Structural Adjustment Program (SAP) designed by International Financial Organizations (IFO), specifically the World Bank and the International Monetary Fund (IMF), to help Nigeria and other African states out of the economic crises they faced was centered on the deregulation of the economies of these countries.

In effect, the deregulation of the Nigerian economy began in 1988 with the creation of the Technical Committee on Privatization and Commercialization (TCPC), to oversee the privatization program. From 1988-1993 when the program was suspended, TCPC had privatized 55 firms. Deregulation of the Nigerian economy was intended to serve as a tool of development and undoubtedly, some level of development have been recorded such as increase in profitability as most privatized companies have generated income for the government in form of taxes, better quality of goods and services provided. However, all these meet the criteria of development from an economic perspective. Other socio-economic indicators of development like inflation rate, per capita income, poverty and unemployment have not witnessed any improvement so far. More so, majority of the private companies that were allowed into the sector are Multi-national Companies (MNCs). The implication of this is that the vital sector of telecommunication in Nigeria is being dominated, indeed hijacked by foreign companies.

In other words, the means of production and labor are controlled by foreigners and a few elites. This move is akin to colonialism by the West, when the whites controlled the affairs and ruled Nigerians via traditional rulers. However, this time, it is quite subtle and engages the use of economic instruments. The most suitable term for this condition is imperialism of which Griffiths, O’Callaghan and Roach argue:

A policy aimed at conquering or controlling foreign people and territory….an imperial state….seeks to derive benefit of some sort from those states or peoples unable to defend themselves against its superior…economic force. (Griffiths, O’Callaghan and Roach 2008: 135)

The Nigerian Telecommunication sector was one of the sectors that experienced deregulation. Hitherto, the sector was made up of the Department of Posts and Telecommunications (P&T), in charge of the internal network and a limited liability company, the Nigerian External Telecommunication Limited (NET) responsible for external telecommunication services. It metamorphosed into NITEL in 1985 and on the heels of the privatization policy of the Olusegun Obasanjo administration in 1999 other private telephone operators became key players in the industry. Consequently, by 2007, the total number of telephone lines in the country had risen from 450,000 to 38 million and 85 million by 2010, due to the introduction of mobile network, and this huge success has been accredited to the effort of privatization in the sector (Ijewere and Gbandi, 2012; Okonjo-Iweala, 2012).

This success recorded in the deregulation of the telecom industry had ripple effects on the Nigerian economy, catalyzing development in other sectors of the economy such as agriculture, health, tourism and education. However, as stated earlier, these developments can be said to be superficial, satisfying only the economic criteria of development, and has become a tool of imperialism by the West, as the sector is currently dominated by foreign Multinational Companies (MNCs).

In view of this background, the study is divided into five sections. Following the introduction, key concepts are defined. The third section provides a background to the deregulation of the telecommunication sector in Nigeria. The fourth section narrows the discourse by bridging the gap between imperialism and development in the telecommunication sector in Nigeria. The last section concludes the paper.

2 Conceptual Discourse

The key concepts in the paper are clarified in the following section. This is necessary to avoid ambiguities and misconceptions that usually trail the use of certain concepts.

2.1 Imperialism

Babatola et al (2012) describes imperialism as a political and economic ideology of Western Europe in the 19th and 20th centuries employed to justify the economic and political activities of the western nations across their borders. Thus, the concept of imperialism is closely related to the concepts of capitalism and colonialism. In fact it can be said to be an off shoot of these concepts. The industrial revolution which heralded the capitalist economic system gave rise to increased production of goods, the replacement of humans with machines in the production process and the need for more raw materials, which incidentally engendered imperialism (Hussain, 2004; Salami 2009). The implication of this was that the non-industrialized countries constantly exported raw materials at cheaper rates to the industrialized countries, while they purchased from the latter manufactured goods at exorbitant prices.

However after the Second World War, Multi-National Corporations (MNCs), generally acclaimed to be the main vehicle of imperialism, particularly after the Cold War emerged, undertaking the production of goods and services in the industrialized countries. These MNCs, though they engender growth due to their large size in terms of capital, labor and infrastructure, display monopolistic tendencies, dominating whatever sector they find themselves in. The implication of this is that indigenous firms might be pushed out of the sector, and even infant industries intimidated. They are also being accused of damaging the environment, corruption, human rights abuses, over-invoicing and capital flight (Ozoigbo and Chukuezi, 2011; Osuagwu and Ezie, 2013). In other words, they are replicating what the industrialized countries did during the colonial era which is exploitation of less industrialized countries and transferring profit to their home countries, thereby developing their home countries at the expense of the host countries.

