3 BILLION LEONES SHAM FROM THE  NATIONAL TELECOMMUNICATIONS COMMISSION IN SIERRA LEONE  

Telecoms

The recent move by the National Telecommunications Commission (NTC) in presenting a cheque of Le 3 billion as contribution to the nation's treasury or Consolidated Revenue Fund is suspect at best, according to a commentary in Concord Times. Let us get one thing clear, the NTC is not a dividend paying entity and the law (Telecommunications Act, 2006) that created the Commission makes no provision for that.

The law in its current form allows for the Commission to levy license fees, fines and other financial impositions that form the 'financial lifeline' of the commission. However, the law falls short on several aspects of the funding and funds of the Commission and some of these areas relate to the accountability and procedural transparency, and the management of surplus. This move on the part of NTC is high risk and farcical in nature.

In February this year, the Ministry of Finance - MoF tabled a Financial Bill in Parliament that will give the ministry the statutory power to collect all monies raised as a result of fees levied by the NTC.

Only few weeks ago, bitter objections to this bill had been raised by the Commission through its Chairman. On the surface, it may have looked like territorial or interagency fights. However, positioning the nation's treasury as the master collecting agent for all monies paid to a utility regulator or any 'autonomous' government agency for that matter --- is in line with international best practices. This is done in The Gambia, Guinea and South Africa to name a few.

So, why the sudden change in position on the part of the NTC? If you say public relations, you are partly correct. This is definitely a ploy on the part of Kanji Daramy and company to be seen in the limelight as doing something good for the nation. I must admit that it is always a good thing to give any level of financial boost or uplift to our 'starving' treasury and giving three billion Leones to this national treasury is commendable. Nevertheless, I will disagree with the Commission on this particular move. In fact, I had been grinding my teeth at this news (especially the way it is being conveyed) if I were one of these GSM operators being asked to pay huge amounts of money (for licensing) by any standards.

The other side of this 'coin' relates to NTC's deficit in accurately and independently figuring out the core objectives of its existence and the approaches required for implementing these objectives. For instance, the cost relating to sector development rests squarely with the sector players. The role of the regulator in this aspect is resigned to facilitating the implementation of policies formulated by the government (sector ministry or the executive branch or the legislative branch). In essence, the regulator can be seen as a buffer between the government and the sector players.

"Training of employees of telecommunications operators" is very important for the development of the overall sector --- however, the regulator's role again is more of encouraging the availability of such facilities across the sector rather than financing such activities. In the case where you have some policy directives from the government on matters such as facilities sharing or number management or inter-carrier billing standards, the regulator could then be seen as the agency or entity responsible for familiarizing these policies or measures with the sector at-large. The current position or direction of Kanji Daramy on this issue has all the traits of being counterproductive and 'anti-intellectual.' Kanji Daramy (Chairman - NTC) has been at the helm for seven months and has nothing to show to the people of this nation as value for the existence of the Commission. He will tell you that the agency is young and they need time to start making inroads into society. Other than a detailed fee structure and few letters to operators pressing for the payment of license fees to the regulator, there is nothing else that will tell you what the regulator has done or has in its offing. There exists no strategic document or plan that will tell this nation how the Commission will conduct the people's business and if you ask Kanji he will tell you that the Commission plans to hire foreign consultants to get that done. Just total intellectual indolence and a lackadaisical approach towards domestic capacity building.

The Commission at this point does not have an accurate projection of its budgetary obligations. It cannot state for certain its projected administrative and operating expenses. These expenses form the bases for regulatory charges in the first place. There is an acute need for the Commission to be in the position to get a solid picture of these figures by the beginning of the next fiscal year. These charges (regulatory charges) should not be treated as mere profit centers.

Rather, they ought to be formula-based figures and directly related to the activity-based expenses incurred in the regulatory process. The first part of subsection (3) of section 16 of the Telecommunications Act of 2006 touches on this. The actual value of the license fee (annual operating) should be based on the actual expenses being incurred annually in the course of administering the related regulatory services. The area of spectrum fees can be treated with a somewhat different approach (getting the market value of the related spectrum allotment plus recovery administrative cost is an acceptable practice).

This is only the second quarter into the inaugural financial year (January 1 to December 31) of the commission. Why is the commission paying 'dividend' at this point of the financial year? That answer can only come from Kanji Daramy, the anointed chairman of the NTC. The Commission does not even have a solid count of the many players in the various segments of the sector and so cannot effectively project the revenue to be generated from licenses and permits.

