Update on our leading FCCPC and Betta Edu commentaries yesterday

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Update on our leading FCCPC and Betta Edu commentaries yesterday – Yesterday, I led with two commentaries. I argued that the regulatory and fiscal incentives of the Federal Competition and Consumer Protection Commission (FCCPC) needs to be realigned. It came to light yesterday evening that the Chief Executive Babatunde Irukera has been relieved of his job. While this is an unexpected change, I think and hope that it allows this very important agency to see fine as the last resort. The key to that is that there should be a demarcation between regulatory and fiscal powers. Also yesterday, as expected, President Bola Ahmed Tinubu has relieved the Minister of Humanitarian affairs of her job. What is clear is that this is not sufficient. The short history of the ministry has shown that the concept does not work because it does not have the data to do so. The ministry should therefore be scrapped and the budget added to education and health ministries. The route out of poverty is not to share from an existing and reducing pie, but through sound economic policies that attracts investments, grow the economy, and create jobs.

Nigeria’s Apex Bank Clears Foreign Airlines Backlogs – If you have travelled in the last nine months, you would have paid astronomical amount to do so, compared to times before then. The reason is simple, fares from and to Nigeria went up dramatically after foreign airlines could not repatriate their funds. At a point, it was estimated at about US $800 million. The consequences were that fares went up and Nigerians had to start paying their fares in US dollars. In some instances, Nigeria related fares went up by about 400% compared to similar journeys elsewhere. Foreign airlines, FMCGs, and other international companies are caught up in the inability of the CBN to meet their repatriation in the past. It says it has recently paid foreign airlines over US $60 million and cleared about US $2 billion of outstanding backlogs. What is not clear yet is when Nigerians should expect to see lower fares and or comparison fares with many other distances as in the past. Globally, analysts expect fares to come down from their high levels since 2021 after Covid – 19 induced bans on travels.

Glo customers, MTN, and NCC – One of the most important elements of the telecom’s ecosystem is the expectation that any customer on any network should be able to call any other network hitch free. Underlying that philosophy is the arrangement all over the over the world called interconnect charges. Unfortunately, the average Nigerian customer have become aware, and increasingly aware in the last 24 hours after Glo was given ultimatum by MTN and the industry regulator NCC to pay up outstanding debts owed to MTN. Failure to do so will mean that Glo customers will not be able to terminate calls on MTN. Given MTN is the largest subscriber network, which means that it collects the most of interconnect charges, it is estimated that the outstanding debts owed MTN by Glo runs into billions of Naira. What is not clear yet from the stories is whether Glo is owing the other networks, including Airtel and 9 Mobile. What is also not clear is what fraction of the outstanding debts would need to be paid for Glo to avoid this disruption to their customers. What is clear is that this is reputational damage for Glo and will further dampen its subscriber growth.

Ethiopia, Somalia, and Somaliland and access to the Red Sea – As expected, the fallout of the Memorandum of Understanding signed between Ethiopia and Somaliland in relation to Ethiopia’s access to the Red Sea continues to rumble on. After signing the MOU, Somalia responded and said the agreement was “null and void” as Somaliland is part of Somalia and not an independent nation, and therefore sees the agreement as a violation of its sovereignty. The Africa Union has intervened to calm the situation. But what is clear is that Ethiopia, as the largest populated landlocked country on earth is desperate for access to sea while Somaliland, a breakaway nation from Somalia since 1991, is desperate for international recognition.

Global

Is Samsung struggling? – Samsung, the global South Korean electronics giant has announced it expects a dramatic drop of about 35% of its profits in Q4 2023. It follows a likely revenue fall of about 4.9% in the same period, according to news monitored on CNBC. Samsung is well known for making memory chips, semiconductors, household electronics and phones. The fall in its profits in the last quarter, especially compared to the fall in revenues, shows an outsize impact of revenue growth on its profit. Analysts also argued that it has some other disadvantages compared to other players such as the cost of its borrowing.