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2008 INSTITUTE FOR DEVELOPMENT STUDIES

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NIGERIAN TELECOMMUNICATION INDUSTRYNIGERIAN TELECOMMUNICATION INDUSTRYNIGERIAN TELECOMMUNICATION INDUSTRYNIGERIAN TELECOMMUNICATION INDUSTRY

BYBYBYBY

EZE, EDITH UCHENNAEZE, EDITH UCHENNAEZE, EDITH UCHENNAEZE, EDITH UCHENNA

PG/MSC/06/46348PG/MSC/06/46348PG/MSC/06/46348PG/MSC/06/46348

INSTITUTE FOR DEVELOPMENT STUDIESINSTITUTE FOR DEVELOPMENT STUDIESINSTITUTE FOR DEVELOPMENT STUDIESINSTITUTE FOR DEVELOPMENT STUDIES

UNIVERSITY OF NIGERIA,UNIVERSITY OF NIGERIA,UNIVERSITY OF NIGERIA,UNIVERSITY OF NIGERIA,

ENUGU CAMPUS, ENUGUENUGU CAMPUS, ENUGUENUGU CAMPUS, ENUGUENUGU CAMPUS, ENUGU

DECEMBER,DECEMBER,DECEMBER,DECEMBER, 2008200820082008

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TITLE PAGE

AN ANALYSIS OF FOREIGN DIRECT INVESTMENT

[FDI] AND GROWTH OF THE COMMUNICATION

SUBSECTOR: A STUDY OF THE NIGERIAN

TELECOMMUNICATION INDUSTRY

BY

EZE, EDITH UCHENNA

PG/MSC/06/46348

RESEARCH WORK PRESENTED TO THE INSTITUTE FOR

DEVELOPMENT STUDIES, UNIVERSITY OF NIGERIA, ENUGU

CAMPUS IN PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE AWARD OF MASTERS IN SCIENCE [M.SC] DEGREE

IN DEVELOPMENT STUDIES

SUPERVISOR: PROF. IKECHUKWU E. NWOSU, Ph.D

DECEMBER, 2008

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CERTIFICATION

I, Miss Eze, Edith Uchenna with REG NO PG/MSC/06/46348,

hereby certify that this research project has not been

submitted for the award of any degree, diploma, or certificate

in this or any other institution of higher learning.

………………………………………….

Eze, Edith Uchenna, PG/MSC/06/46348 Researcher

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APPROVAL PAGE

The Institute and the Postgraduate School of the University of Nigeria, in

partial fulfillment of the requirements for the award of the degree of

Masters in Science (MSC) in Development Studies, have accepted this

project, written by Eze, Edith Uchenna with Registration Number

PG/MSC/06/46348 under the approval of the Institute for Development

Studies

-----------------------------------------------

Prof Ikechukwu E. Nwosu

Supervisor

Date: -----------------------------------

-----------------------------------------------

Prof Ikechukwu E. Nwosu

Director, IDS

Date: ----------------------------------

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DEDICATION

TO SIR PIUS ERIAMA, TO SIR PIUS ERIAMA, TO SIR PIUS ERIAMA, TO SIR PIUS ERIAMA,

TO LADY ELIZABETH AGBENYEKU,TO LADY ELIZABETH AGBENYEKU,TO LADY ELIZABETH AGBENYEKU,TO LADY ELIZABETH AGBENYEKU,

And TO CHIOMA MAUREEN EZEAnd TO CHIOMA MAUREEN EZEAnd TO CHIOMA MAUREEN EZEAnd TO CHIOMA MAUREEN EZE

For their extraordinary touch in my life and to every other person that For their extraordinary touch in my life and to every other person that For their extraordinary touch in my life and to every other person that For their extraordinary touch in my life and to every other person that works hard for the welfare of our society in a simple wayworks hard for the welfare of our society in a simple wayworks hard for the welfare of our society in a simple wayworks hard for the welfare of our society in a simple way

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ACKNOWLEDGEMENTS

The desire of acquiring the comfort of the world hunts the imagination of the poor, and the dread of losing them that of

the rich--- Alexis de Tocqueville, French writer (1805-1859)

Based on the quotation above, I dare not lose the comfort bestowed on me through collective

effort of so many persons. I wish to acknowledge my devoted lecturers who have done every

possibility to impart executive knowledge to me. To the director IDS and my Supervisor,

Prof. Ikechukwu E Nwosu, Prof Ogbuefi, Dr Chikileze, Dr Nwaizugbo, Mr. C.O Ene, Mrs.

N Owoh, Mrs I.I Forchu, Mr. V A Onodugo, Mr. B C Umoh; the administrative staff

especially Chief A. C. C. Okoli, Nze E. Egolum, Mrs. Obiora-Chime, Mrs Nze, IDS

Secretary, Secretary and other staff of the PG School unit, UNEC; I remain grateful for your

immense contribution in my studies.

Words are not enough to appreciate my hearty parents, Evang. Godwin Eze and Mrs. Regina

Eyiuche Eze, my siblings, my distinguished and pioneer course mates, friends and well-

wishers especially Dr. E.U.F.Ewurum, Collins Njoku, Temidayo, Nnabuchi, Arch Henry,

Arch Elijah, Arch Junior (jyno), and his roommate (Biggy), Nkechi, Monica Agu, the porters

at the PG Hostel UNEC, your unalloyed support both fraternally and financially will never

be forgotten. To the staff of Zain especially Isi, Duby, Ebele, Mr. Wale (HOD)and the Staff of

MTN: Ify, Onyinye, Patrick and others; the staff of CAC and FIRS; and the Staff of

BankPHB: Adaobi, Oge, Jude, Emeka, Chinedu, Nneka, Muna; also the staff of Rainbownet:

Nkechi, Biggy, Randy, Onyi, Ann and others; the staff of UBN including Mrs. Nwabuisi,

Aunty Nnenna; the staff of FBN: Aunty Amaka, Chioma, the staff of CBN especially the

Librarian; the security men of these organization that break their rules and let me into their

offices; those at the mobile dealers near DFID building, along Zik Avenue, Ogui Road, I will

always be grateful for your immense contribution. To the Almighty and Everlasting GOD, you will always be my first and last resort.

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ABSTRACT

This research analyses communication FDI and its effect on the development of

Nigerian telecommunication industry. The 1999 deregulation introduced the presence of

‘umbrella people’ in almost every corner of the streets, express-roads, pathways in many

suburbs and towns across Nigeria. Today, Nigerian economy is one of the targeted countries

by multinational telecommunication industries due to its ready market, population size, and

growing economy. This research is an ‘ex-pesto’ because it is an evaluation research on FDI

and communication sector, but the focus is on the telecommunication subsector.

The hypotheses were to analyse the significant benefit from Nigerian labour market to the

international GSM operators. Also, the relationship between Nigerian increased paid-up capital

and the multinational GSM operations, and the effect of the mobile penetration and the growth of

the teledensity

in the host communities.

The study is confined to the MTN Nigeria and Zain Nigeria, the two major GSM mobile

operators in Enugu state. Most of the population in Enugu urban is subscribers to these.

The instrumentation used is structured questionnaire constructed into fixed alternative

questions with inter-rater scale and personal interview. The secondary data is the recorded data

in the CBN annual statistical bulletin 2005, FOS report 2005, and retrieved data from selected

websites, journals, and textbooks. A probability sampling with random technique is used. This

employed a stratified random sampling. The sample size is 108 units. The validated instrument,

which is the fact-finding package, was distributed and collected from the selected respondents on

the two different periods based on cross-sectional method. The test retest is used to measure the

variables stated in both the statement of research problem, research questions and the

hypotheses. The statistical tools used are chi-square(X2), Pearson’s contingency coefficient, and

Yates’ correction formula.

From the field surveying, HO was rejected in the three hypotheses tested. The significance

shown that X2–value calculated are greater than X

2-value critical except in seven items of the

questionnaires. For instance in the analysis, 37% of the respondents believed that whether

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Nigerians are gaining or not, these international GSM investors are benefiting more in terms of

capital flight, tax waivers, labour concession, etc

In concluding, the recommendation is that the foreign contact should be encouraged in the

development of telecommunication in less developed countries like Nigeria but, there will be the

need to check on the capital flight, and the standard of their services should be of international

quality.

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TABLE OF CONTENTS

CoverPage…………………………………………………………………..…...i

TitlePage ………………………………………………………………….……..ii

Certification.…………………………………………………………............iii

ApprovalPage …………………….………………………………….………iv

Dedication ……………………….………..………………………….………v

Acknowledgements ……………..………………………………….………vi

Abstract .…………………………………………………………………vii

Tableof Contents……………………………………………..…………..viii

List of Acronyms and Abbreviations ……………….………….………x

ListofTables …………………………………….…………………………xi

ListofFigures……………………….……………..….…………………xiii

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of Study …………………….………………….1

1.2StatementofProblem ………............................................3

1.3 Research Objectives…………………..………………………5

1.4 Research Questions……………………………………………6

1.5 Research Hypotheses………………………………………….8

1.6 Scope of Study ………………………..……….……….……….9

1.7 Significance of Study …………………………………..………9

1.8Areaof Study ……………………………………….……..….…10

1.9 Limitation of Study …………………………..…..…………12

1.10 Conceptual Definition …………………..………………….13

References

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CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Theoretical Framework …………………….….……….………..21

2.2 Overview of Telecommunication industry in Nigeria...…….25

2.3 Context of Communication FDI in the Nigerian Economy...30

2.4 Corporate Responsibility and Community Relations.……..33

2.5 Highlight of the GSM operators for study…………….….…37

2.6 Review of Related Empirical Studies……………………..…39

References

CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLOGY

3.1 Method of Data Collection……………………….…….………48

3.2 Instrument for Data Collection…………….…………………49

3.3 Population of the Study…………………………………………51

3.4 Test for the Validity……………………………….……………52

3.5 Test for the Reliability…………………………….……………53

3.6 Sample Size Determination……………………………..………54

3.7 Sampling Selection Procedure…………………………….……55

3.8 Method of Data Analysis………………………………...………56

References

CHAPTER FOUR

4.0 DATA ANALYSIS AND PRESENTATION OF THE RESULTS

4.1ResearchFindings…………………….……………..……………60

4.1ResearchResults…………………..…………………………….75

4.2HypothesesTesting………….…………………………………77

4.3 Interpretation of Research Findings and Results…..…80

CHAPTER FIVE

5.0 SUMMARY, RECOMMENDATION, CONCLUSION

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5.1SummaryoftheStudy…………………………………..…………84

5.2PolicyRecommendation……………………………….………….87

5.3Conclusion…………..….………………………….……………….90

Bibliography

Appendices

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LIST OF ACRONYMS AND ABBREVIATIONS