The Commission is currently not positioned to identify fully or somewhat accurately the major components of its revenue stream. As a telecoms revenue assurance consultant, I know for fact that the commission may actually benefit from embracing some of the basic tenets of telecoms revenue assurance and revenue optimization. Going forward, MoF will definitely need outside expertise in attempting to get a solid picture of all revenue generating entities (operators, service providers, permit holders, regulatory transactions such as actual fines and related payments, etc.) in the regulatory process. At this stage, the ministry should consider compiling an opportunity map that relates to the process of activity based costing or any other measure that apportions revenues to 'billable' regulatory transactions. The goal here is to project the places or activities where revenues flow and to establish an approximation of expected total revenue from the regulatory process.

In trying to mitigate its exposure to regulatory corruption risk, the ministry ought to embark on that endeavor as soon as feasible and before the Financial Bill is enacted. The ministry has to position itself to know what to expect from the Commission as far as monies collected in the course of the regulatory process. Without at least co-ownership of that process, the ministry will never see the full potential and benefit of this bill.

In my own preliminary analyses, the Commission could generate between $4m to $6m in its first year if the appropriate measures are employed - but achieving this will be a monumental task for this current Commission.

The NTC in my opinion lacks the requisite capacity to handle this and many other pertinent issues of its business. These projected figures can be recognized even with the GSM license renewal fee being set downward from the current rates (flat fees or per user charge). This will require more specialized skills and efforts from the regulator --- exactly what is expected of a regulator collecting such premiums to manage and regulate this telecom sector.

In 'giving' this Le3b to the government at this particular moment, Kanji and company have confirmed our fears. This exposes Kanji's deficiencies in management (financial, technical, personnel, strategic, etc.). Kanji is projecting his budget to be Le4.5b for this fiscal year and has collected the sum of Le5.89b (inaccurate number in our estimation) so far this year. He has already identified an additional sum of Le3.75b as outstanding payments from three other GSM operators. Thus, the total of committed monies (current) to the Commission is Le9.65b.

So, don't you think it would have been financially prudent on the part of the Commission to cover its budgetary obligations first before rushing to 'give' this gift or dividend of Le3bn to the government? Why did the government encourage this sham? How did the Commission arrive at its proposed budget in the first place? What has the Commission procured since its inception? What are the projects and programs being planned for by the Commission? Why Kanji's focused quest for consultancy support? How serious is Kanji about managing and regulating this dynamic sector?

These are all questions that we should be asking Kanji and the 'powers that be.' We are directing these questions to Kanji Daramy since we believe he is the public face and voice of the Commission and the 'brains' behind its strategy. Kanji must recognize that the 'independence' in the independent regulator does translate to being independent from government or government policies or to develop policies. Being independent merely means that the regulator is independent from any outside influence in performing its functions as prescribed in the law and the policies of the government. The MOU between the 'government of Sierra Leone' and the NTC just reconfirms our unwavering conviction of Kanji's 'emptiness' in telecommunications and management. This agreement should be between the NTC and another organ (NRA or MoF) of government --- but not GOSL as NTC is part and parcel of GOSL. This is another example of Kanji's 'impaired' cogitation and the MOU is full nonsense. We are convinced that this concordat was the sole work of Kanji and his supporters and without the active participation of MoF. One could produce a ten page write-up just poking holes through Kanji's so-called MOU, but we shall leave that for another day.

At this point in the game, Kanji should be telling us how the government plans to achieve universal access, promote the development of human capacity (institutions of higher learning), promote 'pervasive' connectivity (regional), standardize inter-carrier relationships (billing, interconnection, etc.), broaden the pool of access technologies, influence the growth of the pool of users for existing services, promote cost reduction across the board (sector-wide), control the abuse of dominant positions (DSPs), combat fraud (e.g. mobile theft, illegal traffic, etc.), and address pending issues bordering on international telecommunications. These are items Kanji and company should be working on independently without any technical assistance or help from foreign consultants or Bretton Woods (e.g. World Bank) institutions. The Commission is getting paid serious money for its work and should be seen taking ownership of it existence and destiny. This is a Commission that does not even have a stated vision and mission to date and cannot even articulate its core values.

In conclusion, this whole deal smells funny for our comfort and getting the State Lodge involved waters down the seriousness of the move and surely undermines the integrity of not only the NTC but the government or administration as a whole. Telecommunications is a serious business and professionally regulating the telecoms sector is just as serious a business. NTC should not be paying this money into the government's treasury. Instead, MoF through the NRA should be collecting all monies generated from the regulatory process. This is not only the correct thing to do politically --- it is the correct thing to do morally and professionally for this sector and nation all together. Kanji is destined to wreck this ship if he is not stopped.

Concord Times