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Govt’s hold on ICT sector impeding growth -CRAN

December 08, 2021
Govt’s hold on ICT sector impeding growth -CRAN

Namibia's telecommunications regulator says the government's continued hold on the country’s Information and Communication Technologies (ICT) sector was impacting on competitiveness and growth.

“Namibia’s ICT sector was one of the leaders in Africa as recently as five years ago. Namibia lost its leading role in Africa as a result of state-driven consolidation in the sector and the significant reduction in competition. Broadband prices are high and download speeds low in comparison to other SADC countries. Namibia can regain its position but needs to restructure the sector and investigate ways to attract private sector investment and to improve the level of competition,” said the Communications Regulatory Authority of Namibia (CRAN) in its Telecommunication Sector Market Report for October.

The report added that the country’s ICT sector is characterised by state ownership and insufficient competition. This has meant insufficient investment in last-mile connectivity, most notably mobile 4G broadband, low quality of service and potentially high end-user prices.

"The ICT sector enables other economic sectors by facilitating access to information and the co-ordination of economic activity. In order to achieve high broadband speeds and quality of service, and their associated economic benefits, substantial investments are required. A consequence of affordable access to high quality broadband is economic growth and job creation.”

The regulator also noted that the country’s ICT sector revenues, shareholder’s equity and assets had declined between 2012 and 2020 in United States Dollar terms while net profits increased slightly, a position which it attributed to government’s continued ownership of the country’s biggest service providers.

“Namibia is back to the pre-2006 state of affairs with all national operators fully owned and managed by the state. This has led to a contraction of the sector in USD terms ICT sector revenues, shareholder’s equity and assets declined between 2012 and 2020 in USD terms while net profits increased slightly. While this is to be expected as the result of the nationalisation of the ICT sector, it is not in the best interests of the principal shareholder (the state) or Namibia as a whole,” the report noted.

“The growth of Namibia’s ICT sector has slowed down since the takeover by the state in nominal terms and declined in USD terms. Annual revenue growth declined from 19% to 2% in 2019 and 4% in 2020. However, expressed in USD currency, it declined by 10% between 2012 and 2020. In USD terms, the industry shareholder's equity declined from US$290 million to just US$140 million since 2012.”

According to the regulator’s findings, the Namibian government, through its various entities, controls 92% of ICT sector assets and 82.5% of ICT sector revenues. 

“The private sector, while owning 8.2% of the assets, was responsible for 17.4% of the revenues in 2020. This is partly due to the fact that most private companies provide services by leasing infrastructure from Telecom Namibia and NamPower, thus requiring fewer assets themselves,” CRAN said.

Government-owned Namibia Post and Telecom Holdings is the holding company of Telecom Namibia Limited (Telecom), Namibia Post Limited (Nampost), and now only a 60% shareholder in Mobile Telecommunications Ltd (MTC) following its listing on the Namibian stock Exchange.

 

 

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Last modified on Thursday, 09 December 2021 18:39
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