According to Sutcliffe (1999:139), imperialism is “essentially the idea that the world contains an undesirable hierarchy of nations in which some oppress or exploit others, or strive to do so”. The first wave of imperialism as described by him occurred between 1890 and 1917, when force was applied in the expansionist activities of Europe as well as the struggle for domination between its major powers. The second wave views imperialism as collective domination of Third world countries by a few industrialized countries, as well as the gap between developed and underdeveloped countries. Tucker (1999:1) describes imperialism as “a process whereby the lives of some peoples, their plans, their hopes, their imaginations, are shaped by others who frequently share neither their lifestyles, nor their hopes, nor their values”.

V.I Lenin illuminated the concept and philosophy of imperialism, situating it within the context of economic process. According to him:

…The relation of interdependence between two or more economies and between these and world trade assumes the form of dependence when some countries (the dominant) can expand and give impulse to their own development, while other countries (the dependent) can only develop as a reflection of this expansion. This can have positive and or negative effects on their immediate development. In all cases, the basic situation of dependence leads to a global situation in dependent countries that situates them in backwardness and under the exploitation of the dominant countries. The dominant countries have a technological, commercial, capital resources and social-political predominance over dependent countries (with predominance of some of these aspects in various historical moments). This permits them to impose conditions of exploitation and extract part of the domestically produced surplus... (Lenin, 1965)

According to Lenin, imperialism hinges the economy of a less developed country to a more developed country, such that the growth of the former is dependent on the latter. This indicates that acts such as colonialism are imperialist in nature. Kegley (2007:12) views imperialism as “international imposition of one’s state power over another, traditionally through territorial conquest, but more recently through economic domination”. Gartzke and Rohner (2011) argue that the end of World War 2 marked the end of the custom of territorial expansion- however; institutions and economies of the new nations are created to manage the legacies of colonial rule, which makes them highly dependent.

Economides and Wilson (2001:49) examined the concepts of ‘formal and informal’ imperialism. According to them, the former refers to the “acquisition of and direct control over specific territories, while the latter denotes less explicit, even covert, control, influence or domination”. Informal imperialism does not tamper with the country’s formal sovereignty or constitutional independence, but covers a particular sphere of influence - For instance, an economically powerful state influencing greatly, the economic policies of a weaker state.

Gillis et al (1983) view imperialism as barriers placed by advanced countries on the path of progress of poor countries. They argue that the drain of surplus from the developing countries is not the only problem, but also the misuse of the surplus in these countries. In other words, developing countries should be left to supply raw materials as “industrial growth within the developing country would be harmful to both goals, since local industry products will compete with imports and would also bid for local raw materials” (Gillis et al, 1983:32). They also recognize the presence of “commercial capitalists in the developing countries that align with foreign investors because “they make their living from existing pattern of trade and do not want competition from newer patterns” (Gillis et al, 1983:32).

The impetus for imperialism according to Karl Marx (1970) is capital accumulation via the creation of surplus value, driven by the need to profiteer. The surplus value demands a market and source of raw materials, hence the imperialist activities.

2.2 Development

The concept of development is one that is widely contested and ambiguous, thus making a generally acceptable definition difficult to come by. This is because what constitutes development differ from people to people, so also the bench mark for measuring differs. Kanbur (2001:5) opines that “since development depends on values and alternative conceptions of the good life, there is no uniform or unique answer”. A group of scholars referred to as post-modernists view development as “a set of ideas that shapes and frames reality and power relations, by valuing certain things over others” (Hickey and Mohan, 2003:38). This implies that valuing of economic assets over other things will make countries that do not possess economic assets to be viewed as inferior compared to those that do.

There is a technocratic perception of development that is used majorly by international development donor agencies, which focuses on what Gore (2000:794) describes as “performance assessment”. It is usually tied to the achievement of short and medium-term Millennium Development Goals (MDGs). The performance of countries in terms of poverty reduction, increase in life expectancy, adult literacy and other MDG goals have become major criteria for giving assistance to developing countries by institutions such as the Organization for Economic Cooperation and Development (OECD), Development Assistance Committee (DAC) and World Bank.

