Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM



A typical case of capitalist plunder

By Kola Ibrahim

NITEL is in the bad news again. This time, it is the fraudulent sale of NITEL to an unknown telecom company, New Generation Nigeria which offered offer a $2.5 billion bid for its acquisition. As usual, the sale has been tainted with controversy and corruption.

Immediately after announcement of the sale by the Bureau of Public Enterprise (BPE, the body organizing the criminal sale of public corporations), facts emerged that the winner of the bid lacked competence to run the telecom behemoth. In the first instance, the major partner of the consortium, GiCell Wireless Ltd was reported to have less than 250, 000 CDMA lines and has not played any significant role in mobile telecommunication in Nigeria. Yet, this is a company that wants to manage the biggest telecommunication company in the country in term of assets. As if this is not enough, the so-called technical partner, China Unicom Ltd has denied having any partnership agreement with New Generation. The favoured bidder and BPE have tried to justify this fraudulent sale. While New Generation claimed that Unicom’s denial is a case of mistaken identity, the BPE on the other hand maintained that it has confirmed Unicom’s participation. But despite all attempt to force partnership on Unicom, the management of Unicom has not retracted its statement. New Generation has also claimed that its financial partners are in United Arab Emirate (UAE); but it is a fact that UAE economy, especially its financial sector is embroiled in a serious debt mess.

The summary of this is that this round of privatization is bound to fail either before or after the sale. More than this, it is clear that like previous sales, privatization of NITEL will never lead to revamping of the company. In fact, the four failed attempts to sell NITEL since 2000 and the corruption trailing them have shown that no solution can be found to the economic problem facing Nigeria within the framework of neo-liberal capitalism.

It will be recalled that the first attempt to privatize NITEL in 2001 ended in fiasco. The so-called core investor, International Investors London Limited (IILL), could not raise the $1.3 billion bid price for the company. Subsequently, in 2004, government appointed a nebulous company, Pentascope (which has little or nothing to do with telecommunications) to manage NITEL. According to Sylvester Anyanwu, the chairman of Senate Committee on Communication, aside the failure of the management company to get N59 billion revenue for NITEL, over N53 billion was incurred as debt for the company, with the company alleged to have been involved in fraudulent dealings to rip NITEL off. After a failed bid by Egyptian Orascom to acquire NITEL at $256 million, 51 percent of NITEL’s share was handed over to Transcorp Ltd., at $500 million in a bid that is exceptionally fraudulent. Aside the corrupt process of selling NITEL (a public entity) to a company where the then president of Nigeria, Olusegun Obasanjo had interest, the sale was more like a Christmas gift. While NITEL (with only fixed network) was to be sold to IILL at $1.3 billion in 2001, the same company (with fixed network, mobile network and SAT 3) was sold for $500 million in 2006. For the over two years that Transcorp owned NITEL, aside making the company owe billions in debt, properties of NITEL were stripped off while the fixed lines of the company dipped from 500, 000 to 45, 000. In fact, the managing director of Transcorp, Tom Iseghohi, along with two others, was charged to have looted $110 million in NITEL.

If you think the plunder of NITEL is limited to a few players, you are in for a rude shock. According to ThisDay newspaper of July 27, 2008, “(Senator Sylvester) Anyanwu…said that NITEL was to serve as the core server for all the GSM companies to interconnect as they are using NITEL transmitter and optic fibre. According to him, it is not just the GSM companies that are making use of NITEL facilities as many organisations like banks and oil companies, are using NITEL facilities to this day.” The report continued: “He however regretted that NITEL is not getting commensurate returns for the services it was rendering. Rather, it is now being plundered and subjected to slow death as if it is nobody’s assets.” Anyanwu himself was quoted to have said: “Look at the interconnect exchange at Saka Tinubu. It is a fraud, total fraud. And all of them are using that; all of them are using the Sat 3 and no kobo is being paid NITEL. Rather it is a private arrangement and people sit in the office and write what they consider they should pay and send to you as an invoice. How can you determine. Under this technology age how can you sit down in your office and determine what somebody has consumed without meter. It is ridiculous, …Why I am talking to you now is that a lot of people who were part of this are now also putting themselves together trying to go through the back door to take over NITEL, especially financial institutions.”

Do we need anybody else to tell us that the plunder of NITEL is systemic and well orchestrated? Thus, the latest fraudulent attempt to sell NITEL only reflects the bankruptcy of Nigeria’s business and political class. NITEL is seen as a cash cow that can be milked to gain huge wealth without any risk. This is why every attempt at selling the behemoth has been fraught with insider dealing, bribery and corruption. This deadly struggle of every private big business is not unexpected, as NITEL’s huge properties are juicy cake which no capitalist rat can avoid.

The NITEL privatization mess again knocks a big hole in the propaganda that tends to portray liberalization of telecommunication sector as a success story. Aside the fact that most of the private telecom companies in Nigeria grow out of NITEL’s decay, the presence of these private telecom fat-cats has meant serious rip off of Nigeria. While Nigeria’s phone call cost is the costliest in the world, the service is one of the worst. Despite all this, the private telecom companies have been sources of ripping off the economy. As early as 2002, MTN was reported to have declared N55 billion profits, which was more than the profit of all the insurance companies in Nigeria. Yet, MTN, which like other telecommunication companies was awarded 5-year tax holiday between 2002 and 2007, employs less than 0.1 percent of the nation’s workforce. Despite hundreds of billions declared by private telecoms, they have continued to stiffen NITEL of its finance through unpaid debts (of up to N80 billion as at 2008) and rip-off as explained by Senator Anyanwu.

As against all the fictitious facts about leap in telecommunication growth, the various promos and raffles organised by these private telecom companies reflect the low level of patronage for their services and a choked market. This is a reflection of the low purchasing power of the populace coupled with high cost of making call. The claim that there are over 50 million telephone lines in the country only hides the true picture. In the real sense, this figure only translates to around 25 million real phone users and owners (less than 20 percent of the population), as the 50 million lines hide the actual fact of multiple line ownership, lost lines and phones, etc. Worse still, mobile business has led to gradual death of fixed telecommunication, even when fixed line telecommunication is cheaper for the common man. This is not unexpected, as capitalist investors prefer to invest in mobile telecommunication because it is a shortcut to make profit.

While socialists are opposed to the mismanagement of the public corporations/enterprise, we do not see privatization, which only accentuate the looting and plundering as a way out. To us, the collapse of public enterprises like NITEL is not a reflection of ineffectiveness of public ownership of the economy, but bastardization of the idea. According to Leon Trotsky, nationalized economy without democracy is like a body without oxygen. It is the bureaucratic and nepotistic running of the public enterprises, which deny workers the opportunity to democratically organise the running of these companies in the interests of the public that led to their collapse. Those appointed to run these companies are moneybag politicians who were given these appointments as gains of patronage. Thus, public enterprises are run as private firms of moneybag politicians. Only a working class democratic control and ownership of not only public enterprise but the whole economy can ensure proper running of the economy in the interest of the working and poor people. This is the only way to build a genuine working people oriented economy. This requires a political party of the working people that will chase away moneybag capitalist politicians and build a democratic socialist society where people’s need will form the basis of economy and governance.