FDI FOREIGN DIRECT INVESTMENT NITEL NIGERIA TELECOMMUNICATION LIMITED ODA OFFICIAL DEVELOPMENT ASSISTANCE NEEDS NATIONAL ECONOMIC EMPOWERMENT AND DEVELOPMENT SRATEGY FOS FEDERAL OFFICE OF STATISTICS CBN CENTRAL BANK OF NIGERIA NCC NIGERIAN COMMUNICATION COMMISSION NASB NIGERIAN ACCOUNTING STANDARD BOARD GNP GROSS NATIONAL PRODUCT GDP GROSS DOOMESTIC PRODUCT GSM GLOBAL SYSTEM FOR MOBILE COMMUNICATION NDE NATIONAL DIRECTORATE OF EMPLOYMENT PPP PUBLIC-PRIVATE PARTNERSHIP MNC MULTINATIONAL CORPORATION MTNN MOBILE TELEPHONE NETWORKS, NIGGERIA CELTEL CELLULAR TELECOMMUNICATION GLOBALCOM GLOBAL COMMUNICATION MTEL NIGERIAN MOBILE TELECOMMUNICATION LIMITED DFI DIRECT FOREIGN INVESTMENT BOP BALANCE OF PAYMENT NIPC NIGERIAN INVESTMENT PROMOTION COMMISSION USDC UNITED STATE DEPARTMENT OF COMMERCE CIL COMMUNICATIONS INVESTMENT LIMITED UMTS UNIFIED MOBILE TELECOMMUNICATIONS SYSTEM PTOS PRIVATE TELECOMMUNICATIONS OPERATOR NRTP NATIONAL RURAL TELEPHONY PROJECT BPE BUREAU OF PUBLIC ENTERPRISES SNO SECOND NATIONAL OPERATOR W.Ari.Tel’s WEEST AFRICA TELECOMMUNICATIONS TRADE FAIR FNO FIRST NATIONAL OPERATOR NTEC NIGERIAN TELECOMMUNICATIONS CONFERENCE AND EXHIBITION AFRINET AFRICAN INTERNET SUMMIT AND EXHIBITION NIG NIGERIA INTERNET GROUP ITU INTERNATIONAL TELECOMMUNICATION UNION USAID UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT CTO COMMONWEALTH TELECOMMUNICATION ORGANIZATION ATU AFRICA TELECOMMUNICTION UION WATRA WEST AFRICA TELECOMMUNICATION REGULATORS ASSOCIATION CSR CORPORATE SOCIAL RESPONSIBILTY MOU MEMORNDUM OF UNDERSTANDING OECD ORGANISATION FOR ECONOMIC CORPORATION DEVELOMENT FIFA FEDERATION OF INTERNATIONAL FOOTBALL CLUBS MPC MARGINAL PRODUCT OF CAPITAL MPL MARGINAL PRODUCT OF LABOUR

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LIST OF TABLES

2.2.1 Communication Sector (1991-1998)

2.2.2 Mobile Subscribers 1998-2006

2.2.3 Sectoral Composition of FDI in Nigeria, 1970-2001 Percentages

2.2.4 Telecoms and Technology Forecast

2.2.5 Growth of the Nigeria Telecommunication Industry

2.2.6 Total Connected Lines and Teledensity

2.3.1 Nigeria: Foreign Direct Investment 1970-2002

2.3.2 Fixed Assets at Cost

2.3.3 Cumulative Foreign Private Investments in Nigeria Analyzed

by Type of Activity

2.3.4 Components of Paid-up Capital Analyzed by Holder

2.5.1 MTN Nigeria Market Information and Result

2.5.2 Mobile Cellular Operators in Nigeria

3.3.1 Rate of Distribution

4.4.1 Observed and Expected Frequencies of Nigerian Government Level

of Encouragement on Communication FDI

4.4.2 Observed and Expected Frequencies of the Possibility of

Multinational Telecom Companies Provision of Better Quality Services

4.4.3 Observed and Expected Frequencies of the Level of Acceptability

of GSM Operation in the host Communities

4.4.4 Observed and Expected Frequencies of the Accessibility of

Advanced Telecom Application

4.4.5 Observed and Expected Frequencies of the Efficiency in

the International GSM Coverage

4.4.6 Observed and Expected Frequencies of the Network Services

and Valuation of Nigerian Currency

4.4.7 Observed and Expected Frequencies of more Investment

Attraction into Telecom Industry

4.4.8 Observed and Expected Frequencies of the need for stronger

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Competition 4.4.9 Observed and Expected Frequencies of poor Infrastructural Development on Telecom Industry

4.4.10 Frequencies Distribution of the Policy Management

and Multinational Telecom Industry

4.4.11 Frequencies Distribution of the Import Promotion verses Exportation

4.4.12 Frequencies Distribution of the Internet Services Provision

4.4.13 Frequencies Distribution of the Digital Migration

4.4.14 Frequencies Distribution of who gains more

4.4.15 Frequencies Distribution of the need for Foreign Contact

in the Telecom Industry

4.4.16 Frequencies Distribution of the Level of gained Knowledge

from International GSM Operators

4.4.17 Frequencies Distribution of the Effect of Social Vice on the

Growth of Telecom Industry

4.4.18 Frequencies Distribution of the Job Opportunities

from Communication Industry

4.4.19 Frequencies Distribution of the Staff Motivation by

Multinational Telecom Corporations

4.4.20 Frequencies Distribution of the Phone Vendors and

International GSM Operators

4.4.21 Frequencies Distribution of the Position Influence of the

GSM entrepreneurship Programme on Nigerian Youth

4.4.22 Frequencies Distribution of the Nigerian Development,

Cheap Labour, and Communication FDI

4.4.23 Observed and Expected Frequencies of Government

Funding for Rural Telephony

4.4.24 Frequencies Distribution of the Rural Telephony,

Village Farmers, and Rural Economy

4.4.25 Calculation of Correlational Analysis and Chi-square (X 2)

of the Questionnaire Items

4.4.26 The Significance of Benefit from the Nigerian Labour Market

4.4.27 The relationship between increased Paid-up Capital

and Communication FDI

4.4.28 The Growth Rate of Teledensity

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LIST OF FIGURES

2.4.1 Celtel phone vendor at Amaechi Idodo

2.5.1 Entrepreneurship empowerment of Nigerian youth

2.5.2 Rural telephony promotion

2.5.3 Celtel kiosk at Owerre-ugwu, Edem Ani

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an analysis of foreign direct investment and growth of the communication subsector: a study of nigerian telecommunication industry eze, edith Uchenna

The consequence of

investment behaviour

and adoption ability

influenced both by

macroeconomic factor

like demand growth

and the traditional

epidemic learning

process of judging what

advantages others are

gleaning from the new

technology.

(Antonelli 1991: 24)

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

“Statelessness does provide certain environmental advantages.

Among the benefits are the ability to avoid trade and political

problems, to sidestep regulation hurdles, to achieve labour

concessions, to balance costs, and to win technology break through,”

(Czinkota et al 2000: 392).

This statement enunciates the reasons why multinational

corporations are usually better companies than their local rivals in

most of the developing countries. The assumption emphasizes that

these world corporations are building insider capabilities no matter

their area of operation and either their factories or laboratories are

moved around the world.

In the Nigerian economic sector, the highest recent growth in

foreign direct investment (FDI) has been in services. The influx of

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international investment in telecommunications has received high

and favorable attention because of the monopoly and inefficiency of

NITEL for decades. Stimulation has been given to this cross–border

activity due to its connections to innovation diffusion and the mobility

of foreign equity capital pumped into the Nigerian economy. FDI leads

to sustainability in any developing economy. It is an amalgamation of

capital, technology, marketing and management. As Ugbaka

(2007:63) writes, “It is elementary economics that the wheels of every

economy are oiled not only by FDI but, also, by the creation of jobs,

which has direct impact on national development, wealth creation,

and national security.” It is assumed that stronger FDI and official

development assistance (ODA) inflows and a reduction in the stock of

public debts are among the factors that drive growth in any review

period in Nigeria (Abdul Mutallab 2006: 18; Yakubu 2007, Todaro

and Smith 2003: 635, Adesida 2001: 2).

Conversely, the pre-liberalization era of telecommunication in

Nigeria encountered a terrible heart attack. The industry had

symptoms of high level of corruption, epileptic service provision, and

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high cost of acquisition, paralytic infrastructural maintenance, poor

availability of telephone lines etc.

The complete deregulation in 1999 of the Nigerian mobile phone

market opened up for other cellular operators a lifeline, thereby

increasing competition and driving down prices. Already, by April

2007, it estimated that 38m mobile phones have served Nigerians.

The Advanced telecommunication in the telephone and internet

services recognize to have led to economic success especially by

strengthening real sector and personal advancement, since

sustainable human development cannot occur in a vacuum

(Anotonelli 1999: 25; Nwosu, Nwodu and Fab–ukozor 2007; NEEDS

document 2005: 72).

Although FDI in telecommunication industry ought to be

accepted, the lapses in the quality of services provided by these GSM

operators in Nigeria should not be neglected. There have been

complaints from consumers on the gradual decay of their services.

The cause of these lapses is traceable to the government incapability

to breed positive influence into the system.

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This prompted into carrying out this project. The research

project when concluded, will provide a framework on the levels of

association between the FDI and the growth of the telecommunication

industry in Nigeria

1.2 STATEMENT OF RESEARCH PROBLEM

Before proceeding further, there is need to state what

constitutes the research problem on this study.

Several researchers have done work on the macroeconomics

related to this topic. Such researchers are Linda Y. C Lim and Pang

Eng Fong, 1991; Antonelli C 1991; Agba A. V, 2002; Aremu J.A 2005;

Ndukwe E, 2006; Bhattacharya, Montiel and Sharma 2005, Calderon

and Serven 2004, Kirsten M (ed) 2003: 91 – 168.

These authors work will be reviewed as the empirical related

literature. However, this research is pinpointing on how international

investment in Nigeria can help at the microeconomic level to achieve

economies of scale that has not been achieved in domestic market.

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Just as Adam Smith stressed on self-interest, once there is growth in

each subsector of the economy, it will have effect on the growth in the

aggregate economy.

One of the major variables to be studied is on the assumption that

multinational corporation employ cultural management techniques to

suit the locality.

The nature of this prediction is that there will be need for these

multinational corporations in Nigeria to employ more of indigenes

than bring in foreign expertise into the host economy.

Therefore, the research intends to find out how FDI has affected

Employment of labour in Nigeria.

In addition, to define how the FDI tends to make a change

through market expansion and increase in the federal capital reserve

with the complaint of infrastructural deficiencies in Nigeria.

Another aspect is that there has been non-acceptability of their

quality of services delivery especially in their inter–connectivity

networking which has raised public hearing forum proposed by NCC

and NASB on telecommunication activities.

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Finally, the issue of who gains more than the other on the

investment is yet to be clarified. Is the capital inflow into Nigeria more

beneficial to Nigerians than the capital flight to the parental

corporation or vice versa?

1.3 RESEARCH OBJECTIVES

The objectives are as follows:

1. To investigate the impact of multinational corporation on

employment function in the telecommunication industry in

Nigeria.