The United Nations Development Decade (1960-70) described development as “… growth plus change”. Change in turn is social, cultural, as well as economic; qualitative as well as quantitative….the key concept must be improved quality of people’s life”. There are different dimensions of development- economic, social, political, legal and institutional structures, technology, the environment, religion, arts and culture.

Bellu (2011:25) views development as an “event constituting a new stage in a changing situation”. He stresses the multi-dimensional nature of development i.e it can occur in different ways, at different rates and propelled by different causes. According to him, there are various types of development, which include, among others, economic, human, sustainable and territorial developments.

For Tucker (1999), development is a western concept used to describe the process by which the West dominate other people and affect their destinies in line with their (west) perception of the world. He contends that development is part of the imperial process, where the “developed countries manage, control and even create the Third World economically, politically, sociologically and culturally”. Pieterse (1999:79) advanced the concept of ‘Balanced Development’ which he describes as a “balance between economic growth and redistribution, and between growths across different sectors”. Soubbotina (2004) argues that indicators of wealth such as Gross Domestic Product (GDP), per capita income only show the quantity of resources a country has, but says nothing about the distribution of these resources. Hence, we have countries that have similar incomes but differ in terms of quality of life obtainable and this covers areas such as access to education, security, employment and others.

Todaro and Smith (2009), stress the fact that the traditional conception of development is within the framework of economic development, measured with indices such as Gross National Income (GNI) and per capita income. However, in the 1970s, development was redefined and measured against the back drop of poverty elimination, inequality and unemployment. Willis (2005:39) emphasize the fact that development is a process towards modernity that entails “a move from agricultural societies with traditional cultural practices, to a rational, industrial and service focused economy”. Dutt (2001) argues that development differs from growth in the sense that the former is a broader term that covers all areas -social, political, human-, and aims at purposeful improvement of society and human well-being.

2.3 Deregulation

Olashore (1991:115) argues that deregulation is an “economic policy and is often used synonymously with liberalization to mean the removal of official restrictions on consumer choice and the introduction or extension of competition on the supply side of market”. He contends that it is a way of relying on private entrepreneurs as a motivator for development. He stress the differences between deregulation and privatization, saying while deregulation abolishes monopoly, privatization is what transfers ownership from public to private sector. In other words, privatization is an instrument under deregulation.

Dhanji and Milanovic (1999) identified the following as the purpose of deregulation: creation of a market economy, increase in economic efficiencies, establishment of democracy and guaranteeing political freedom and increasing government revenue. They argue that an economy based on the prosperity of private individuals is better and serves as a way of preserving individual freedoms than an economy where productive apparatus are socially owned.

Owojori (2011:3) views deregulation as “the process of reducing or eliminating specific governmental rules and regulations that applies to private business”. It is the expansion of private sector activity and consequently the reduction in public sector size, in the interest of productive efficiency. One of the benefits is that it attracts foreign investment into the country. However, he warns that corrupt practices in the government circles will reduce the effectiveness of deregulation as a policy towards development.

Eme and Onwuka (2011:14) define deregulation simply as “either the partial or total withdrawal of government controls in the allocations and the production of goods and services”. According to them, the benefits of deregulation are effectiveness and efficiency, foreign investments, redirecting of governments fund to other sectors and breaking the monopoly of public enterprises, ensuring greater access to consumers. They however contend that though deregulation is a desirable tool of development, it should occur in stages, so as to allow state-owned monopolies to regain efficiency, before full privatization.

Ernest and Young (1988) see deregulation as one of the various economic policy tools with the ultimate aim of improving the overall economy in well defined ways such as ensuring efficiency and effectiveness in utilization of resources, reduction of the government’s debt burden, income generation for the government, and promotion of a free market that is characterized by healthy competition. They argue that, the above factors must be combined with other efforts towards development for it to perform to its maximum level in bringing about expected results. In other words, deregulation cannot work in isolation.

Bannock et al (1999:10) defines deregulation as “the process of invigorating activity in a sector of the economy by reducing the burden of government controls, particularly those that have the effect of creating barriers to entry”. They argue that the major goal of deregulation is to promote competition in sectors that were once considered as natural monopolies or where regulation has outlived its intended purpose. The problem they identified with deregulation is that it forces producers into a tight competition and along the line, normal social obligations are ignored. They argue that though deregulation and privatization are intertwined, deregulation is still more important of the pair.

