On a rainy August morning, Abubakar AbdulKhadiri completed his computer science lesson for primary four pupils at LEA Primary School in Gurfata, a rural community in Nigeria’s federal capital territory. The teacher is dissatisfied with his job. While computer science teachers in many parts of the world use computers to teach their students, Mr AbdulKhadri relies on images in books to explain the basics of the subject to the 420 pupils in the school.

“We use images in books as instructional material to teach our pupils computer science,” Mr AbdulKhadri said. Even worse than not having a computer, Mr AbdulKhadri’s community is not connected to electricity or mobile network service, which are essential infrastructures for teaching his pupils the basics of computing. He has lived in the community for 30 years since his birth.

Just a few metres from the school is Hajara Seriki, a farmer who is also struggling with the consequences of the village not having mobile network coverage. For her, this means being financially excluded. To overcome this issue, she has to travel to either the area council headquarters in Gwagwalada or Lambata in Niger State in order to access banking services.

To contact her customer from the village, she has to climb a hill to access the mobile network.

“I currently don’t have a phone, I used to have one, but we have to climb that hill to get a mobile signal,” Ms Seriki said while pointing to a hill outside the village.

The lack of mobile networks in this community excludes residents from the financial system. Over the past couple of years, the financial system in Nigeria has been leveraging technology to bridge the gap and provide accessibility to underserved communities. For instance, Point-of-Sale (POS) machines have taken some form of banking services to the unbanked. However, this also requires telecommunication infrastructure, which is lacking in many rural communities in Nigeria.

“From this place to Gwagwalada is like one hour for you to use POS. Those without bikes will need to use okada (motorcycle taxi) which costs as much as N2,500 and the same thing when coming back. If you plan to withdraw N10,000, you would already have spent N5,000,” Adamu Shehu, a local government worker in the community, told this reporter.

The lack of mobile networks is not peculiar to the Gurfata community. About 20 years after the liberalisation of the telecommunication sector, telecom operators are yet to cover the entire country and the telecommunication black hole remains in many areas, particularly rural communities.

In 2002, the Nigerian government under former President Olusegun Obasanjo conceived the National Rural Telephony Project (NRTP), designed to ensure that rural areas were not left out of the telecommunication development that was about to take off in Nigeria.

Like several other well-intended but poorly planned and executed projects in Nigeria, the NRTP was conceived without the infrastructure for implementation, hence, the project failed to provide the intended relief for underserved communities across the country.

The project was designed to deploy Code Division Multiple Access (CDMA) and other technology to cover rural areas in the 768 local government areas in the country and the six area councils in the FCT. The thinking then was that people in rural areas may not be able to afford the GSM technology, hence the argument for CDMA technology.

In the first phase of the project, the Nigerian government took a $200 million concessionary loan from China to expand telecommunication infrastructure in rural areas in Nigeria like Gurfata.

ZTE Nigeria, a Chinese technological firm, was awarded the contract to procure and install 150,226 Code Division Multiple Access (CDMA) technology in 110 local government areas across the country. Another Chinese firm, Sangai Bell got a contract to procure and install fixed wireless systems in 108 local governments.

For the ZTE project, the federal government got a loan of $82 million (part of the $200 million) at an interest rate of 3.5 per cent per annum, with a tenor of 12 years and a moratorium of six years. Facts obtained through a Freedom of Information request from the Debt Management Office by PREMIUM TIMES confirmed that 100 per cent of the loan was released to the ZTE.

In addition, ZTE was to provide Base Transceiver Stations (BTS) in 110 LGAs nationwide, and Main Switching Centres in Bauchi, Kano, Kaduna, Ibadan and Enugu states. According to Nigeria’s Ministry of Communication and Digital Economy, in response to another FOI request by PREMIUM TIMES, ZTE delivered the project in 2010 and Technical Provisional Acceptance Test (PAT) and Final Acceptance Certificates (FACS) were issued in November 2010.

Problem with integration

The NRTP was designed to be integrated into the network of the federal government-owned telecommunication company, NITEL. Before the liberalisation of the telecommunication sector, NITEL had monopolistic control of the industry. Following the liberalisation of the telecommunication sector, the Nigerian government commenced the process of privatisation of NITEL but with mixed success.

The poor privatisation process, according to the Ministry of Communication and Digital Economy, has not allowed the government to integrate the $82 million project into the transmission line 13 years after the completion of the project. While the privatisation has been ongoing for years, the infrastructure of the state’s own telecom has become moribund.

“The integration of the network to the NITEL transmission network and the Public Switch Telephone Network (PSTN) to ensure seamless connectivity to other networks could not be achieved as the NITEL transmission network had become moribund as a result of pending privatisation and poor funding of NITEL to maintain and operate its network,” the telecoms ministry stated in the reply to the FOI.

