ARTICLES
Competition is Pro-Poor
By Thompson Ayodele*
There used to be a rhetoric peddled about by Nigerian government for years. It is the claim that state monopoly and of course establishment other state- owned corporations is to ensure "fair distribution of resources" and adequate provision of cheap basic amenities affordable to the entire citizens and create "economically equal citizens." Given the situation of things, evidence abound that the claim is far from reality.
The Nigeria telecoms sector until mid 90s was state monopolized. Aside from inefficiency and poor services that characterized the telecoms sector then, connecting to the octopus government telecoms outfit then would take nearly a year if not more. Neglect and poor attitude of the staff to work were things that nobody prays that it should recur.
The billing system was sometimes arbitrary, over-bloated and subject to fraud. The costs of installation were above the roof. The costs of telephone calls were determined by the telecoms company and government officials and not by market.
From late the 80s, the price of installation and calls tariff were subjected to various abnormal increases and astronomical. People kicked against that. Students protested. Workers threaten to down tools. Subscribers sworn never to patronize the telecoms company.
However, instead of listening to the concern of the poor people which the government first said the public companies were out to protect and provided cheap services for, one of the Ministers of Communications had no balm to sooth the pain inflicted on the people than to say: "Telephone is not meant for the poor. The cost of telephone calls in Nigeria is the cheapest in the
world."
What on earth has the poor done to deny them the amenity that could help them create wealth, transform their lives and prosperous? After all they are humans like the honorable minister. Less than two decades later, it has been demonstrated by market that the so-called government monopoly are in fact not meant for the poor. Monopoly only creates inefficiency, costly and inferior services/goods, bureaucracy and encourages corruption.
With the partial deregulation of telecom sector in the mid 90s, private companies started providing services. The costs of importation of equipment and of obtaining licenses, few companies that were licensed and the
interconnectivity rate merely provided a slight relief. The costs of private providers too were still on the high side, but you did not wait for months before you got telephone to be installed.
Since 1997 more and more private firms had been licensed. Shortly after the present administration came into office in 1999, three private telecoms companies were licensed to provide mobile phone (GSM) services in Nigeria. With two only starting operation at initially, the price of getting one never remain the same. It keeps changing and changing with several business promotions to boost the number of their subscribers. What however did not change is the tariff cost for a minute.
However, the last entrant has forced earlier operators to adjust their prices and services. The per-seconds billing which the two earlier operators said was not possible has been adopted by all private mobile operators. The price
also continues to crash.
Now it is estimated that over 8 million Nigerians own a mobile phone. The number will continue to surge. These Nigerians also maintain their phones. They pay for their services and recharge their phones. Out of these numbers
over 2 million are in the rural areas. Also out of the total figure of people with a mobile phone over 4.5 million of them are poor.
This is contrary to the minister's assertions that telephone is not meant for the poor. Increasingly, the same government-owned telecoms outfit that had its tariff jerked up and which the honorable minister said "is the cheapest in the world" has been reduced by over 50 per cent. Other private outfits also are towing that line.
What the whole scenario shows is government directed programs with respect to public enterprises is bound to harm the poor people most. As alternative is not available, the poor will be forced to stick to the poor and inefficient services provided by the monopolized public enterprise.
The assertions that the poor cannot pay for services have been debunked. The fact is the poor can actually pay for efficient and reliable services. What is important is to create alternatives from which the poor people can be able
to choose rather than forcing them to glue to government provided inefficient services. The best that could happen to the poor is to encourage fierce competition in every sector. That is the only way to promote their lots.
* Thompson Ayodele (thompson-at-ippanigeria.org -- replace -at- with @) is the Coordinator of the Institute of Public Policy Analysis in Lagos, Nigeria.