However, the danger of deregulation is that a few private individuals with overriding influences can dominate a sector and create an oligopoly (a market in which a few number of producers control the supply of a commodity and also influence price). These private individuals could also exploit the consumers with high prices (O’ Hara, 2001). Hence the need for a regulator, that will monitor the pricing of the goods and services and also quality of goods and services provided.

Haque (1999) identifies deregulation within the context of an ideological shift on the path of states (developed and developing alike) from a state-centered interventionist perspective to a market-driven perspective. In respect to developing countries, the reason for adopting state-centered policies in the first place was to reduce foreign ownership as they were just being freed from colonialism, promote economic self reliance, develop infrastructure, redistribute income and generally, improve the standard of living of people.

However, shortly after this transition from colonialism to political freedom, the economic objectives headed towards a different direction which includes: stabilization, productivity, competitiveness, attraction of foreign investment and efficiency. This led to the adoption of market-oriented principles such as deregulation, privatization and liberalization. Haque however considers these polices as a threat to the achievement of sustainable development which he defines as “improvement of current living standards without jeopardizing future living conditions” (Haque, 1999:8).

3 Backgrounds to the Deregulation of the Nigerian Telecommunication Sector

The first telecommunication facility in Nigeria was a cable connection between the colonial office in London and Lagos established by the colonial administration in 1886. Telephone services were later made available to government offices in 1893, and later extended to the hinter land such as Ilorin and Jebba. The first commercial trunk telephone service between Calabar and Itu was established in 1923; a steady development of telecommunication in the country thus began. A three-channel line carrier system between Lagos and Ibadan was commissioned and later extended to Benin, Enugu, Kano, Kaduna, Kano and Osogbo; this took place from1946-1952 (Ajayi et al, 1999).

The equipments used were changed- small to medium capacity systems that employ the use of VHF and UHF radios were introduced, and also the use of Strowger exchanges as against manual pegboards. These telecom infrastructures were put in place by the colonial masters and they were intended to help in administrative functions and not mainly for socio-economic development of the country (Ajayi et al, 1999).

At independence in 1960, there were only 18,724 phone lines available to a population of about 40 million (Ijewere and Gbandi, 2012) and this was grossly insufficient. In the face of this reality, four national development plans were executed towards the improvement of the current state of the network and infrastructure, and they were supervised by the Ministry of Communications. Some of the intended objectives were: installation of additional telephone lines, expansion of trunk dialing facilities to link the major urban centers, and the establishment of an institution in the sector Nigerian External Telecommunications (NET) Limited (Ajayi et al, 1999).

These objectives were not totally achieved, but some level of improvements were recorded such as, the connection of major cities via microwave radio transmission system, the establishment of NET, increase in the number of lines in the telephone network from 52,000 to 241,000 lines, building of satellites that boosted external coverage, a microwave link connecting Nigeria and Benin Republic, and installation of an International Telephone Switching Center (ITSC). There were certain factors that limited the development of the telecom sector at this period such as inadequate funds, poor coordination of projects, interruptions such as the civil war of 1967-1970, and insufficient skilled labor force to manage the additional equipments.

Up until 1985, the institutions in the telecommunication sector were the Department of Posts and Telecommunications (P&T) which was responsible for the internal network; and the Nigerian External Telecommunication (NET) Limited, which was a Limited Liability Company responsible for the external network. In 1985, the Posts and Telecommunications Department was separated into the Postal and Telecommunications sections, and the telecommunications sector was merged with NET to form Nigerian Telecommunications Limited (NITEL), which also became a Limited Liability Company. NITEL was established to supply to the Nigerian state efficient telecommunication services, and this required sufficient resources - financial and technical, as well effective planning and co-ordination, as it was to merge the responsibilities of planning and coordinating internal and external telecommunications, and ensure these services were affordable and accessible (Ijewere and Gbandi, 2012).