Amid this failure, the government had to get private security companies to protect the infrastructure from vandals which means that Nigeria continues to incur costs in protecting a project that is yet to benefit the people who need it. The ministry failed to provide the cost of engaging private security to protect the infrastructure.

Failed attempt to privatise the NRTP

To get the project working, the government also embarked on the privatisation of some parts of the NRTP project, specifically the six telephony exchanges built in the six geopolitical zones. The government initiated the concession assets under the lease, operate and own model.

Omobola Johnson, a former minister of communication under former President Jonathan, announced in 2012 that the project would be better implemented by the private sector because the government does not want to have anything to do with running telecommunication firms.

 

“The telecom industry is fully liberalised, there is very little government involvement and, therefore, we believe that the National Rural Telephony Project is better implemented and managed outside of government.

 

“So these six rural telephony exchanges are being concessioned to companies that have paid for them and our role is to monitor the implementation and delivery of services to rural areas. In a sense, we are getting out of the rural telephony,” she stated.

Following years of a bidding process, the Abuja and Kaduna NRTP were awarded to Suburban Broadband at $47.7 million and $47.5 million respectively. Bauchi zone was awarded to Gicell Wireless Limited at $30 million.

Also, Voicewave Limited won the bid for Enugu zone at $57 million, Key Communication Limited won the bid for Ibadan zone at $38 million and Port Harcourt zone was awarded to Hezonic Limited.

Just like the failed integration of the NRTP into the NITEL network, the privatisation process has also been poorly done. For years, the federal government failed to hand over the assets to the concessioners. In 2011, some of the firms complained of bureaucratic impediments in the process of handing over the projects.

While the project assets wither away in different parts of the country, the Nigerian government has repaid the $82 million loan with interest. By December 2014, the government had repaid the $82,251,000 to the Chinese EXIM Bank and also paid $17,592,160 as interest on the loan.

It is unclear if the government handed over the project to the relevant companies that won the bid. However, data on the Nigerian Communications Commission website shows that the CDMA technology has a zero per cent share of the market. Therefore, it is safe to say the ZTE project has not been integrated into the network.

When this reporter contacted the NCC about the integration of the NRTP CDMA technology into Nigeria’s telecommunications network, Ruben Muoka, NCC’s director of public affairs, said he was not sure there is any CDMA technology in the sector following the exit of Multilinks, Starcomms and other CDMA based companies.

While responding to a text message, Mr Muoka said CDMA technology could not compete against GSM across Africa.

“I don’t think of any (CDMA) because Multilinks, Intercellular, Starcomms, MTS first wireless etc. are all out of operation. CDMA technology could not compete with GSM across Africa.”

Experts say network operators may not have the necessary incentive to invest in the provision of telecommunication infrastructure in non-economically viable communities.

“NCC makes a requirement that there should be consideration given to non-economically viable areas either through co-location or single location.” Martins Nwoga, a telecoms expert, told PREMIUM TIMES.

He added that nowadays, most telecom operators opt to rent telecom masts from companies rather than installing their own.

“It is no longer the GSM companies that are making decisions on installation of mast, the mast companies are,” Mr Martin added.

Another $99 million for Phase II

Despite the problem that characterised the implementation of the first phase of the project, the federal government still embarked on phase two of the project, and once again planned the project based on a $99,375,700 loan agreement with China. Nigeria was to provide 15 per cent of the counterpart funding which amounted to $14,116,990.

In phase two, ZTE was once again contracted to supply fixed wireless lines to the remaining local governments. Still, the project hit a snag with the funding arrangement. According to the Ministry of Communication and Digital Economy, the loan from the Chinese was not forthcoming but Nigeria had paid the contractor its counterpart commitment.

In the face of the financial constraint, the Nigerian government was forced to review the scope of the project by triggering the “changed scope” clause in the contract with ZTE. Instead of supplying the fixed wireless system for rural communities, the government instead directed ZTE to use the $14.11 million down payment to deploy 4G-LITE technology.

“With the FGN down payment of 15 per cent counterpart funding and the loan not forthcoming, the Vendor was directed to utilise the 15 per cent down payment amounting to $14,116,990.80 equivalent to N350, 000,000.00 to implement the “CHANGED SCOPE” and deploy 4th Generation – Long Time Evolution (4G-LTE) standalone Telecommunications network infrastructure on the 700MHz frequency band,” the ministry stated.

Furthermore, the ministry said the technology has arrived from China and it is currently being warehoused in the premises of ZTE in Lagos State.

Although 4G technology is crucial for economic growth, the federal government’s failure to implement the NRTP has resulted in people like Ms Seriki and many others in Gurfata and other rural areas of Nigeria being denied access to essential technology and its associated benefits.

This story was produced with support from the Centre for Journalism Innovation and Development (CJID) and funding from the Centre for International Private Enterprise (CIPE).