2. To examine the effect of capital inflow through Nigerian

telecom industry into the GDP from the foreign direct

investment

3. To assess the quality of available GSM services and other

lifelines in march with the population density.

4. To explore the outcome of Communication FDI in developing

communities through telecom services

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1.4 RESEARCH QUESTIONS

The study proposes to provide empirical responses to the

following research questions:

1. Who has gained more than the other in the foreign direct

investment? Is it the host market or the parent enterprise

outside the country?

2. What percentage index of the profit maximization gained by

these multinational telecom corporations from Nigeria has been

reinvested back into the economy?

3. What effect has the capital flight from the affiliated branch

office of these international GSM operators to the parental

enterprise on the Nigerian GDP?

4. To what extent has the improved telecommunication industry

contributed on aggregate employment function in Nigerian

labour market?

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5. To what extent has the employment of Nigerians by these

transnational telecom corporations affected the growth of their

business trend?

6. What effect has the FDI expanded market into Nigerian

telecommunication companies had on their global linkage?

7. To what extent does the consumption investment schedule of

the telephony in Nigeria has to depend on foreign direct

contacts?

8. To what rate has the revolution in the Nigerian

telecommunication industry affected other sectors of the

national economy in Nigeria?

9. How many of these multinational corporations with their

manufacturing functions related to GSM operation has been

attracted to invest into Nigerian manufacturing subsector?

10. To what extent has there been technology transfer from the

transnational telecom corporation to the Nigeria domestic

market?

11. How far has these international GSM operators gone with

signing memorandum of understanding with communities to

build good relation with the people?

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12. How successful has the communication FDI assisted their

subscribers by providing scholarships, skills development

programmes etc to encourage their patronage?

1.5 RESEARCH HYPOTHESES

To come out with realistic results from the research questions

asked, the following null hypotheses are formulated from the

objectives stated above for statistical testing:

HO: Communication FDI has no significant benefit from

the cheap labour provided by Nigerian labour market.

H0: There is no relationship between the increased paid-up

capital with the Federal Reserve System in Nigeria and

the Communication FDI

H0: There is less growth rate of teledensity in the

Communities even with the mobile penetration

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into Nigerian economy

1.6 SCOPE OF STUDY

The nature of the study demands for an analysis on the

performance of foreign-owned telecommunication companies and

their relationship to the economic growth and development.

This study is confined to the MTN Nigeria and ZAIN Nigeria that

are the major GSM mobile operators in Enugu state; although the

findings could be generalized to their other branches since, their

management system is centralized no matter their branch area.

It is limited to confirm how they have influenced the economies

in Enugu State.

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Its scope limits those cellular or wireless phone networks that

are not operating in Enugu or those within but have not started

operating.

1.7 SIGNIFICANCE OF STUDY

There is need to justify the relevance of this study.

Telecommunication industry has witnessed tremendous response to

change recently in Nigeria. The outcome of its productivity and rise in

GNP depends on the services prodded by both the foreign direct

investors and domestic private investors.

From the study, out of the four major network operators in

Nigeria, two are related to foreign-owned companies.

Therefore, a significant surveying needed to be done, to find out

how favourable the part played by Communication FDI in Nigerian

market. It will also assist to review how many other enterprises

related to this particular subsector has been invested in Enugu urban

due to presence of these transnational companies.

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This research work is also necessary for researchers interested

in communication development and management or international

economics.

1.8 AREA OF STUDY

The geographical area for coverage is the Enugu urban in Enugu

State. This locale is appropriate for the study because Enugu is one

of the oldest cities in Nigeria and the two major telecom companies

related to the foreign direct investment are located at the mentioned

area.

The MTN Region in Asaba launched her Y’hello bahn in Enugu city on

January 2002. Presently, she has a center at Zik Avenue in Uwani.

Within this area, there are many related business transactions.

Besides, Uwani constitutes a suitable population for the sample

because of its high density.

As well, Zain Nigeria once known as Celtel until 1st August 2008 has

an office at 6 Ebeano Housing Estate, Independence layout. The area

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also constitutes an appropriate population from which the sample is

drawn. In addition, the Zain office is situated between BankPHB Plc

and Rainbownet, a local rival. The vicinity is known for its business

outlook. In close proximity to the Ebeano layout is the mobile

repairers’ village where so many microentrepreneurs have trade for

handsets, recharge cards, simcards, and other accessories of the

mobile business.

Most of the population in Enugu urban are subscribers of mobile

operation and possess all the characteristics measured as required

by the objectives of the study.

1.9 LIMITATIONS OF STUDY

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This research has numerous limitations. The work is limited due

to time factor. The time limit, within the work completed, was

hampered finally.

Another limitation is lack of sufficient fund to carry out this

work thoroughly.

Also, insufficient material has been encountered especially on a

statistical database. The central bank of Nigeria, Okpara Avenue

branch has statistical bulletin limited to 2005 (therefore, their official

data will beat the span years of 2000 to 2004).

The federal office of statistics could not provide current figures

for researchers. It has no data on any of these foreign- owned

Cellular Companies. The worse is that the workers has low standard

of literacy and are less helpful. Besides, the aggregate data provided

by government agencies are unreliable and inconsistent.

The office of the National Communication Commission branch in

Enugu State, which is one of the regulatory bodies, is poorly

structured. The woman at the administration who redirected the

researcher to the website was of no assistance. This is because the

P a g e | 32


USPF page/chapter she referred her to is unknown zone and cannot

open. She also supplied her with NCC ACTS, which is unnecessary

and irrelevant to the objective of the project.

Some of the staff of MTN and Zain was unhelpful. They were not

cooperative and the companies jealously guarded data, which would

have helped to upgrade this study.

There is also the problem of collecting all the questionnaires shared.

Sometimes, the researcher meets the absence of the respondents.

1.10 CONCEPTUAL AND OPERATIONAL DEFINITIONS OF KEY

TERMS

Foreign Direct Investment (FDI)

Conceptual: FDI is an investment made to acquire a lasting

management interest (normally 10% of voting stock) in a business

enterprise operating in a country other than that of the investor

defined according to residency

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(World Bank, 1996)

Operational: From 1970-2001 in Nigeria, the manufacturing

subsector had a rate of 32.2%, mining and quarrying 30.3% and

transportation and communication 1.1% because of its

unattractiveness. Most multinational companies now pumped in

capital, technology, or management techniques in the economics of

communication subsector.

Official Developing Assistance: (ODA)

Conceptual: Net disbursements of loans or grants made on

concessional terms by official agencies of member countries of OECD

(MP. Todaro and S.C Smith 2003: 804)

Operational: The interdependency by the less developed

countries for financial loans or grant on the developed economy has

not helped the countries economically. There is need for stronger

foreign contact that will encourage challenges and improvement of

human resources.

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Sustainable Development:

Conceptual: It is an approach to development, which allows

nations to meet their present needs without compromising the ability

of future generations to meet their own needs (Nwosu

2007:7citing UNCED).

Operational: Nigerians need a capacity for self-sustaining growth

and this can be actualized through the provision of a

multidimensional institution and/or structures that meets the core

values of development at the subsectors level.

Telecommunication:

Conceptual: It is the technology that is used to bring about

communication of voice and data signals over some geographical

distance (Woherem 2001:3)

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Operational: Telecom has gone super high tech and

Nigerians need to send and receive messages with the outsiders

through electronics that can be linked globally.

Innovation Diffusion:

Conceptual: The consequence of investment behaviour and

adoption ability influenced both by macroeconomic factor like

demand growth and the traditional epidemic learning process of

judging what advantages others are gleaning from the new

technology.

(Antonelli 1991: 24)

Operational: This period of information age has helped in the

spreading of new ideas, knowledge, or evidence rapidly since the

world is now a global village.

Technology Transfer:

Conceptual: The transfer of systematic knowledge for the

manufacture of a product, the application of a process, or the

rendering of a service (Czinkota 2000: 831)

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Operational: Communication FDI attracts companies with

modern production techniques that require sophisticated machines,

spare parts and technical services.

Gross National Product:

Conceptual: The total market value of all final goods and

services produced in the economy in a year. It is equal to the

GDP plus total earning made by national abroad (X) minus the

earnings of the foreigners within the country during any given period

(M) (Udabah 1999: 163)

Operational: The capital flow from the Communication FDI is a

principle way by which resource comes into Nigerian economy. It

stimulates aggregate supply, damp inflation and helps to restore

general macroeconomic stability through tax payment, expanding of

Nigerian market domestically and globally, and boosts up the labour

incomes.

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Gross Domestic Product:

Conceptual: The total final output of good and services

produced by the country’s economy, within the Country’s territory, by

residents and non-residents, regardless of its allocation between

domestic and foreign claims

(M.P.Todaro and S.C. Smith 2003: 797)

Operational: Countries derives benefits such as organizational

adjustment, technology transfer, and promotion of balance of

payment, price stability, and employment generation, domestic

market expansion etc from foreign investment.

Capital Flight:

Conceptual: The flow of private funds abroad because investors

believe that the return on investment or the safety of capital is not

sufficiently ensured in their own countries

(Czinkota 2000: 818)

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Operational: The government should adopt sound policies that

will regulate the entry and exit of foreign dealings. The NIPC and

NCC should work hand in hand to stabilize the system and

encourage reinvestment into other sector.

Deregulation:

Conceptual: The move to eliminate legal restraints on competition

in various industries (Boone L.et al 1985:576)

Operational: The monopolization of telecom by NITEL affected the

growth and development of Nigerian economy mostly because of their

incompetency and lack of technology-know-how. The introduction of

free market system attracted FDI into the communication subsector.

Communication technologies:

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Conceptual: The modern inventions and instruments used for

information gathering, distribution, dissemination, transfer,

collaboration and Co-ordination

(Ogbuoshi 2007: 160)

Operational: Due to globalization, the advanced telecommunication

has been changing hand frequently. The new ICTs are always

introduced into the market. It anchors global linkages.

Shareholders:

Conceptual: They are those people who acquire the shares of

the corporation; they are its owners

(Boone et al 1985:63)

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Operational: Some of the multinational companies operate

under license while some operate under contract, merger,

amalgamation, charter, etc. MTN International offered license to

MTNNigeria to operate as franchise.

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REFERENCES

Antonelli C (1991), The Diffusion of Advanced Telecommunications in Developing Countries Paris: Development Centre Studies,

Boone L.E et al (1985), Contemporary Business, 4th Edition, New York: The Dryden Press

Czinkota, et al (2000), International Business Update, New York: The Dryden Press, Harcourt College Publishers

National Economic Empowerment and Development Strategies, NEEDS (2005), Abuja: CBN and NPC

Nwosu, I E et al (2007), Communication for Sustainable Human Development-A Multi-Perspectival Approach, Enugu; ACCENigeria

P a g e | 42


Ogbushi, L.I (2007), “The Role of Modern Communication Technologies in Sustainable Human Development,” in Nwosu et al (ed) Communication for Sustainable Human Development-A Multiperspectival

Approach, Enugu: ACCE, Nigeria

Todaro, M P et al (2003), Economic Development, India; Pearson Education, Asia

Ugbaka, G (2007), “Celtel, NDE Launch National Youth Employment Programme,” Lagos: Financial Standard Newspaper

Woherem, E.E (2001), Information Technology in the Nigerian Banking Industry, Ibadan: Spectrum Books Limited

P a g e | 43


The capital flow from the

Communication FDI is a

principle way by which

resource comes into

Nigerian economy. It

stimulates aggregate

supply, damp inflation

and helps to restore

general macroeconomic

stability through tax

payment, expanding of

Nigerian market

domestically and globally,

and boosts up the labour

incomes.