NITEL was able to provide 60% of the N12 billion that was invested in the provision of certain infrastructures such as digital exchanges and transmission links, from internally generated revenues. This was a big credit to the institution. The institution also engaged in Research and Development (RD) to develop system components that suit the environment, develop solutions to technical problems and introduce new services. In 1993, NITEL introduced the voice mail, the paging system, trunked radio and phone card. The Integrated Services Digital Network (ISDN) ensured the availability of services such as electronic mail, video telephone, telefax and many more. NITEL was also able to provide telecommunication services to local governments in the country (Odukoya, 2007).

However, NITEL was faced with problems of corruption, mismanagement, inefficiency in service delivery in terms of quality; the telephone system was congested, erratic, non-customer friendly and expensive. The immediate result of these was the public outcry for state intervention to remedy the epileptic telephony services of NITEL.

Consequently, the Decree of 1992 led to the establishment of the regulatory body in the sector- Nigerian Communication Commission (NCC) as part of state reaction to the challenges of NITEL. The NCC commenced operation in 1993 with the inauguration of the first commission, however full deregulation began in 2000. The NCC was charged with the responsibility of monitoring the evolution of competition in the sector, preventing hostility against new entrants by those already existing in the market, and protection of the public against the manipulation of the market by the firms via practices such as inflated prices, reduced quality and quantity of services provided (Sodiq et al, 2011).

The NCC is also in charge of licensing telecommunications operators, engendering of private sector participation and investment, tariff regulation, interconnection disputes, supervision of technical and operational standards and practices for network, and other matters affecting the industry; and it is meant to perform these functions without bias and with all sense of autonomy, on the basis of transparency, equity and fairness. The NCC granted licenses to three GSM service providers in 1999- Econet, MTN and MTel, a Second National Operator in 2002, which is Globacom, and another operator in 2008, Etisalat. In 2006, the Universal Access Service licenses were issued to provide fixed telephony, VSAT and internet services (Alabi, 1996).

The rationale behind the deregulation of the telecommunication sector include: the inability of the government to support the sector with subsidy; the need to reduce the burden on the government, the demand for efficient and current facilities, low rate of infrastructure growth, low access especially in the rural areas, and poor service delivery.

The commercialization of the operations of the state enterprise in the late 1980’s marked the beginning of the deregulation process. However, with the announcement of the National Communication Commission (NCC) Decree of 1992, telecom was divided into 2, with a part left in the hands of NITEL exclusively, while the other sector was opened to private sector participation. NITEL thus kept her monopoly over areas such as Exchange and Trunks and International Services. Section 10(a) of the Decree made provision for only Nigerians to participate in the sector, but this was amended in 1998 spelling out the criteria for being licensed.

In 1999, the then President of Nigeria, Olusegun Obasanjo made it a priority to privatize the sector totally, involving the Global System of Mobile Communications (GSM) service providers. Some private companies received licenses, but no operation took place until 2001 when three operators got digital mobile licenses auctioned by the NCC; the operators include Econet, MTN and MTEL. After this, there was a great explosion in the sector; by 2007 the number of telephone lines in the country grew to 38 million as against 450,000 that was in place as at 1999, and 85 million by April 2010, due largely to the mobile network, which made the country the world’s fastest growing teledensity (Okonjo-Iweala, 2012).

The Telecommunication Act of 2003 encouraged more entry into the sector, engendering competition, and strengthened the role of the NCC. This paved way for the entry of the Second National Carrier which was GLOBACOM, and this has increased the intensity of competition in the sector, as each company introduces competitive and innovative packages, in order to gain the greater share of the market. As at 2004, the following had been achieved in the sector: a teledensity of 3.9% as against 0.4% at 2001; average of 45% of the population in an area of about 156,200km2, 3.8 mobile lines connected in less than 3 years; 4 licensed service providers, including two National Operators; increased access to mobile phones by the people; reduction in acquisition costs of new lines; reduction in cost of internet access; employment generation on the path of the companies and the “umbrella people” (Ndukwe, 2005).

Today, the industry has gone past telephony as there are quite a number of mobile service providers such as MTN, Airtel, Globacom, Etisalat which provide a range of services that include internet, Small Messaging Services (SMS), multimedia services, internet access and mobile banking. With such development, new challenges are also arising such as ensuring conformity to best quality of service delivery; upgrading of infrastructures to meet international standard; security and maintenance of facilities, especially in the remote areas; ensuring the framework of broadband that can be accommodated by the ecosystem; and security of data in this digital world.

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