Sub-Saharan Africa – Universal Service Fund Study
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Sub-Saharan Africa – Universal Service Fund study SEPTEMBER 2014 Report prepared for GSMA by Ladcomm Corporation Important Notice The report is provided exclusively for the GSMA’s use under the terms of the Contract. No party other than the GSMA is entitled to rely on the report for any purpose whatsoever and LADCOMM accepts no responsibility or liability to any party in respect of the report or any of its contents. The information contained in the report has been obtained from a number of third party sources that are clearly referenced in the appropriate sections. In some instances, figures provided have been clearly identified as estimates. Although LADCOMM has done its best to verify and corroborate the information contained in this report, the information or circumstances may have changed since the report material was gathered. Further, any results from the analysis contained in the report are reliant on the information available at the time of writing the report and should not be relied upon in subsequent periods. Accordingly, no representation or warranty, express or implied, is given and no responsibility or liability is or will be accepted by or on behalf of LADCOMM or by any of its partners, employees or agents or any other person as to the accuracy, completeness or correctness of the information contained in this document or any oral information made available and any such liability is expressly disclaimed. SSA USF STUDY CONTENTS 01. EXECUTIVE SUMMARY 06 02. INTRODUCTION AND GENERAL OVERVIEW 11 2.1 What is a Universal Service Fund (USF) 11 2.2 Study objective and methodology 13 03. OVERVIEW OF USFs 15 3.1 Introduction 15 3.2 Fund profiles 17 3.2.1 Snapshot of the SSA Funds Studied 17 3.2.2 Types of services 18 3.2.3 Table of USF levies applied 19 3.2.4 Fund collection and disbursement 20 04. DEEP DIVE ANALYSES 22 4.1 GHANA 22 4.1.1 Country overview 22 4.1.2 Current status of telecom market 22 4.1.3 Fund background 23 4.1.4 Current status of the fund 24 4.1.5 What the fund has achieved to date 25 4.2 MOZamBIQue 27 4.2.1 Country overview 27 4.2.2 Current status of telecom market 27 4.2.3 Fund background 28 4.2.4 Current status of the fund 29 4.2.5 What the fund has achieved to date 29 4.2.6 Other elements of interest 30 4.3 Nigeria 31 4.3.1 Country overview 31 4.3.2 Current status of telecom market 31 4.3.3 Fund background 32 4.3.4 Current status of the fund 34 4.3.5 What the fund has achieved to date 35 4.3.6 Other elements of interest 36 3 SSA USF STUDY 4.4 South Africa 37 4.4.1 Country overview 37 4.4.2 Current status of telecom market 37 4.4.3 Fund background 38 4.4.4 Current status of the fund 40 4.4.5 What the fund has achieved to date 43 4.5 UGANDA 46 4.5.1 Country overview 46 4.5.2 Current status of telecom market 46 4.5.3 Fund background 47 4.5.4 Current status of the fund 49 4.5.5 What the fund has achieved to date 49 4.5.6 Other elements of interest 51 4.6 ECOWAS 52 4.6.1 Universal Service/Access legal framework and scope 52 4.6.2 Funding mechanism 55 4.6.3 What has the ECOWAS Act achieved so far 55 05. BEST PRACTICES IN THE MANAGEMENT OF THE USF 56 5.1 Introduction 56 5.2 Basic elements and characteristics of a successful USF 57 5.2.1 Sound and flexible legal and regulatory framework 57 5.2.2 Autonomy and independence 57 5.2.3 Policy articulation 57 5.2.4 Consultation with stakeholders 58 5.2.5 Delineation of responsibilities between the USF and other external organisations 58 5.2.6 Defined and measurable objectives 58 5.2.7 Flexibility and neutrality in service deployment 59 5.2.8 Fair and objective project allocation process 59 5.2.9 Capacity building and sustainability 59 5.2.10 Innovation and incentives 60 5.2.11 Visibility, transparency and accountability 60 5.2.12 Digital inclusion 60 06. COMMON CHALLENGES IN THE ADMINISTRATION OF USFs IN SSA 61 6.1 Overview 61 6.2 Underlying legal and regulatory framework 61 6.3 Difficulty to adapt to changing requirements and focus 62 6.4 Correlation between USF levies and demand 62 6.5 Structural deficiencies 63 6.6 Definition of USF strategy and objectives 63 6.7 Managerial, operational and capacity issues 63 6.8 Transparency, visibility and accountability in USF reporting 64 6.9 Oversight and governance 64 6.10 Project allocation process 64 4 SSA USF STUDY 6.11 Constraints to broadband deployment 65 6.12 Underlying infrastructure and facilities 65 6.13 Availability of resources