P a g e | 44


CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 THEORETICAL FRAMEWORK

The theoretical approaches to multinational corporations

review the group of assumptions proposed by various theorists.

Anyanwale (2007:17) citing Lim (2001) states “FDI positively

correlated with economic growth is situated in growth theory that

emphasized the role of improved technology, efficiency, and

productivity in promoting growth.”

The Growth Theory has models that can analyse FDI and the

growth of Telecommunication subsector in Nigeria as a developing

economy. So far, it allows capital fluctuations, movement in the size

of the working population with its implication for their strength and

age profile, and technical progress.

The Growth Theory to be used in this research is the

Neoclassical Growth Theory. Todaro M. P et al (2003:130) backed up

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this theory by stating, “Another cornerstone of the neoclassical free

market argument is the assertion that liberation (opening up) of

national markets draws additional domestic and foreign investment

and thus increases the rate of capital accumulation. In terms of GNP

growth, this is equivalent to raising domestic savings rate, which

enhances Capital-Labour ratios and per capital incomes in capital-

poor developing countries.”

The model in this research accesses the social rate of returns

when foreigners invest in Nigeria economy. Output (Q) in any

economy is a function of the factors of production: labour (L), land (R),

capital (K), and the level of technology (T) (or factor efficiency). So, the

aggregate output written as a function of factor inputs plus

technology as:

Q= f(R, L, T, K)

The theory emphasizes the ease of substituting K and L in the

production function to avoid economic instability because of the

assumed fixed capital (FC) to labour coefficients.

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The theorists use marginal analysis to analyse the pricing of

goods, services and factors of production in any competitive market

at the micro level. They emphasize that market prices and factors

efficiency were related to their scare resource.

The assumption is on the possibility that a set of market prices

can ensure the equality of supply and demand in all markets.

Here, the factor prices is considered to be flexible in the long-run

causing the ease of factor substitution in response to changes in price

and factor proportions which is utilized in the aggregate production

function, in particular to changes in the capital to output ratio.

The focus is on a perfectly competitive economy in equilibrium.

The perfect competition assumes that at the equilibrium growth path,

the rate of interest (I) equals marginal product of capital (MPC) and

the rate of wage equals the marginal product of labour (MPL).

Also, there is an assumption that technical progress is

exogeneous. It identifies the source of economic growth, population

growth, and technical progress with capital accumulation and

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determination on capital to labour ratio in a steady state. This is to

say that an economy that is stable leads to full employment.

To analyse a situation, using an economy disturbed by some

increase in the optimum stock (or decrease in the actual stock) of

capital, it may be due to assumed dependence of investment profit,

technological change, fluctuations in business confidence, consumers

change of taste, price instability etc, the net investment will be zero.

The domestic capital goods industry is producing only for

replacement purposes, and has idle capacity.

An investment with foreign capital will increase production by

the industries up to their capacity level.

Therefore, increased employment (E) and increased income (Y)

in these industries will lead to higher level of consumption demand,

and increase in the optimum stock as it intensifies the capital storage

and prolongs the period of capital operation in the capital goods

industries.

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Generally, neoclassical theory accepts the existence of market

forces that tend to maintain full employment, production, and

progressive growth along with reasonable price stability.

2.2 OVERVIEW OF TELECOMMUNICATIONS IN

NIGERIAN COMMUNICATION SUBSECTOR

GSM originated in France in the early 1990s, and took the

telecom industry by storm.

The history of telecommunication industry in Nigeria is traceable

to 1950’s with the first operator NITEL. NITEL’s incompetence was

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part of the problem that caused poor quality of industrialization and

slow economic growth and development in Nigeria.

As Ndukwe (2007:26) avers, “We cannot tap the full potential of

this market without a sound telecommunications and information

technology base.” Nigeria progressed from the telecommunication

dark ages before the year 2000 as reviewed in table 2.2.1 (see

appendix IV). In 1999, the statistics bear that only 400,000

connected telephone lines and as in table 2.2.2, 25,000 analogue

mobile lines was in Nigeria having a total teledensity at a paltry 0.4

lines per 100 inhabitants in table 2.2.3 (see Appendix IV). Only few

could afford to own landline because the connection costs were

unnecessarily high; moreover, it takes a lot of time for the technicians

to fix any spoilt line. At this point, Oyewola (2007) observes that,

“Nigeria phone users were confine to the use of fixed phone

communication system. It was therefore a common sight to see long

queue at phone boots, with everyone waiting for his or her turn.”

Another alternative was to purchase the NITEL unit cards for the

public phone booths that were cheaper.

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The digital migration marked the beginning of Nigeria telecom

revolution. It bears increment and promotion of competition in the

telecom industry. There was growth, in fact, while NITEL connected

lines only grew at an average of 10,000 lines per annum in the four

decades, (within the years of the new communication technologies,)

an average growth rate of more than 4m mobile lines per annum was

attained. As of September 2006, Nigeria has attained over 26m lines,

(24.5m of which were digital mobile lines) is shown in table 2.2.2 (see

appendix IV)

The telecoms reform in Nigeria led to the establishment of NCC

in the year 1992, under the Nigerian communication decree to

liberalize a high potential mobile market. It was realized with the

auction of four GSM licenses to NITEL, Econet wireless Nigeria, MTN

Nigeria and Communications Investments Limited (CIL) in January

2001.Because CIL failed to meet its financial requirements, its license

was revoked and in August 2002 awarded to Globacom. NITEL was

licensed as the FNO.

In table 2.2.4, the number of main lines (0.8m in 2004) is

expected to increase to 1.7m by 2009 and the mobile subscribers

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(7.6m in 2004) is expected to be 19.6m (see appendix V). The

comparism of Nigerian telecom growing economy with that of Western

world has exposed the dynamism and promising future of the

country’s telecoms market. Other observers including the Telecoms

Consultancy Pyramid Projects anticipated a greater growth in the

sector.

Presently, NITEL is transitioning from the Nigerian telecoms

market’s only player to an open-market competitor. Following the

failed bid to sell NITEL in 2002, BPE decided to reform the former

monopolist. Pentascope International was given the management

contract of NITEL for three (3) years. However, the contract was

terminated just within two (2) years.

Again, BPE auctioned NITEL for sell with 51% of the company

up for grabs. In July 2005, BPE short-listed six interested companies:

Vodacom, MTN, Egypt’s Orascom, the Chinese Consortium of Huaweii

Technologies, Celtel Netherlands, and Newtel. Presently, Transcorp

Nigeria Plc, an indigenous company, is managing NITEL. While NITEL

was going through trauma, Globacom in 2003 took over as the SNO.

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Currently, the competition is heat up with Starcomms Limited set to

become the TNO and enter the Nigeria telecommunications arena.

The telecom industry’s popular W.Afri.Tel attributed good

remark on the rise in the Communication Subsector. The W.Afri.Tel’s

launch in 2001 coincided with the start of the telecoms boom, and it

has been attracting more companies into the regions. As written in

corporate Nigeria (2007:154) stating, “The result was a much needed

injection of FDI with a 200-fold increase from $50m in 1999 to over

$10b by the end of December 2005.” In the 2005, Nigeria experienced

a record year in telecommunication industry. There was rise in the

PTOs operation. The teledensity raised by 100% ration of 9.47 to

100% of population to 18.18 with total investment of $30.68 billion

worth of FDI attraction.

In order to protect the rate of return of investors, the NCC

established 5-year clause on the provision of mobile telephony service

expired on February 2006.

In May 2006, four PTOs were granted unified licenses to join

Nigerian’s GSM operators; Intercellular Nigeria PLC, Starcomms Ltd,

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Prest cable and Satellite Communications, and Prestel and Multilink

Telecommunications limited.

More so, in most towns in Nigeria, many internet cafes operated

are often connected to European internet connections. A new

dimension to internet connectivity has given interested borrowers

access to internet on their WAP-enabled mobile phones, smart phones

and on their PCs using their phones as a modem. This is due to the

introduction of GPRD by GSM operators, and other value-added

services.

The operation of Nigerian telecommunication industries has

brought recommendation from so many organizations. NTEC on

September 2006 announced that Nigeria has become one of the

world’s fastest growing telecom markets and one of the liberalized

telecoms market in Africa.

In order to establish stronghold on the growth of the industry,

NCC sets up a monthly consumer parliament on August 29, 2003

where operators meet the complaints of their customers, universal

services obligations, rural telephony, and consumer empowerment.

In recognizing of global linkages, it is stated in Corporate

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Nigeria (2006/2007:143), that “This novel approach to dealing with

consumer issues has even acknowledge International

Telecommunication Union (ITU) as an effective medium for getting the

consumers in contact with the operator as well as the regulator.” The

existence of foreign contact in the Nigerian telecommunication

industry has helped Nigeria to become part of the global village.

2.3 CONTEXT OF COMMUNICATION FDI IN THE NIGERIAN

ECONOMY

Telecommunication is the infrastructure of the global information

society. The networks are making it possible for developing countries

to participate in the world economy since its explosion in the

developed nations is reaching saturation point.

Between 1993 and 2002, mobile users in developing countries

increased from 3 million to over 500 million.

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Etta and Parvyn-wamahuim (2003:21) observes that, “There

have been significant changes in the telecommunications sector in

Africa in the recent past. These changes have been on three broad

fronts. There have been policy changes, institutional innovations, as

well as technical and operational changes all of which have been

catalyzed by new liberalization and privatization regimes.”

Coping from the effect of FDI on the oil and gas sector, the

growing economies of other sectors have improved as well. So far, the

policy indicated in NEEDS (2005:130) that FDI in the non-oil sector,

since 1999, has raised from zero to billions of dollars with doubled

capacity utilization, leveling off unemployment, and raising the GDP

growth as in table 2.3.1 (see appendix VI). The economy recorded

growth of 8% in 2006, and 5% in 2007. The reform component is on

infrastructure development of HB 15 convention of the African

Telecommunication Union bill, 2003. It is assess to be enacting on by

the ministry of communication. Anyanwale (2001:1) asserts that,

“FDI comprises not only merger and acquisition and new investment,

but also reinvested earnings and loans and similar capital transfer

between parent companies and their affiliated.” According to

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USDC, FDI is an investment with at least 25% foreign equity

participation in it.

