Twenty years on, and the revolution in Nigeria’s telecommunications industry cannot be forgotten in a hurry – with the transition from 400,000 NITEL lines in 2001 to 279 million connected lines (187 million active) in 2021 – the positive impact on all spheres still lives with us today. From increased digital access to Nigerians and the democratization of mobile lines to the economic impact on the lives of millions and the increased foreign direct investments (FDI), the modest success story of this sector is stellar and should be exemplary.
The Nigerian telecommunications sector and electricity sector were bedevilled with similar challenges in the past and currently have a similar regulatory setup overseeing both sectors – the Nigeria Communications Commission (NCC) and Nigeria Electricity Regulatory Commission (NERC), respectively. But it seems both sectors have different developmental narratives years after their privatization following the same liberalization philosophy. While both sectors’ end-user products have varying intrinsic characteristics and usage styles, both are critical for survival in this modern age as digitalization increasingly comes closer and permeates our daily lives.
The clean energy transition is gaining momentum globally and will change the local energy landscape in the few years to come. While this may look worrisome and at the same time reassuring, it is essential that stakeholders – policymakers, business leaders, regulators and financial institutions – closely examine the impact of these increasingly available decentralized clean energy technologies on our energy system and access how we can leverage on them to revolutionize the energy sector – achieving the feat that happened in Nigeria’s telecommunications sector within two decades. Put differently, the energy transition is the sixth technology revolution just after information and telecommunications, and we are in the springtime of renewables! Nigeria’s electricity sector is heavily centralized, with key subsectors supporting the operation of the centralized grid system – Generation, Transmission, and Distribution. However, it has been proven that a more decentralized electrification approach leveraging distributed renewable energy (DRE) technologies like solar home systems (SHS), solar appliances, microgrids etc., could be a game-changer to the energy access predicament in the country. DRE technologies can do for the electricity sector what Global System for Mobiles (GSM) and Code Division Multiple Access (CDMA) technologies did for the telecommunications sector in Nigeria.
The liberalization of the telecommunications sector in 2001 saw the takeover by private sector participants that made digital mobile phones a dominant Information and Communications Technology (ICT) tool. Innovations like the GSM & CDMA technologies ushered in an era of wireless and mobile telephone services. This further opened the space for more innovations that have led most telecommunications companies to evolve into services ranging from broadband and internet services to financial products. On the other hand, DRE technologies made popular by the energy transition debate fits this narrative as it is modular, cost-effective, and can evade grid constraints. With the advent of the internet of things (IoT), machine learning, availability of advanced software and smart devices, energy services from DREs are very flexible and can be adapted to meet consumer energy needs.
The transition in Nigeria’s telecommunications industry to digital mobile phone technologies is not without challenges, analogous to the ongoing challenges with the energy transition experienced across the globe – soaring energy prices in the United Kingdom, India, and China. For example, at the initial introduction, GSM subscriptions started with NGN 20,000 per line against the prevailing exorbitant subscription price of NGN 60,000 for an analogue mobile line. But by 2011, the price had fallen to zero. Similarly, calls to GSM lines, which started in 2001 at NGN 50 per minute, had by 2011 fallen to as low as N12 per minute even to some international destinations. This highlights the importance of a market-based tariff and lower entry cost on the back of competition, driven by innovation and private sector participation. In 2003, Globacom entered the Nigerian market with an innovation–per–second billing that transformed call tariff methodology, further creating competition amongst sector players that helped drive down consumer tariff.
Innovative services and products offered by current telecommunications service providers like fast mail, MTN family and friends, special micro-sim cards, MTN eye, DSTV mobile TV service, Glo power box, Glo quick teller, Etisalat easy life, and Airtel club 10 are proof that a highly competitive and liberalized market is a more efficient means of fair and efficient resource allocation and improved service delivery in a developing economy. Whilst the DRE space in Nigeria is awash with various innovative technologies and gradual, albeit slow private sector investment, it promises to be that game-changer for the Nigeria electricity market despite limitations – the variability of DRE sources and initial entry costs. While there are multiple stakeholders in the energy sector, only government policy actions are key. They will determine the action or inaction of other participants, highlighting the need for sound energy policies and government reform actions. The telecommunications industry transformation is a clear example of government commitment through its significant transparency, merit-based license award process, forward-thinking policy directives, legislative support to extend the powers of the NCC and immediate appointment of a good leadership team at the time to drive the liberalization. More importantly, the political will, enabling investment climate, efficiency and accountability provided by the Olusegun Obasanjo led administration at the time was pivotal.
The telecommunications industry transition demonstrates the commitment of private investors and innovative entrepreneurs. The sector experienced a significant increase in private capital injection from a mere $50 million investment pre-2001 to over $81 billion within two decades. This brings to fore the fact that financial capital will flow toward new economic opportunities, innovation and growth, derating old sectors in decline. At the time, the players bidding for the Digital Mobile License (DML) were willing to individually pay a $20 million non-refundable deposit to demonstrate their readiness. Whilst this should be an example to current and prospective private sector participants in the DRE space, the Nigeria power sector landscape may have a different background and circumstance – investors should be cautiously optimistic – risks should be adequately assessed, mitigated, and appetite gauged before a war chest is declared to solve the energy access challenges using off-grid technologies.
Coincidentally, Nigeria’s telecommunications industry revolution occurred at a time when innovations for a digital future is on top gear across the globe, making the internet, mobile phones, modems, smart devices, computers, and other accessories increasingly available to the Nigerian market. Likewise, the energy transition has necessitated increased investment in R&D for clean energy solutions across the globe, decreasing the cost of solar photovoltaic cells and batteries, making these solutions scalable and within reach across Africa. Thus, there couldn’t be a better time than now for all stakeholders in the energy space to synergize and explore multi-pronged approaches to revolutionize Nigeria’s energy sector leveraging DREs.
Lastly, the telecommunications sector revolution allowed for a new class of entrepreneurs. These include the nationwide network of dealers, vendors, accessory sellers and the ubiquitous ‘umbrella stand call centres. This contributed to the widespread social acceptance of mobile phones and telecommunications devices even though the technologies at play were rapidly evolving and unfamiliar at the time. Again, this showcases the need for the clean energy transition to be just, inclusive, and socially adapted so that people who may lose their jobs due to the transition are economically secured in the new era. Conclusively, Nigeria’s telecommunications sector revolution provides hope and potential for DREs to revolutionize the electricity sector. What is needed is government policy commitments, political will, fiscal incentives, legal and regulatory support, increased private sector investment and a fully liberalized electricity market.