OHADA des Telecoms is moving forward / March 2008

• 06/03/2008
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1 - Design and State of Play The "OHADA des telecoms" project was launched at the Ouagadougou Francophone Summit in November 2004, to create an open market for electronic communications services across a large group of African countries. The vision was that regulatory harmonization and the cooperation of regulatory authorities would minimize the costs of market segmentation and allow participants to reap the benefits of a wider market. Eventually, the group of participant countries would carry significant clout in the OAU and in international fora. International investors would benefit from a more secure environment in their cross-border operations, and national service providers would be able to rely on a clear and stable institutional framework giving them access to a wider market, based on free access in each country. Thus, over time, there would be growing awareness of the need for common regulations, and of the need for a small General Secretariat to provide the necessary coordination. Under the leadership of President Cissé, the project received the support of many African leaders. Financing was generously provided by the Swiss Cooperation, the Organisation Internationale de la Francophonie and the French Ministry of Foreign Affairs, while ACP Numérique and UNIDA gave their expertise. Close cooperation was maintained with the ITU, whose proposals for harmonized regulatory platforms have been well received. The first leg in implementation has been to pursue regulatory harmonization at a sub-regional level; participating countries in this initial stage have been the member countries of WAEMU/UEMOA and CAEMC/CEMAC. As a preliminary step, their diverse regulations were compiled on a comparative basis. In a decisive move in December 2005, the WAEMU Council of Ministers adopted six Directives covering harmonization, interconnection, universal service, licensing, tariff structures, and the creation of a Committee of Regulators, respectively. These Directives are to be transposed to national regulations. The Committee of Regulators first met in June 2007; it took stock of the directives and defined its work program. Meanwhile, contacts were maintained with ECOWAS, with a view to extending the WAEMU arrangements. In the CAEMC region, ACP Numérique, working with national regulators and Ministry officials, completed in early 2007 the drafting of proposed harmonized regulations. The drafts were endorsed at a seminar of regulators and Ministry officials in Yaoundé in May - June 2007. They cover technological convergence; autonomy of the regulator; phasing out of exclusive rights; creation of a tariff structure observatory; consumer protection; and the creation of a Committee of Regulators. In December 2007, the CAEMC Council of Ministers mandated the Commission to take necessary steps for their adoption by national authorities. Meanwhile, as a first step towards possible further cooperation, Jacques Blanché presented the draft regulations in Kinshasa, where they attracted careful consideration. Building on these advances, the next leg will be the drafting and adoption of Treaty instruments involving both sub- regions and open to other participants, so as to carry harmonization to an expanded geographic area. This is a demanding exercise; however, the drafting process in 2007 included cross-checks between WAEMU and CAEMC, so that there will be no need to reconcile major institutional discrepancies when preparing the Treaty provisions. 2- Impact on Poverty Alleviation Electronic communication services can significantly contribute to poverty alleviation in Africa, especially in the rural areas, where communications are more difficult. Where they become available, they create opportunities that people find creative and innovative ways to exploit. Numerous examples have been documented; to illustrate:

• Mobile phones have connected Ethiopian farmers to the market: though illiterate, farmers can take phone orders for their produce and ship it to good effect;
• In South Africa, a combination of mobile phones and smart cards has brought banking services to previously underserviced populations;
• A similar combination has been put to effective use in Rwanda to facilitate payment of utility bills;
• In Senegal, a network of medical auxiliaries feeding high frequency measures of toddlers' weight gains into a database has served as an effective early warning system of disease outbreak;
• In Mali, X-Ray pictures from field hospitals can be transmitted to Bamako for evaluation, thereby greatly enhancing effective access to medical diagnosis.

How then do poor people gain access to electronic communications? An improved delivery across the board is needed, but is not enough: targeted improvements, aimed in particular to the rural areas, are also essential. Across the board, an open market will allow the provision of a wider range of services on a competitive basis. The small size of national African markets limits economies of scale, and restricts the scope for competition. As a result, access costs are much higher in Africa than in other regions of the world, especially in the provision of broadband access. In turn, the higher access costs depress effective demand, further constraining market size: the World Bank reports 15 internet users per thousand population in Sub-Saharan Africa, as compared with 133 for the upper-middle income group. Thus high access costs feed on themselves in a "vicious" circle which the OHADA des telecoms' objective of creating an open market across countries intends to break. In addition, electronic communications require a stable institutional environment, because returns can be sensitive to changes in regulations. By fostering cooperation among regulators, the project will support the development of « best practices » and increase confidence in the stability of the regulatory environment. Targeted improvements are also needed: the regulatory arrangements can and should be structured with a view to addressing the handicaps of the poorer populations. With this requirement in mind, the project has supported the following:

• Funds designated as "universal service Funds", should be financed from earmarked resources to secure service improvements in poorer areas. Minimum service levels (which, in the view of ACP Numérique, should also cover broadband access) should be set by the relevant political authorities; once the objectives have been set, the Funds should be separately and transparently administered by the regulators to make sure that their resources are applied as intended;
• Tariff observatories should aim at keeping tariffs as low as is consistent with sound business practice. The alternative of granting higher rates in underserviced areas, in order to attract additional resources to these areas, would confuse the issues; a well designed universal service fund is a preferable solution;
• Effective interconnection is another essential requirement - and another central function of tariff observatories, who must ensure that rates charged for connections are fair and non-discriminatory;
• Fostering competition requires that exclusive licenses benefiting "historical operators" should be rescinded; however, in order to ensure a smooth transition, a five-year transition period should be provided.

XXX To conclude: encouraging progress has been made towards the goal of creating an open market for telecommunication services across many countries. A continued participatory approach is essential for further progress, as is the continued support of donors and cooperation with ITU; this requires flexibility in implementation, while keeping the overall purpose firmly in mind. The tasks ahead are many: preparing to elevate cooperation at a regional level through a Treaty arrangement; extending the arrangement to other interested countries; and, last but not least, following up: once directives have been adopted at the sub-regional level, they need to be transposed to national regulations. The potential rewards are equally numerous, as an open market with stable regulatory arrangements can bring clear benefits to all Africans, especially among the poor.