Corporate Nigerian (2006:63) reveals, “Foreign investment

into Nigerian’s telecoms sector rose to $8b at the end of 2005 from

$50m in 1999.” Besides this, International experts still rates the

‘rocketing’ growth of Nigerian telecoms as low, indicating that the

potential for growth in the country and the region is phenomenal. The

federal government of Nigeria is striving hard to make the economy

more investor friendly, strengthen security, reduce bureaucracy,

provide adequate infrastructures, and combat economic and financial

crime that hobbles the perception of the country by the foreign

investors. In a bid to liberalize the investment climate, the

government is introducing initiatives and measures: with the policy

plan to abolish restrictive laws, set up investment protection treaties,

encourage private utilities and equip fully the export-processing

zones. The establishment of NIPC in March 2006 as a one-stop shop

for investors is to help them gather information and services faster in

Nigeria.

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Nigeria corporation (2006:64) citing Bello Mustafa, CEO NIPC

states that, “We have a population about 145 million, so if you are

looking for the ready market, we have it. Why squeeze yourself into a

competitive market where the margin is 4 to 5 percent? Why not come

to an environment where the market is between 40 to 50 percent,

even though the cost of production is a bit high?” In table 2.3.2, the

fixed assets at cost does not have wide margin. (See appendix VI)

Nigerians are looking forward to attract more foreign investors into

the corporate economy. Steps have to be taken to change the negative

perceptions from outsiders. Foreign entrepreneurs see Nigeria as a

high-risk economy for investment with a harsh business environment.

Bello Mustafa confirms in corporate Nigeria (2006:67) that “No

economy can develop without foreign contact, not just funds, but

know-how as well.” Today, the NRTP connects internally, and

internationally to hold project of e-commerce, e-education, e-health

service and e-agriculture that will progress into reality. Nigeria will

then firmly belong to the global village.

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2.4 CORPORATE RESPONSIBILTY AND COMMUNITY

RELATIONS STRATEGY FOR THE GROWTH OF THE TELECOM

INDUSTRY

Some researchers have stated that FDI increases the growth through

productivity and efficiency gains by local small-scale enterprises.

Ayanwale (2007:6) citing Globeram, Imbriani and Reganeti (1997),

acknowledges that, “Available evidence for developed countries

seems to support the idea that the productivity of domestic firms is

positively related to the presence of foreign firms.” These

multinational companies to enrich their business have adopted

different approaches. Such are the welfare approach, the equity

approach, the efficiency approach and the empowerment approach.

Just as Nwodu (2004:180) avows, “Any bureaucratic organization

operating within a locality certainly owes some obligations to the

inhabitants of that locality.” He continues, “The reason is obvious

and glaring. By virtue of its location, the activities of the organization

are bound to impact in certain ways, on the welfare-cum-living

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conditions of the host community.” Effort has been made by the

telecom companies to feature in rural markets with the intention of

reaching 50% of the Nigerians living in rural communities (see

appendix IX). To achieve this, there is need to empower the

communities through sustainable job creation, communication service

provision, public relations, propaganda and publicity, customer care

services, local wealth generation, economic and physical

development, and improve the availability of their services and

product. (See appendix IX)

A 2006 study by the GSM association reviews that the potential

annual revenue from the rural population of all developing countries

will be worth around $95b a year by 2012, with Nigeria identified as

Africa’s largest rural growth opportunity. So far, the role of

Communication FDI in Nigerian communities seems to be definite, but

can be positive, negative, or neutral depending on the structural,

institutional, economic and technological conditions in the area.

Both MTN Nigeria and Zain Nigeria have been contributing

significantly to their recipient communities. These companies claimed

to have foundation project locations that have affected almost 60% of

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Nigerians. This telecom companies have philanthropic and

empowerment stories; such as donation of toll free lines for

emergency service, rural entrepreneurial program (they have

empowered youth with training, funds, tools, etc to start their own

business as in fig 2.4.2 (See appendix IX). This has been one of the

strategies for their coverage campaign, and the distribution of ultra

low cost handsets (ULCH). The ULCH is designed to push down the

entry hurdle to telecommunication (for low-income earners). Even,

Zain Nigeria has a unity tariff that can reach all their subscribers

across all networks.

These multinational companies have sponsored program,

festivals, and leagues. Such as the Rangers’ international leagues by

MTN and the Omambala masquerade festival in Nike, Enugu State

supported by Zain Nigeria. The latter reveals that it has been lighting

up the socio-economic landscape of many rural communities under its

rural acquisition initiative (RAI) introduced in 2007. The initiative

aims to collaborate with local communities to increase the

‘affordability, availability, awareness and acceptability of CELTEL

service.’ It also encourages adopting local entrepreneurs, or associate

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distributors (Ads) to act as franchise trade partners. They are also

responsible for securing their base station and basic maintenance.

Ligali (2008:41) reveals that, “The rural poor represents a significant

market in Nigeria and CELTEL is the first operator to develop a

scalable model to serve them more profitably, while at the same time

delivering real value to local communities.”

The CEO, MTN Nigeria on his point, according to Nwokeoma

(2007:34), ensures, “We are a catalyst for radical social change in

Nigeria by institutionalizing the highest ethical standards in our

business and incorporating all facts of corporate social responsibility

to our business strategy.” The MTN Nigeria foundation claimed to has

a multimillion-naira schoolsconnect project as well as a voluntary

counseling and testing (VCT) centre. The VCT centre is expected to

reduce the cost of testing for HIV/AIDS, and provide counseling for

people living with or affected. All this are their expression of

commitment to improve the quality of life in Nigerian communities by

investing in three key areas: education, health, and economic

empowerment. The schoolsconnect initiative has helped in bridging

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the digital divide in the country through the provisions of laboratories,

library materials, ICT facilities and training in schools.

2.5 HIGHLIGHT OF THE INTERNATIONAL GSM

OPERATORS FOR STUDY

This study is the brief history of the two international GSM

operators in focus. The locus is to review their closeness with the

Nigerian economy.

MTN International acquired National GSM in Nigeria at the cost of

US$ 285m and launched operations in August 2001, which is valid

until August 2016. In 2002, MTNN commenced with Y’hello Bahn, a

3,400km long radio transmission project. In 2003, MTNN secured a

US$395m loan to fund the further expansion of its infrastructures in

the country. In November 2004, Lagos-based MTN linked an

agreement with a consortium of Nigerian and international financier

for a $200m loan to upgrade its GSM network development. MTN has

been a prime driver in the Nigerian telecommunication industry as

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well as African Leading Cellular Companies. It will be the global

mobile sponsor of the 2010 FIFA world cup South Africa. Rural

telephone project ‘phone lady initiative’ of the MTN Nigeria foundation

won the 2006 GSM association award in the category of best mobile

community service. It is also ranked 2nd in the annual FM top

companies survey and recognized as the only company to appear in

the FM TOP 20 since the inception.

In the Sunday times marketing excellence award 2006, MTN received

the gold award in the direct marketing category. So far, MTN provides

services that have reached more than 46% Nigerians as recorded in

table 2.5.1. (See appendix VIII)

Pan African mobile company, Celtel, is owned subsidiary of

MTC group, presently known as Zain Group. MTC was established in

1983 to offer mobile services in Kuwait. Then, it acquired Celtel

Nigeria in April 2005.

The history of Celtel now subscribed as Zain on August 1, 2008,

started from 6 August 2001 when Econet wireless Nigeria limited, a

subsidiary of Ecobank Nigeria plc was operating in Nigeria. Econet

was bought by Vee Networks limited, a completely owned by

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indigenous investors. Vmobile was one of the successful bidders in

the 2001 GSM licensing auction. The company started on June 2004.

In expanding its network infrastructure, the company invested

$650m. It emerged as Nigeria 2nd best mobile operator. On July 17,

2006, Vmobile was changed to Celtel International. It has

collaborated with NDE to launch a Programme, Celtel-NDE national

payphone rollout Programme for youth employment. To them, the

partnership (PPP) initiative will help the youth to set up payphone

known as Celtel redphone.

2.6 REVIEW OF RELATED EMPIRICAL STUDIES

This work surveys existing written materials that have direct

and indirect bearing with the research. It is in respond to what is

written in the problem statement that various researchers have done

work related to this subject.

Lim and Fong (1991) on FDI and industrialization observes that

the increasingly complex two-way flows of capital: technology and

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market access between developed countries and Asian economies,

the growing of new actors and new forms of involvement between the

foreign and local capital, the relative competitive decline of western

economy, etc, all suggests a change in international economic

relations. These relations are far from the dominant-dependent

pattern of the so-called 1st world - 3rd world economic interactions in

the past or the unequal share of the benefits of foreign investment.

On diffusion of advanced telecommunication in the developing

countries, Antonelli (1991) implores that it affects the ability of firms

and countries to compete in the global markets.

The early adopters have gained advantage into the

international market and, are controlling their shares through exports

of goods, technology, and growth of multinational firms.

He writes that the “Appropriation” of innovations on

international diffusion has decline recently. The technological

innovations introduced eventually induce fast diffusion in

downstream sectors, and technology “blending” has spread

throughout traditional activities.

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Antonelli uses the theory of investments and adoption, the

equilibrium models, the epidemic models to analyse the correlation

between economic growth and diffusion, and the growth of demand

for innovated capital goods that expands investment and the

purchasing opportunities for the goods.

He relates the models to the relationship between investment

and labour productivity in Kaldor’s “technical change function”.

He uses regression equation to test the study on specification of

variables in the year 1974-1986.

The resentment of some researchers on the developed countries

for affecting the slow growth of electronic industries in developing

economies raises the issue of capital flight.

Onunoduokit,(2004) attempts to estimate the determinants of

capital flight from Nigeria. He includes domestic inflation, availability

of capital, parallel market premium, and competitive growth rate

among the major determinants of capital flight in Nigeria.

He concludes that there is every reason to hope for the

repatriation of the flight capital, or at worse the eradication of the

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trend. He suggests that domestic economy should be made attractive

for private investment and flight capital recaptures, and

inappropriate policies should be corrected.

On the other hand, the development Report (2003) reviews that

Africa inability to attract foreign investment continues to hinder her

sustainable development. The obstacles blocking the inflow of foreign

capital are high levels of poverty, poor infrastructure, red tape, and

corruption in bureaucracies, fears of political instability, and the

weak capital market system. However, it is stated that certain effort

has been made to attract FDI by some African countries such as

investment promotion strategies, and providing incentives and

policies that are more open in this regard.

It reveals the best practice of FDI in Africa, which includes the

new technology transfer and skills (increasing competitiveness) with

examples of VODACOM and MTN.

Certain researchers assumed that FDI should augment the

domestic capital. This can be done through setting up and

maintaining of community telecentres in area where there is poor

information infrastructure and limited human capacity.

P a g e | 68


Etta and Parvyn- Wamahium, in their study, recorded that

mobile phone subscriber now outnumber fixed-line users, and with

numbers reaching almost 24m subscriptions in 2001. It demonstrates

the inability of public services network operators to meet, in their

years of monopoly, the need for basic voice services.

The growth of mobile telephony indicates a need, yet to be met

and needed mostly in rural areas, that have had very little

telecommunication development.

