Is government sneaking back to owning telecom firms?

I fear that I may have unwittingly joined the growing legion of critics of the Nigerian government’s increasing investment in telecoms companies while it makes a public show of its commitment to a private sector-led economy, particularly in the telecommunications sector.

Since the return of democratic governance in 1999, government has continuously insisted that it would leave the business of business to private concerns; it has severally vowed to commit resources to providing basic social amenities and expanding the opportunities for growth to millions of Nigerians in various fields.

In this vein, in the last nine years, it has privatized several publicly owned companies and set the tone for private ownership of government’s enterprises. It dismantled state-owned monopolies and liberalized sectors once under the firm grip of inefficient managers. It also established independent regulatory authorities to set the rules and ensure order among competitive private players. Increasingly, it made it clear that it would only get involved by creating the right environment for private enterprises to flourish.

Several businesses that had swallowed billions of dollars in decades and brought nothing but losses and an appalling degree of inefficiency went into the auction rooms to come out as privately owned enterprises. The privatization midwife, the Bureau for Public Enterprises (BPE), helped to find new private owners for these failed businesses and dismantled institutions that have been emasculated by the engagement of cronies as CEOs and too much government interference.

The telecommunications sector was completely deregulated. The state-owned monopoly, Nitel, was taking to the auction room and sold off. Although Nitel’s sale and resale has remained a subject of recurring controversies, the truth is that government affirmed its belief that only private sector players could redeem years of neglect that the sector has suffered.

But, in the last three years, government appeared to have sneaked back into the telecommunications business and has invested billions into a sector it had severally vowed never to be involved in.

It is dawning on the consciousness of an increasing number of concerned stakeholders, including senior public officials and political appointees holding ministerial portfolios, that government has returned to the business of selling services in a supposedly free market.

Gradually, we have returned through Galaxy Backbone and NigComSat to the era of having government doing business that private concerns are best at doing. We have returned to the era of "un-level" playing fields and a painful circumstance where the regulator has specific boundaries it dare not cross in a supposedly private sector-led economy.

Privately owned ISPs (Internet service providers) are staying clear of government institutions to sell bandwidth and deliver Internet solutions. That market segment now belongs exclusively to Galaxy Backbone. With unfettered access to government funds, the publicly owned bandwidth company has become the bully that private ISPs must steer clear of in other major markets where government, through public-private partnership, has an overwhelming influence, including the oil and gas sectors.

Those who preach a level playing field (including my humble self) are daily weeping over the gradual loss of confidence as government returns to telecom business with a rapacious greed to eat everything. As for the private ISPs who must fight among themselves for the crumbs and also contend with Galaxy Backbone, I join others in weeping for the loss of sanity and the looming era of inefficiency. History is truly a vicious circle.

The present crop of managers at Galaxy Backbone may be among the best anywhere in the world. Indeed, its current CEO pioneered Microsoft business in Nigeria and other parts of West Africa. However, government is notorious -- not for its capacity to appoint the best brains at all times but for the high tendency to sack at will and appoint inept cronies to manage sensitive businesses just to satisfy political expediency. Our history of national tragedies has been defined by this singular factor. Nitel, with other public enterprises, went into ruins for this reason.

Perhaps nowhere has government proved its loss of direction more than at NigComSat. The communication satellite company has suffered as much interference from government as did Nitel in the pre-deregulation era. For every decision it must take to compete against other satellite companies, it must get a clear nod from a government minister. Everything has become bureaucratic for a company established to deliver satellite backbone solutions in a market beyond the boundaries of Nigeria, where global trends are practically privately, not publicly, inspired. For every marketplace decision Eutelsat or PanAmSat makes in milliseconds, it takes NigComSat 30 days or more to make. It doesn’t need much of a soothsayer to tell where the future of NigComSat is headed under the government's suffocating grip.

It also doesn’t require a soothsayer to predict the limit of control the country’s telecom regulator can exercise over NigComSat or Galaxy Backbone. We have seen a few practical examples to point to the gradual emasculation of the regulator by the government and its business institutions.

But it is government and the people of Nigeria that would be the greatest losers. The only seeming comfort is that global trends may make it practically impossible to return to the era of having state-owned monopolies completely running the show. But state-owned businesses will harm growth and dictate the pace of private sector participation. They will kill competition and take the zeal out of the sector. That is my concern and the reason why several stakeholders are asking that government retrace its steps now.

It took state-owned Nitel 40 years or so to deliver 500,000 landlines and 55,000 mobile phone lines. It took private telecom companies seven years to deliver 60 million mobile phone lines and landlines. Government’s bureaucracy can never be more efficient than free enterprises. Time has proven this truth.