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Monday, December 24, 2012

Local content development, panacea to capital flight –Juwah

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Local content development, panacea to capital flight –Juwah
Dec 24th 2012, 23:00

The Executive Vice- Chairman, Nigerian Communications Commission, Dr. Eugene Juwah, has said that active participation of local companies in direct contract delivery to telecoms players had become critical to developing the telecoms industry on a sustainable basis.

Therefore, allowing indigenous companies to have a space for active participation in the country's bourgeoning telecoms industry, Juwah said, would help in creating jobs as well as curbing annual capital flight in the industry.

Delivering a paper during a forum organised by the Association of Telecoms Companies of Nigeria in Lagos recently, the NCC boss said the Nigerian telecoms industry had come a long way in the last decade and as such, indigenous companies must have significant role in the provision of services and supply of materials to the telecoms industry.

Between 2001 and mid 2012, investment inflow into the nation's telecoms industry had increased from $500, 000 to over $25bn. Industry analysts had, however, lamented that while the investment into the sector had been astronomical, a larger percentage of the money, which should have remained in the Nigerian economy, was being lost to capital flight, as most infrastructure contracts were awarded to foreign firms, which would repatriate the money realised in executing the projects to their respective countries.

Meanwhile, explaining his argument for local content, Juwah, who noted that the industry had grown tremendously from about 400, 000 subscribers in 2001 to over 109 million active subscribers in October, 2012, said operators depended heavily on major network vendors such as Alcatel- Lucent, Ericsson, Qualcoms, Cisco and so on, for the provision of the critical infrastructure from switches, routers, base station controllers to base transceivers stations which required state-of-the-art technologies.

He said these aspects were provided by vendors with both the technological capacity and the economies of scale to compete on a global basis, noting that operators and any business for that matter would ordinarily choose vendors to provide them products and services on economic reasons and technical as well as operational capacity to deliver such products and services.

Juwah, however, argued that some of the supply and services decisions in an industry such as the telecommunications industry in Nigeria must not only be fair but must be seen to be fair.

According to him, a situation where an operator issues service contracts to a vendor and the vendor goes ahead to, in some cases, fully sub-contract the services contract to local companies for implementation raises some pertinent questions.

"Some reasons has been espoused for such practices though, chief amongst is the perceived organisational and coordination competence of the lead vendor as operators seek to reduce complexity introduced with managing multiple parties in project delivery."

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