Agba (2002) sees DFI, which is largely undertaken by MNCS as

an enigma.

In his work, he mentioned some models and empirical methods

of Analysis. Import dependence, transfer pricing, profits (dividends)

and other remittance abroad are also measured in order to gain a

holistic insight into the research.

He observes that in Nigerian economy, some modifications are

required to suit the current analysis, and in particular, the

multinational corporation affiliates are dependent on imported inputs.

He specifies that its characteristic include excessive foreign

P a g e | 69


exchange, which invariably has severe repercussions on the balance

of payments.

He also cites Ndugbu (1986) who demonstrated how the import

dependent import-substitution industries in the country have failed to

achieve any appreciable degree of inter-industry linkages.

He uses econometric and statistical relationships among the

relevant variables and they were articulated.

Anyanwale (2007) explores empirically the relationship between

FDI and GDP growth in Nigeria. He also examines the effects of

manufacturing FDI on economic growth in Nigeria and ascertains the

long-run sustainability of the FDI-induced growth process.

From the findings, he observes that the main determinants of

FDI are markets size, stable macroeconomic policies, and a level of

human capital that is tolerable by investors.

He concludes that since communication FDI has the highest

potential for contributing growth, it needs to be channeled and

integrated into the mainstream of the economy. Communication FDI

potential contribution is several times that of oil FDI.

P a g e | 70


Ndukwe E, (2007), the CEO Nigerian communications

commission in his paper on the expansion of telecommunication

reveals that access to telecommunications is critical to the

development of all aspects of a nation’s economy including

manufacturing, banking, education, agriculture, and government.

He states that due to factors including deregulation policy, the

worldwide trend of rapid development in telecommunications and ICT

and the huge potential of the Nigeria market, Nigerian economy now

had a turning point. Since year 2000, NCC has licensed Digital

mobile service providers, several private telephone operators, fixed

wireless Access Operators, two long Distance operators, internet

service providers and a third National carrier.

Apart from giving details on the Nigeria telecom revolution, he

explains the role of NCC and the challenges ahead.

In concluding, he states that the telecommunication offers

Nigeria the platform to catapult into a higher development plane.

P a g e | 71


REFERENCE

Agba, A V (2002), Direct Foreign Investment and Nigeria’s Balance Of Payments, Ibadan: Evi-Coleman Publishions

Ameh, E.P (2008), “NITEL: Awakening the snoring Giant,” Lagos: Businessday Media Ltd

Antonelli, C (1991), The Diffusion of Advanced Telecommunications in Developing Countries Paris: Development Centre Studies,

Ayanwale, A B (2007), FDI and Economic Growth: Evidence from Nigeria, Nairobi: African Economic Research Consortium

P a g e | 72


Aremu, J A (2005), Attracting and Negotiating FDI with TNCS in Nigeria, Lagos: Market Link Communications

Http://www.Marketlinkint.Com

Bhattacharya, A. et al (2005), “How can Sub-Sahara Africa attract more Private Capital Inflows?” Http://www.Imf.Org

Calderon, C and Serven L (2004), “The Effects of Infrastructure Development on Growth and Income Distribution,” Http://

www.Bcentral.Cl/Eng/Stdpub/Studies/Working Paper

Corporate Nigeria, the Annual Business, Trade and Investment Guide 2006/2007,

Switzerland: IMC Publication and Nigeria: NIPC

Etta, F B and Parvyn-Wamahiu, S (ed) (2003), The Experience with Community Telecentres, in Information and Communication Technologies for

Development in Africa Vol.2, Canada: IDRC And CODESRIA

Kirsten, M (2003) (ed), Financing Africa’s Development: Enhancing the Role of Private Finance, Development Report 2003, South Africa: Development

Bank of South Africa

P a g e | 73


Lim, L Y C et al (1991), Foreign Direct Investment and Industrialization in Malaysia, Singapore, Taiwan and Thailand, Paris: Development Centre

Studies,

Ndukwe, E (2007), “The Expansion of Telecommunication,”www.Clubfrome.Org/Tt 30/Material

Nwodu, C.L (2004), “Social Responsibility and Communication Relations as Critical Factors in managing the Niger-Delta Conflict” in Nwosu and Wilson (2004) in Communication, Media and Conflict

Management in Nigeria Enugu: ACCE, Nigeria

Nwokeoma, J (2007), “MTN Blackberry unleashes Power to do much more,” in Y’ello Magazine Vol.4, Lagos: Mtnnigeria

Communication Limited

Onwioduokit, E.A (2004), Capital Flight from Nigeria: An Empirical Re-Examination, Ghana: West African Monetary Institute

Oyewola, O (2007), “The Evolution of Mobile Telephony in Nigeria,” Http://www.Mobileafrica.Net/A101 Htm

P a g e | 74


Todaro, M P et al (2003), Economic Development, India: Pearson Education, Asia

P a g e | 75


FDI is an investment

made to acquire a

lasting management

interest (normally 10%

of voting stock) in a

business enterprise

operating in a country

other than that of the

investor defined

according to residency

(World Bank, 1996)

P a g e | 76


CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLOGY

3.1 METHODS OF DATA COLLECTION

This research investigation has a nature of sample survey. Its

design seeks the relationship that exists between communication

FDI and the growth of Nigerian telecom industry. The data collected

so far are both primary and secondary data. They are sourced

internally and externally. The raw data collected externally are

from representative samples and a developed structured

questionnaire used as a guide for the discussions with the staff

and customers of the selected telecommunication companies at

Enugu Urban. This includes handset repairers at Ogui Road, Main

Market Road, Okpara Avenue, and call business centers within the

outreach. The interview supplements the information derived from

the questionnaire and help to reduce the rigidity associated with

the designed questionnaire.

The authors of related empirical studies provided some of

P a g e | 77


the secondary data. The fact that this study needs an in-

depth descriptive record, the recorded data in the CBN annual

statistical bulletin 2005, FOS report 2005 and others were also used.

The communication sector was combined with the transport sector

due to the facts that they are under ministry then. It is difficult to get

current data scanning to 2006/7 at least. It is also difficult to get a

data with communication sector only for this project. Relevant data is

retrieved from selected websites from internet cape. (See Appendices)

INSTRUMENT FOR DATA COLLECTION

The most useful instrument used in the data collection is the

structured questionnaire. It was constructed into fixed alternative

question with scales.

An effort was made to structure the questionnaire into multiple

choices, questions that gives the respondent the opportunity to

choose from a range of options. The instrumentation was divided

into sections with twenty-eight (28) items in total. Apart from the

P a g e | 78


personal data, the first section elicits more on the 2nd, 3rd, and 4th

points in the objectives. This section contains 16 items designed to

provide adequate information about the stated objectives while the

second section has 8 items. 2 items are related to the 1st hypothesis

(1,16) in the first section with 5 items in the section B

(18,19,20,21,22). The 2nd hypothesis is related to 11 items

(1,6,7,8,9,10,11,12,13,14,15) and (17) in section B while the 3rd

hypothesis is related to 7 items in section A (1,2,3,4,5,9,15), and

section B had 3 items (17,23,24).The likert summated rating scales

was the type used in the measurement of the variables. This is to

say that the questionnaire items are scored under 5 point-inter-rated

scale and correlated for reliability. The items used for the pilot

testing are more of negatively keyed than the 28-structured-

questionnaire. Copies of the questionnaires were administered

directly to the respondents. They were also mailed to the companies

involved through email for expert opinion.

The emphasis on the analysis was placed on those questions, which

have direct bearing on the proposed research questions and

P a g e | 79


objectives of the study so that both the subjectivity and objectivity of

the research can be actualized.

However, the research will be based on the data available to the

researcher

POPULATION OF THE STUDY

By design, this research is a preliminary inquiry into the

communication between FDI and growth of Nigerian

Telecommunication industry. Therefore, the degree of variability of

the population for the study is the senior staff and those junior staff

of telecommunication industry with minimum of BSC degree holding

from faculties related to the study. In addition, GSM line subscribers

to multinational telecom companies with knowledge of the study,

P a g e | 80


aged 21-50 years. The issue is that all the targeted staff is also

subscribers involved in this investigation.

The customers and all involved cannot be reached in the

geographical coverage, and there is the problem of time limit and/or

financial insufficiency, this fact led to the decision on a defined

population.

TEST FOR THE VALIDITY

The instrument was validated to check if they are authentic.

After all, it is the fact-finding package of this research.

The questionnaires was distributed and collected by the

researcher on the two different periods, from July and October, since

the surveying was being based on cross–sectional method. The aim

was firstly to make sure that the questionnaires are distributed to

P a g e | 81


those that are knowledgeable in what is been researched on.

Secondly, the exercise of the pilot testing helped the researcher to

dictate errors on the instrument from the respondents. It was more

helpful when the researcher went into discussion with most of the

respondents for clarification.

The content validity is based on the items selected from other

questionnaires related to these projects. Any overlapping content will

be eliminated. From the pool, a test will be drawn from stratified

random sampling. In addition, the research will seek an expert

opinion based on their experience through unstructured interview and

mailed questionnaires to various telecommunication companies

especially. Frequently Asked Questions (FAQ), in their various

websites will be used to get the needed answers.

In addition, the research content will need to be compared with

the available data and findings of previous related research.

Moreover, the questionnaires were submitted to the project

supervisor for vetting.

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TEST FOR THE RELIABILITY

The same variables stated in both the statement of research

problem, research questions, and hypotheses were measured at

different times to the same set of respondents.

The test retest used in measuring the sample at different times

was gathered together and correlated to determine the relationship

between the first test score and the retest score.

In addition, the researcher seek an expert opinion to validate

the instrument so, an inter-rater scale will be used to score the

observations made by these experts to analyze some of the

hypotheses.

SAMPLE SIZE DETERMINATION

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This criterion targets at least 3,000 respondents depending on

the outcome of the field surveying.

The research is determined to accommodate a critical parameter

at an acceptable confidence level of 5% if evenly distributed while the

5% will reflect the chance of committing an error.

However, to obtain this confidence, the Taro Yamane formula is

used to determine the sample size of the targeted population, to be

studied:

n = N

1 + N (e)2

Where, n = Sample size unit

N = Total population

E = Degree of acceptable error margin (5%)

I = Constant

From the surveying carried out, the data obtained are

stated in tabular form:

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Table 3.1 Rate of Distribution

Selected

Telecom companies

Category

Total

Companies

Staff

Subscribers

MTNnigeria 64 174 238

Zainnigeria 54 144 198

Total 118 318 436

Source: field survey, 2008

n = 436 436

1+436(0.052) = 1 + (0.0025)

= 436 436

1 + 1.09 = 2.09

= 208.61 = 209

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Approximately 209 units were distributed but 108 was returned

representing 52℅ sample size.

SAMPLING SELECTION PROCEDURE

From the infinite population, a sample was selected statistically,

to ensure an even selection of the targeted population and avoid

biasness.

