Wednesday, April 23, 2014

Nigeria and Infrastructure Regulation, By Uddin Ifeanyi

Published:

Ifeanyi Uddin disagrees with official statistics saying inflation has been on the upswing all year, causing rising food prices, reducing disposable income, and hurting households’ welfare

I have often wondered what the world was like before social media. The ease with which user-generated content is created and exchanged on the web has rendered timelines the new haunts of choice: producing news and gossip in equal measure. But unlike output from the “shebeens and speakeasies” that one once frequented, the new discourse (or, better still, its diverse threads) is imbued with qualities, and churned out in volumes that were previously inconceivable. A number of other qualities remain unchanged, though: officialdom finds the new dialogue no less loathsome than it found its predecessors. However, whereas previously it was enough to have state security personnel and plainclothes detectives police the old haunts, and haul away the odd dissident, it is slightly harder to police social media sites.

In result, there is an outside chance of a noticeable improvement in governance (over the medium-term), as a lot more sunlight and fresh air is let in on habitats that previously had only mirrors in them (and a great deal of smoke). Exercised by these possibilities, the debate around the utility of the new IT-based channels has been involved. An emerging consensus is that whereas the new commentariat may be broadening the scope for popular voice, and strengthening citizen engagement, it may well mask another no less important trend. Gradually, the internet (that thoroughfare through which all these traffic passes) is becoming as important as the plumbing and wiring in our houses. Of concern, only when it fails to work.

Still, the numbers that the new plumbing supports compel further engagement. According to a recent newspaper report, a survey of the Nigerian economy by Euromonitor International (a global market research organisation) concluded that last year, e-commerce transactions in the country rose by a quarter over the 2010 numbers to close at N62.4bn. A lot of money for a nascent industry in a struggling economy. On the other hand, the Central Bank of Nigeria (CBN), in its annual report for 2011, states that “The volume and value of electronic card (e-card) transactions increased significantly from 195,525,568 and N1,072.9 billion in 2010 to 355,252,401 and N1,671.4 billion, reflecting an increase of 81.5% and 55.8%, respectively”. The apex bank blamed this rise on enhanced public confidence in electronic card payments.

Arguably, some of these are transactions diverted from the old cash-based economy. And despite the apparent size of these transactions, they pale in comparison with more traditional numbers. In 2011, for instance, (again, according to the CBN) “the volume and value of cheques cleared nationwide increased by 11.0% and 13.3% to 37.72 million and N22.30 trillion from 33.99 million and N19.69 trillion, respectively, in 2010″. But to the extent that the ease of use and convenience of access of online financial/commercial transactions may be creating its own economy, we are invited to look again at the dynamics of the e-business part of the national economy.

There is in this regards, a compelling argument for strengthening infrastructure and regulation in the information, and communication technology sector. For at the very least, it is obvious that the more robust the supporting infrastructure for e-business in the country (of course this goes beyond the mere profusion of service providers, to include the standalone integrity of their systems and their interoperability), the bigger this market could become. At this point all that talk of financial inclusion begins to make sense. If we are to mainstream the 65%, or thereabouts of the bankable population that currently has no access to formal financial services, then we can do no worse than introduce e-business solutions to them. Biometric-enabled ATMs will help with the literacy issues that make password changes and storage a nightmare for even the most educated, in the same manner that cash-accepting ATMs will remove the time wasted queuing at most bank branches.

There is, therefore, incentive to look critically at the mechanism(s) for providing the infrastructure that drives e-business. It helps a lot that the supply of internet services, and the surfeit of service providers associated with this remain in the private space. That way, the sector has a degree of responsiveness to market signals alien to the publicly provided services. However, as usual, there is no hard and fast rule to the provision of infrastructure in support of an economy’s productive capacity. After all, the Government in South Korea was instrumental in the roll out of fibre-optic networks to almost its entire population.

Constrained by its parlous finances, it may be a task to require our governments to run the cabling required to make this a networked economy. Nonetheless, it is difficult to understand why it appears to be failing on a basic requirement of governance: regulation. Why is it allowing internet service providers, including the telcos, their audacious claims? 42mbs? And 3.75G at a minimum? Anyone who has been out of the country understands immediately how specious these claims are. While we struggle to get our 4G networks here to download computer patches, you get to stream a full movie on the internet in the UK without it having to buffer once. Yet, the industry in the UK is only discussing rollout of 4G infrastructure.

Service providers may take advantage of an ignorant people in their quest for profits. But I do not think the people should suffer happily a government whose ignorance makes the discharge of its regulatory duties risible.

GTBank SME MarketHub campaign