Nigeria’s biggest technology and telecoms players will benefit in the long term from the COVID-19 pandemic. The challenge is to protect small start-ups that represent the future of innovation. This third article of our series on the the impact of COVID-19 on Nigeria, looks at telecoms and technology.
Kidnap fears drive Nigeria’s clean-up of SIM card data
Nigeria’s Communications Commission (NCC) in April surprised some mobile network operators when it said that nearly two-thirds of the SIM card data that the operators have gathered and processed was invalid.
The commission cited irregularities such as invalid face capturing and fingerprints. The president of the National Association of Telecommunications Subscribers of Nigeria, Deolu Ogunbanjo, blamed operators for setting aggressive sales targets for their agents.
For prospective entrants to the market, the stringent data registration process may seem cumbersome and bureaucratic. Behind it lies Nigeria’s persistent kidnapping problem. Efosa Idehen, the NCC’s compliance director, says that kidnappers use improperly registered SIM cards to make calls to the families of their victims to seek a ransom.
Data compiled by NYA 24 shows that Nigeria witnessed the highest number of kidnappings in Africa in 2017. Incidents were found across the country, with a concentration in the Niger Delta region. The primary targets are affluent domestic nationals. Police have estimated that 685 people have been kidnapped in Nigeria so far this year, but many cases are never reported.
In that light, the penalties for breaching SIM card regulations, which include fines, arrest and imprisonment, start to make sense.
“Know Your Customer”
In 2015, the four leading mobile operators in Nigeria were forced to deactivate lines with unregistered or improperly registered mobile subscriber data. MTN was fined $2.2bn as Nigeria was unable to trace owners of SIM cards used by kidnappers of former finance minister Olu Falae, who was freed after his family paid a ransom.
This time, the commission sought to placate operator fears in a statement on April 24. It said that of the 95.7m invalid subscriber registrations, more than 60m have been successfully “scrubbed”. Still, the statement promised a “zero tolerance” policy for any deviations from the approved process.
- There is no reason that the clean-up should affect prospective foreign entrants to the Nigerian market “unless they haven’t done their homework,” argues Thecla Mbongue, senior research analyst at Ovum in Johannesburg.
- Before the SIM registration process started in Nigeria in 2011, there was no “Know Your Customer” process, Mbongue says. “Customers just bought SIM cards from operators, resellers and touts without giving any of their details.”
In comparison, in western Europe and North America, post-paid subscriptions dominate the markets and customer details, including banking information have already been collected, she says. New and prospective operators in Nigeria need to streamline their processes to ensure that registrations are carried out accurately, argues Elo Umeh chief executive of Terragon, a data and marketing technology company in Lagos. They need to “learn from their predecessors and align better with the regulators,” he says.
- Mbongue sees the chance for foreign operators to turn necessity into a virtue by using the SIM card requirements to better target the market. The process being enforced will help current and prospective players to better segment and better their markets, she argues.
Authorities can still do more to streamline the process. In Africa as a whole, Mbongue says, prepaid usage exceeds 90% of mobile subscriptions. She finds a “lack of financial and logistic support from the authorities” when it comes to SIM card registration.
- “One reason why the process has been tedious and constraining is often the lack of a national centralised database,” which needs to be initiated and maintained by the authorities, she argues.
Inaccurate SIM card data poses an existential threat to affluent Nigerians. Prospective mobile network operators need to fully understand the security implications.