A probability sampling method is adopted specifically with

randomization technique that employs a stratified sampling

approach. Each stratum is represented in the same proportion using

the table of random numbers.

Because a cross-sectional method was used during the

surveying, with an observation at one or more points in time, some

participants are selected as far as they met the selection criterion.

In addition, the size of the population of the subscribers is

impracticable. So, non-proportional stratified approach is used

according to the objectives of the study.

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METHOD OF DATA EVALUATION

The statistical tool to be used to determine the standard error of

mean will be Chi-Square (X2). It will help in making appropriate

inferences through this statistical hypotheses testing and its

application in decision-making.

The statistical parameter to be tested when comparing the

expected and observed frequencies only evaluates the probability

that the observed relationship is as a result of chance.

Thus H0 :U 0 = Ue

When X2 = O

Then F0, Fe coincide

F0 =Observed frequency

Fe =Expected frequency

While X2 >0,

P a g e | 87


the F0, Fe do not coincide

The formula is:

X2 –calculated = ∑ (o-e) 2

e …………………………equation 1

where;o ==== Observed frequency

e ==== Expected frequency

∑ ==== Summation size

The contingency table used to calculate expected frequencies make

use of row totals and column totals as well as grand total was the

formula shown below:

Thus e = (C T) (R T)

GT ………………………..equation 2

Where, RT = row total of the cell

CT = column total of the cell

GT = grand total for all observed frequency

e = expected frequency for a given cell

To calculate the degrees of freedom for significance in the value of X2,

each contingency table uses the formula below:

Df = (r-1)(c-1)

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where; r = number of rows

c = number of columns

To assess the significance of each X2, the critical X2 value distribution

is used. The outcome of the calculated X2-value and the critical X2-

value affects the decision rule.

To calculate the degree of relationship between the variables, the

contingency coefficient formula is used.

In order to determine the degree of association after getting X2-value,

this research uses Pearson’s coefficient of contingency denoted by C.

The formula is

C = X2

N + X2

Where,X2 = Obtained Chi-Square Value

N = Number of Respondents

As Nwankwo (1999:139) states, “Whenever the expected frequency

in any contingency table is small, the X2 distribution curve shows a

great deal of discontinuity. In order to maintain the continuity of the

P a g e | 89


curve, a correction has to be applied to the frequencies in the cells of

the table.”

In this research, Yates’ correction formula for continuity in Chi-

square tests is used. It is denoted as Y(X2):

Y(X2) = ∑(/o-e/)-0.5)2

e

Where, /o-e/ = stands for Absolute value

e = obtained Expected frequencies

REFERENCE

Asika, N (2006), Research Methodology in the Behavioural Sciences, Lagos: Longman Nigeria PLC

Bourner, T (1996), The Research Process: Four Steps to Success, in Greenfield, T. (ed), Research Methods: Guidance for Postgraduate, London: Arnold

Http://lisweb.curtin.edu.au/index.html

P a g e | 90


Http://lisweb.curtin.edu.au/referencing/apa.pdf

Http://www.sce.carleton.ca/faculty/chinneck/thesis.html

Http://www.siriusweb.leeds.ac.uk

Nwankwo, O.C (1999), A Practical Guide to Research Writing, Enugu: Ferdinco Printing Press

Obasi, J.N (2000), Research Methodology in Political Science, Enugu: Academic Publishing Company

Reinard, J.C (1994), Introduction to Communication Research, United State of America: WCB Brown and Benchmark Publishers

Udoh, G.O (2004), A Guide to Modern Research Methods, Enugu: Institute for Development Studies, UNEC

P a g e | 91


an analysis of foreign direct investment and growth of the communication subsector: a study of nigerian telecommunication industry eze, edith uchenna dec.,2008

Gross Domestic Product

is the total final output

of good and services

produced by the

country’s economy,

within the Country’s

territory, by residents

and non-residents,

regardless of its

allocation between

domestic and foreign

claims

(M.P.Todaro and S.C.

Smith 2003: 797)

P a g e | 92


CHAPTER FOUR

4.0 DATA ANALYSIS AND PRESENTATION

4.1 RESEARCH FINDINGS

In this chapter, we present the analysis of the data

generated in this study as well as the key findings or results from

this analysis. The three hypotheses that further guided this study are

also tested and findings presented. To compute the expected cell

frequencies according to the responses based on the rule of

probability, the sum of expected frequencies (ei) must equal the sum

of all observed frequencies (oi). Then with the data, the values of x2

were computed in this study. The findings are as follows:

TABLE 4.1 Observed and expected frequencies for Nigerian government level of encouragement on communication FDI


Respondent

Responses

Yes

No

Don’t

know

To an Extent

Undecided

Total

Staff 9(18) - - 9(4) 9(5) 27(25%)

Customers 63(54) - - 7(12) 11(15) 81(75%)

Total 72(66.7℅) - - 16(14.8℅) 20(18.5℅) 108(100%)

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In table 4.1 above, it is observed that 67% of the respondents said

Yes to the fact that Nigerian government has been encouraging

communication FDI in telecom services while 19% had doubts and

cannot decide. 9 observed frequency of the staff believed that

government to an extent has been encouraging but, need to do more.

27% of the respondents are the staff while 75% is the customers.

However, none of the respondents said NO or do not know.

TABLE 4.2 Observed and expected frequencies of the possibility of multinational telecom companies’ provision of better quality service.


Here, 60% of the respondents said Yes to the fact that if any of this

multinational companies is national operator carrier, the quality of

telecom services will be better. 21% disagreed totally and 7% had no

Respondents

Responses

Yes

No

Don’t

Know

To an Extent

Undecided

Total

Staff 18(16) 9(6) -(2) -(2.3) -(0.8) 27(25%)

Customers 47(119) 14(17) 8(6) 9(7) 3(2.7) 81(75%)

Total 65(60%) 23(21%) 8(7%) 9(8%) 3(2.7%) 108(100%)

P a g e | 94


ideas. Although 8% believed that if either of the multinational telecom

companies is given a chance to be a carrier, the services may improve

but the difference may not be too obvious. 2.7% of respondents found

it difficult to decide whether it is necessary for the improvement of

telecom services.

TABLE 4.3 Observed and expected frequencies for Nigerian government level of encouragement on communication FDI


Out of the 53% that believed very strongly, 14 is the expected

frequency of staff. However, 15 observed frequency believed so. 17%

of the respondents believed that the GSM services are rarely

accepted in the locality. Unlike the 28% that also responded strongly

Respondents

Responses

Very

Strongly

Strongly Rarely No

Idea

Undecided

Total

Staff 15(14) 12(8) -(4.5) -(0.7) - 27(25℅)

Customers 42(43) 18(23) 18(13.5) 3(2) - 81(75℅)

Total 57(53℅) 30(28%) 18(17%) 3(3℅) - 108(100℅)

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in favour of the acceptability of GSM operator in both urban and rural

communities, While 3% has no idea if they are accepted or not.

TABLE 4.4 Observed and expected frequencies of the accessibility of advanced telecom application


The expected frequency is 28 but 21 observed frequency of the customers

agreed that multinational telecom companies have access to advanced telecom

application more than Nigerian GSM operators. 17% of the respondents disagreed

to this. 21% strongly agreed that international GSM operators are at advantage

when it comes to advanced telecommunication 24 observed frequency of the

customers, out of the 23 expected, has no idea

TABLE 4.5 Observed and expected frequencies of the efficiency in the international GSM coverage

Respondents

Responses

Strongly

Agreed

Agreed Strongly

Disagreed

Disagreed No Idea

Total

Staff 5(6) 16(9) - -(4.5) 6(8) 27(25℅)

Customers 18(17) 21(28) - 18(14) 24(23) 81(75℅)

Total 23(21℅) 37(34%) - 18(17℅) 30(28%) 108(100℅)

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Out of the frequency of the 48.7% expected from the customers, 45 observed

stated that international GSM operators have done good work in their coverage.14

observed, out of the 10.5 expected, believed that their coverage has not met the

expectation of many Nigerians. Therefore, they tick badly in their response.

However, almost 18% of the respondents have no idea on the efficiency of the

coverage from this multinational telecom industry. 60% believed that they have

done well so far.

TABLE 4.6 Observed and expected frequencies of the network services and valuation of Nigerian currency

Respondents

Responses

Very

Good

Good Very

Bad

Bad No Idea

Total

Staff 7(2.5) 20(16) - -(3.5) -(4.75) 27(25℅)

Customers 3(7.5) 45(48.7) - 14(10.5) 19(14) 81(75℅)

Total 10(9℅) 65(60%) - 14(13℅) 19(17.6%) 108(100℅)

Respondents

Responses

Positive Negative No Idea Undecided None

Total

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In the above table, 58% has no idea on the purpose of ZainNigeria

borderless network service. 19 observed, out of the 21 expected frequency of the

customers believed that this service would bring positive impact on the value of the

Nigerian currency. Zero (0), out of the 3.25 expected frequency of the staff, and

believed that the service has either neither positive nor negative impact or effect on

the Nigerian currency. 3.7% of respondents could not decide. However, none

believed that it would have negative impact.

TABLE 4.7 Observed and expected frequencies of more investment attraction into telecom industry


Staff 9(7) - 18(16) -(1) -(3.25) 27(25℅)

Customers 19(21) - 45(47) 4(3) 13(9.75) 81(75℅)

Total 28(26℅) - 63(58%) 4(3.7℅) 13(12%) 108(100℅)

Respondents

Responses

True Not

True

To an

Extent

Undecided No

Idea

Total

Staff 2(3.7) -(3.25) -(7.75) 9(5) 16(7.3) 27(25℅)

Customers 13(11.3) 13(9.8) 31(23) 11(15) 13(21.8) 81(75℅)

Total 15(14℅) 13(12%) 31(29%) 20(18.5℅) 29(26.8) 108(100℅)

P a g e | 98


In table 4.7 above, 31 observed frequency, out of 23 expected of the

customers, believed that the growth of MTN and Zain in Nigeria has made the

economy to be more attractive for foreign investment. From the staff, 16 of the

observed out of the 7.3 expected indicated that they have no idea if the growth of

the company they are employed has made Nigeria a less-regarded high-risk country

for investment. 14% approximately believed that they have truly opened the

opportunities for more foreign investors.

TABLE 4.8 Observed and expected frequencies of the need for more investors


In the above table, 67 observed frequency out of the 58 expected agreed

definitely that the government should give room for more foreign investors to

Respondents

Responses

Very

Definite

Definite Indefinite Extremely

Indefinite

Don’t Know

Total

Staff 17(7.7) 10(19.25) - - - 27(25℅)

Customers 14(23.2) 67(57.75) - - - 81(75℅)

Total 31(28.7℅) 77(71.3%) - - - 108(100℅)

P a g e | 99


invest in the telecom industry. Approximately, 29% of the respondents are very

definite on this issue. However, none of them disagreed.

