African governments told to stop messing with telecoms

Two things in life are guaranteed; death and taxes. This is generally accepted by the world, but perhaps the sticky fingers of the government are asking a bit too much.

Day two at AfricaCom brought a couple of sessions with a bit of a bite. Usually your correspondent finds cringe-worthy moments too much to handle, most episodes of The Office are watched from behind a cushion, but watching three senior telecoms figure do quite a bit of government bashing while South Africa’s Deputy Minister for Telecommunications sat in the front row was quite entertaining.

“We need a new wave of investment in Africa,” said Liquid Telecom CEO, Nick Rudnick. “For this to happen, there needs to be government encouragement. In many cases, this means government should stay out of the way.”

It was quite a spicy start to the panel, catching a few by surprise and set the tone for the rest of the session. In short, governments are screwing up the telco landscape across the African continent.

Whether it is taxes on equipment or devices, attempting to build nationalised networks to create a broadband monopoly or irrelevant regulation and legislation, government intervention has been highly frowned upon. And apparently it isn’t simply well-meaning incompetence, the public sector has been accused of being too greedy.

“Some companies in the telco space are being viewed as cash cows, and governments are trying to extract as much value from them as possible,” said Aniko Szigetvari of International Finance Corporation.

It was politely worded, but essentially there is an accusation of overtaxing a successful segment, with figures quoted at 40-50% on the panel. There were a few fingers being pointed, one of which was towards tax regulatory reform, but it was all pleasantly said, with smiles hiding what we can only guess is quite deep seeded resentment.

The feeling in the room was one of frustration. Overtaxing on equipment necessary to build infrastructure has not only crippled operator ambitions to improve connectivity, but overtaxing devices has impacted the availability and accessibility of data for the consumer. 75% of the continent still use feature phones, which would be considered an impairment for the connected economy.

Another source of frustration is government involvement in funding and building networks. A trend which has been noted is the tendency for governments to try and create a government-owned monopoly business. It’s a worrying observation, contradicting successful examples of the digital economy elsewhere in the world.

“My view is that government should be building hospitals, not telecommunications networks,” said Rudnick.

“I’m not too sure I am on the side of the government,” said SafariCom Chief Innovation Officer Kamal Bhattacharya.

And we do have some sympathy with Rudnick and Bhattacharya on this point. Networks are expensive to build and expensive to maintain. In all honesty, private organizations will probably just be better than the government. And not forgetting, monopolies are very bad in every sense of the word.

Just to be clear, this is not every government in Africa, and no specific nations were highlighted, though the feeling of the room was very clear; governments are one of the biggest barriers to connectivity in Africa.

Unfortunately, this doesn’t look like it is going to change in the near future. In the very next presentation, South African Deputy Minister for Telecommunications Stella Tembisa Ndabeni-Abrahams outlined her plan to improve connectivity across the country, while also promising greater government intervention in the telco space. Perfect timing.