and knowledge 65 6.14 Local conditions and related security 66 6.15 Consideration of digital inclusion 66 07. RECOMMENDATIONS 67 08. USF OVERVIEW TABLES 68 8.1 Burkina Faso 69 8.2 Cameroon 70 8.3 Cote d’Ivoire 70 8.4 Democratic Republic of Congo 71 8.5 Gabon 72 8.6 Ghana 72 8.7 Lesotho 74 8.8 Madagascar 75 8.9 Mali 76 8.10 Mauritania 77 8.11 Mauritius 78 8.12 Mozambique 79 8.13 Nigeria 80 8.14 Niger 81 8.15 South Africa 82 8.16 Rwanda 83 8.17 Senegal 84 8.18 Swaziland 85 8.19 Tanzania 86 8.20 Togo 87 8.21 Uganda 88 8.22 Zambia 89 8.23 Zimbabwe 91 09. BIBLIOGRAPHY AND REFERENCES 93 9.1 Africa 93 9.2 General 95 5 SSA USF STUDY 01. Executive Summary The following report examines Universal Service Funds (‘USFs’) in 23 Sub-Saharan African (‘SSA’) countries These USFs are examined in a global context i.e., taking into account their characteristics and performance when measured against an additional 46 USFs in the Arab States, the Americas, Europe and Asia Pacific (an overall total of 69 countries studied). The report draws on information used to prepare global USF overview reports for both the GSMA and the International Telecommunication Union (ITU) over the last two and a half years. In general, there are significant deficiencies • More than half the funds (12 out of 23) in fund structure, management and operation apply levies of 2% or more of operator throughout the SSA region. In fact, if it is revenues. not possible to disband the majority of the funds and return the monies collected, then • There does not appear to be any these USFs will require significant reform and correlation between the levies collected restructuring in order to be transformed into and the actual universal service funding functional and effective investment support requirements i.e., no in-depth needs vehicles for unserved and underserved areas assessments or project forecasts are in SSA. carried out. The following provides a brief snapshot of • Just over half of the inactive funds within the current state of USFs in SSA. A detailed the 69 countries studied are based in SSA analysis is provided in the sections that as depicted below. follow this Executive Summary. 6 SSA USF STUDY fund activity levels Total Sub-Saharan Africa Rest of world 26 22 18 13 11 12 7 6 7 6 6 4 INACTIVE FUNDS LOW ACTIVITY MODERATE ACTIVITY HIGH ACTIVITY • In regards to USF project funding capabilities, the following chart illustrates the technologies and services that can be supported by USFs; of particular note is that less than 50% of the SSA USFs are able to fund wireless technologies and just over 25% of the SSA USFs permit funding of broadband. 7 SSA USF STUDY seRvices/tecHnOlOGies suPPORted 69 Total Sub-Saharan Africa Rest of world 46 39 29 29 26 28 23 23 24 25 18 17 16 13 15 11 11 10 6 8 FIXED-LINE DIAL UP WIRELESS BROADBAND TELE-CENTRES CONNECTIVITY PERSONS WITH INTERNET OF ANCHOR DISABILITIES INSTITUTIONS (PWD) • 11 funds permit the financing of tele-centres or community centres (the only area in which SSA is better positioned than other regions). • Obtaining accurate financial reports (or any reports at all) regarding funds collected and disbursed is possible in only a few countries (e.g., Ghana, Uganda); even in countries where the telecommunications regulatory environment is advanced and the fund guidelines are clear, the reports simply do not get issued: • Only two funds currently have formal annual reporting procedures in place. • Some other funds provide intermittent reports on project allocations. • Overall transparency levels are low to extremely low (e.g., Mauritius, Sudan, Zimbabwe) with only a few exceptions such as Ghana and Uganda but with significant transparency improvements expected in Nigeria and South Africa. • Both the total levies collected as well as the levels of undisbursed funds cannot be accurately ascertained due to this lack of timely and transparent reporting. 8 SSA USF STUDY usf activity: funds disbuRsed and available 300.00 250.00 200.00 $ us 150.00 100.00 50.00 0 E E R R O N IC IA IA R E UE GO HO I ICA R T AS G Q N ANA OGO and BL BO E O R I ANIA BW ITIUS L T O MB O ANDA U ANDA A F F Z I V G A NI R ASCA A P G GH Z G ’I Z E G MB NI F C A U AN D LES RW R H A INA A MB O T I MAU Z TE UT SW OZ RK ATIC M MADA CO SO BU R C MO DE Total remaining funds available Estimated funds disbursed Sources: derivations from annual reports, reports from fund web sites, operator reports, etc.1 As can be seen from the illustration above, appear to disburse all that they collect.