The Race to Lead the WTO
The race to lead the WTO, MTN and Airtel show us their Report Card, Phone tariff in Cameroon.
It’s the last day in the month of October, a good time to remember that not all forecasts come to pass.
There are many explanations for why Coronavirus turned out to be less deadly in Africa but an easier explanation might be that making predictions is simply using historical data to forecast what events will happen next. And history is the study of surprising events. Quite a paradox.
The race to leading WTO
The world trade organisation -- an organisation that regulates international trade between nations -- was very close to having its first female and African head earlier this week but it didn’t happen.
By Wednesday afternoon, there was a general agreement on who the next Director-General (DG) should be. Nigeria’s own Ngozi Okonjo-Iweala (NOI) had significant support for the role but with the US opposing her selection, she needs more to be appointed as the next DG.
Here’s how selection & decision happens
As per Stears Business, “The selection committee—a three-person team, known as the “Troika”, listens to each country’s “vote” in a securely guarded room at WTO HQ, Geneva. As each country enters the meeting, security collects all electronic devices and closes the grand doors behind them. The member country tells the committee who they support and expresses their reasons. Now, the Troika doesn’t just note this down as a vote for either candidate, but instead, they measure the “breadth of support” for each candidate.
As the almost 20-year old selection rules state: the aim is to find a candidate that a consensus can be built around.
So it’s not as simple as “the one with the most votes wins”. Even if one candidate has the most “votes”, if there isn’t a strong enough breadth of support, then he or she may not be appointed. This happened in 1999, and the two remaining candidates were allowed to each serve a three-year term.”
The US is backing South Korea’s candidate to lead the WTO, possibly because of its long term relations with the country, which dates as far back as 1949. But it’s not just about that, there are other battles the US is fighting.
Us vs China: Since 2018, there’s been a pronounced trade war between The US and China. With the US constantly accusing China of Intellectual property theft. The US blames the WTO for not curbing China’s rise.
Us vs EU: The US and the EU for 16 years have been trying to settle a case with the EU. Both parties accuse each other of unfairly subsidizing these aeroplane manufacturers -- Boeing (US) and Airbus (EU).
How this might end up
If a “consensus” can’t be reached then a vote can be used to decide the appointment. This time the highest vote wins.
What a WTO African leader could mean
An African leader could help ensure that the interests of the continent and other developing countries are taken into account in WTO activities. For example, In recent years South Africa and Ghana have complained that Brazil has been flooding their countries with “cheap” frozen chicken.
MTN and Airtel show us their Report Card
It's been a whirlwind of a week for the big players in the telco industry. Major players MTN and Airtel have seen some recent developments alongside political bodies in Ghana and Nigeria. So...let's get to it!
Big Bucks and Big Smiles
For MTN Nigeria
Results from the third quarter of business are out and MTN Nigeria is smiling. It recorded a 13.9% increase -- from this time last year -- in its total revenue (N975.76 billion) for Q3 2020. Its mobile subscribers now stand at 75 million while its data (internet) subscribers increased to 30.7 million.
While an increase in the use of internet-enabled call options has reduced the use of voice calls and voice revenue, the contribution of data revenue to its total service revenue jumped from 18% in 2019 to 25% in 2020.
For Airtel Africa
From its recently released first half (H1) of the year results, Airtel Africa noted a 16.4% increase in revenue in the first half of its current financial year. This is made up of mobile revenues which increased 15.3% in H1 due to growth in voice and data and its mobile money operation Airtel Money which saw revenue growth of 30.4%. The telco giant has also seen a growth of 12% across its customer base. Airtel Africa currently has 116.4 million customers across 14 markets, which span Eastern Africa, Francophone Africa and Nigeria.
The Nigerian Communication Commission (NCC), the major regulatory body for telecommunications in Nigeria recently announced it granted two mobile operators, MTN and 9mobile approval to carry out trials on national roaming services for a period of 3 months.
Roaming service enables a mobile subscriber to automatically make and receive voice calls, send and receive data, or access other services when outside the coverage of a particular network geographical area by utilizing the network coverage of other networks. This enables mobile network coverage to expand to unserved and underserved communities across the country. This means you don’t have to carry multiple sims for different parts of the country, if a network provider’s coverage isn’t good in a particular area you can temporarily use the services of another network provider.
Airtel has announced that it plans to end its Ghana operations by selling all of its 100% stake in its Ghana division, AirtelTigo to the Ghanian government.
This is very sensitive news as earlier this year, the Ghana Communications Authority laid out plans to disrupt MTN’s dominance in its market to promote competition and protect consumers and network operators.
Now that the government is a direct competitor with MTN, it will be interesting to see how things pan out in the coming months.
Taking it under our Lens
Pandemic or not, the telecoms industry has emerged to provide an essential service for economies in Africa and the world, allowing people to connect and work remotely, reduce travels and allow access to entertainment.
When we think of possible positives, we’d like to imagine a future where this kind of connectivity gives people voices and businesses opportunities to connect, especially in Africa where there are underserved and uncovered regions.
A different kind of tariff in Cameroon
Cameroon tried charging phone dealers for every mobile device shipped into the country.
What is happening: As part of the new law tax following their 2019 financial law, the government recently announced that every phone or tablet shipped into the country must be cleared at 33% of the cost of factory price of the device. You should know that this goes beyond import duties, it is a step towards increasing the revenue generated by customs. Times are clearly hard.
How things are about to change
The VAT rate in Cameroon is currently at 19.25%, this however varies, depending on the product. But mobile devices imported into the country are charged at 33% and import duties which were usually handled by dealers, have taken a new turn with this new tax law.
Digital control: The tax implementation is a little different from usual. There has been a shift from the physical clearance done by dealers. Now customers are meant to pay the tariff through their internet providers.
In collecting the tax, your mobile network providers are allowed to make deductions from your airtime account. Users are allowed to pay their tariff in instalments or pay in full.
There is something else: Another part of the new tax law allows your network providers to charge you a fee for any app you download. For every app you download, the network deducts a fee of 200 CFA Francs (36 cents).
Also, when anyone buys a phone or tablets in Cameroon and connects to any network, the network provider determines if you are a first-hand user of the phone I.e if you bought the phone fairly used. It does this by detecting the unique international Mobile Equipment Identity (IMEI) number of every phone.
What the government stands to gain: Nearly 4 million telephones are imported into Cameroon per year. For them, that represents a potential of 13 billion FCFA ($23.1m)in revenue per year. By collecting less than 100 million CFA ($179,211) the government says it is facing a shortfall of nearly 12 billion per year. If the government goes on with this plan, they are able to raise customs revenue up to 2500% in one year.
Bottom line: After days of using the hashtag #EndPhoneTax and other means, Cameroonians voiced out their frustrations over the new phone tax law. Clearly, Times are hard for everyone — Government and Citizens. The government had to suspend the law for now.
Worth reading 📚
Democratizing Access: An overused phrased but a theme in some of the most important companies of tomorrow.
You are under no obligation to remain the same person you were a year ago, a month ago, or even a day ago. You are here to create yourself, continuously.
– Richard Feynman
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