TABLE 4.9 Observed and expected frequencies of poor infrastructural development on telecom industry growth


In the table 4.9, 14 observed frequencies, out of 13 expected, believed that poor

power supply has an average effect on the GSM operation. While 69% of the

respondents believed that poor power supply has very high effect on the growth of

the GSM operation, 9.25% disagreed. Rather they believed that its effect on the

operation is low compared with other social vices/thresholds encountered in other

countries.

Respondents

Responses

Very

High

High Average Low Undecided

Total

Staff 14(19) 3(1.5) 3(4.25) 7(3) - 27(25℅)

Customers 61(56) 3(5) 14(13) 3(8) - 81(75℅)

Total 75(69℅) 6(6%) 17(16%) 10(9.25℅) - 108(100℅)

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TABLE 4.10 Frequencies distribution of the policy management and multinational telecom companies


From the staff, 11 observed frequencies out of 9 expected, believed that

NCC and NIPC should make sure that the multinational telecom companies

reinvest into other sectors of the economy. 6.48% against 33% of the respondents

have a strong disagreement on this, and vice versa. While another 33% agreed

neutrally, 26.8% also disagreed just like that.

TABLE 4.11 Frequencies distribution of import promotion verses exportation

Respondents

Responses

Strongly

Agreed

Agreed Undecided Strongly

Disagreed

Disagreed

Total

Staff 16(9) 11(9) - -(1.75) -(7.25) 27(25℅)

Customers 20(27) 25(27) - 7(5.3) 29(22) 81(75℅)

Total 36(33℅) 36(33%) - 7(6.5℅) 29(26.8) 108(100℅)

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From the customers, 6 Observed frequency, out of the 10 Expected, said No to

the fact that transnational telecom companies have promoted import against

export. While 17% suggested that multinational telecom companies have

encouraged import of Nigerian services at least to an extent while 12% disagreed

by saying No they do not.

TABLE 4.12 Frequencies distribution of the internet services provided by international GSM operators

Respondents

Responses

Very

High

High

Average

Low

Very

Low

Undecided

Total

Respondents

Responses

Yes No To an

Extent

Undecided Don’t

know

Total

Staff -(6.3) 7(3) -(4.5) 6(4) 14(9) 27(25℅)

Customers 25(19) 6(10) 18(14) 9(11) 23(28) 81(75℅)

Total 31(30℅) 13(12%) 18(17%) 15(14℅) 37(34%) 108(100℅)

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Staff 11(5) - (2) 8(15) - - - (3) 27(25%)

Customers 9(15) 9(7) 53(46) - - 10 (8) 81(75%)

Total 20(19 9(8%) 61(56) - - 10 (9%) 108(100%


From the table, 9% of the respondents cannot decide if international GSM

Operators have helped to reduce the cost of internet services. 11 observed frequency

of the staff believed that they have highly helped. 9 Observed of the Customers

agreed that they have helped while 53 Observed of the Customers believed that

their services can be rated as average. Totally, 56% of the respondents agreed that

it is at average rate.

TABLE 4.13 Frequencies distribution of the digital migration


Respondents Responses

Very

High

High Low Very

Low

No

Idea

Total

Staff 8(9) 13(13) - - 6(4.9) 27(24%)

Customers 28(27) 36(36) - - 13(14) 77(74%)

Total 36(35%) 49(47%) - - 19(18%) 104(100%)

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From the table, 13 Observed out of 13 Expected frequencies of the

staff, believed that the operation of multinational telecom companies

in Nigeria has helped the economy close the gap of digital divide

between developed economy and the developing economy. The 35%

agreed that it has very high influence on this advanced telecom

technology been used in Nigeria today. While 18% has no idea on

this.

TABLE 4.14 Frequencies distribution of who gains more


Here, 37% of the respondents strongly agreed that the unequal share of the

benefits from the telecom investment is more beneficial to the parent enterprise.

Even 11 Observed, out of 6 Expected of the staff, also agreed with the respondents.

None of the respondents disagreed on this and, 40% claimed to have no idea.

Respondents

Responses

Strongly

Agreed

Agreed Disagreed Strongly

Disagreed

No

Idea

Total

Staff -(9.8) 11(6) - - 16(11) 27(24℅)

Customers 38(28) 13(31) - - 26(18) 77(74℅)

Total 38(37℅) 24(23%) - - 42(40%) 104(100℅)

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TABLE 4.15 Frequencies distribution of the need for foreign contact in the telecom industry


Here, 5% seems very certain that Nigerian GSM operators would have

succeed without the international GSM companies coming into the

system. 12% of the respondents also agreed to this. 34% found it very

rare happening. 32 observed frequencies, out of the 28 expected

frequencies of the customers responded that it is very rare. None of

the staff agreed that Nigerian GSM companies would have succeeded

without the presence of foreign contact. 23% of the respondents

claimed to have no idea.

TABLE 4.16 Frequencies distribution of the level of gained knowledge from international GSM operators

Respondents

Responses

Very

Certain

Certain Rarely Very

Rare

No Idea

Total

Staff -(1.3) -(3.25) 9(7) 5(9) 13(63) 27(25℅)

Customers 5(4) 13(10) 19(21) 32(28) 12(19) 81(75℅)

Total 5(5%) 13(12%) 28(26%) 37(34%) 25(23%) 108(100℅)

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Here, 53% of the respondents believed that Nigerian labour economy

has gained telecom techniques exactly through foreign contact. 11%

was undecided if it should be attributed to communication FDI.

However, 26 observed of the customers seem to be very exact about

it while 12% claimed to have no idea.

TABLE 4.17 Frequencies distribution of the effect of social vice on the growth of telecom industry

Respondents

Responses

Very

Exact

Exact Undecided Not at

all

Don’t

Know

Total

Staff -(6.5) 18(14) 7(3) - 2(3) 27(25℅)

Customers 26(20) 39(43) 5(9) - 11(10) 81(75℅)

Total 26(24%) 57(53%) 12(11%) - 13(12%) 108(100℅)


Very High High Relatively

high

Not high Undecided

Total

Staff 4(3.5) -(6) 7(5.5) -(4) 16(8) 27(25℅)

Customers 10(11) 23(17) 15(16.5) 16(12) 17(25) 81(75℅)

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From the table above, 21% of the respondents believed that insecurity

has high effect on the market expansion of telecommunication in

Nigeria. 15 observed out of 16.5 expected customers believed that the

effect is just relatively but 16 observed out of the 12 expected

disagreed totally.

However, 30.5% of the respondents were undecided on blaming

insecurity for any market contraction.

TABLE 4.18 Frequencies distribution of the job opportunities from communication industry


Total 14(12.9℅) 23(21%) 22(20%) 16(15%) 33(30.5%) 108(100℅)

Respondents

Responses

Very

True

True To an

Extent

Not

True

Undecided

Total

Staff 9(13.7) 3(2.7) 15(10.5) 27(25℅)

Customers 46(41) 8(8) 27(31.5) 81(75℅)

Total 55(51℅) 11(10%) 42(38.8) 108(100℅)

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From the customers, 46 observed, out of 41 expected frequencies, believed that

multinational telecom companies has provided opportunities for job seekers 10% of

the respondents truly believed and 51% seems to be very sure. While 27 observed,

out of 31.5 expected of the customers, could not decide and 15 observed frequency

of the staff, out of 10.5 expect could not decide also.

TABLE 4.19 Frequencies distribution of the staff motivation by multinational telecom corporations

Source: field Survey, 2008

From the survey, 19 observed frequency of the customers, out of the

approximately 14 expected, believed that the staff of these multinational telecom

companies must be relatively motivated. 17 observed of the staff do not know if

they should claim motivated or not. The 46% of both staff and customers has no


Highly

motivated

Motivated Relatively

motivated

Not

motivated

Don’t Know

Total

Staff 6(7.67) 4(1.85) -(5) - 17(12) 27(26℅)

Customers 23(21) 3(5) 19(13.9) - 30(36) 75(74℅)

Total 29(28℅) 7(6.8%) 19(19%) - 47(46%) 102(100℅)

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idea. However, 6 observed frequency of the staff out of 7.67 expected frequency

believed that they are highly motivated.

TABLE 4.20 Frequencies distribution of the phone vendors and international GSM operators


From the survey, 39% observed of the customers, out of the approximately

40 expected, believed that most of phone vendors often use or subscribe to the MTN

or Zain mainly for their services. 5.5% of the respondents believed that mobile

shops, outlets, or franchise dealers seldom subscribe to these companies as their

main source. However, 28% of the respondents believed that relatively most of the

phone vendors are using mainly the business line of MTN or Zain or any other

international GSM operators for their business line.

Respondents

Responses

Often Seldom Not

at all

Relatively No Idea

Total

Staff 14(13) -(1.5) -(1.75) 13(8) -(3) 27(25℅)

Customers 39(39.75) 6(4.5) 7(5) 17(23) 12(9) 81(75℅)

Total 53(49℅) 6(5.5%) 7(7%) 30(28℅) 12(11%) 108(100℅)

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TABLE 4.21 Frequencies distribution of the positive influence of the GSM entrepreneurship programme on Nigerian youth


Here, from the staff, 19 observed out of the 9 expected frequency, were very sure

that the entrepreneurship programme and their low cost handsets will help to

improve the livelihood of Nigerian youth. 53 observed out of 46 expected of the

customers said that surely, it will but 11 observed disagreed. The 10% of the

Respondents were not sure that it would positively influence the standard of the

living of Nigerian youth.

TABLE 4.22 Frequencies distribution of the Nigerian development, cheap labour and communication FDI

Respondents

Responses

Very

Sure

Surely Not

Sure

Not at all No Idea

Total

Staff 19(9) 8(15) -(3) 27(25℅)

Customers 17(27) 53(46) 11(8) 81(75℅)

Total 36(33℅) 61(56%) 11(10%) 108(100℅)

Respondents

Responses

Strongly

Agreed

Agreed Undecided Strongly

Disagreed

Disagreed

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From the survey, approximately 4% of the respondents agreed strongly that the

low earnings of the staff of multinational telecom companies do not help the

development of Nigerian economy. Both 12 observed of the staff and 12 observed of

the customers believed that it devalues the standard of the living of Nigerians while

19% of the respondents disagreed strongly that cheap labour from Nigeria lead to

the underdevelopment. 34% disagreed to the response that communication FDI

using cheap labour to under develop the economy.

TABLE 4.23 Observed and expected frequencies of government funding for rural telephony

Total

Staff -(1) 12(6) -(5.5) 8(5) 7(9) 27(25℅)

Customers 4(3) 12(18) 22(17) 13(20) 30(28) 81(75℅)

Total 4(3.7℅) 24(22%) 22(20%) 21(19℅) 37(34%) 108(100℅)

Respondents

Responses

Very

Definite

Definite Indefinite Very

Indefinite

Undecided

Total

Staff 23(10.5) 4(9) -(1.3) - -(6.5) 27(25℅)

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So

urc

e: field survey, 2008

The table reveals that 19 observed of the customers agreed very definitely that

government of Nigeria should provide fund to the multinational telecom companies

to support the rural telephony. 32% of the respondents were definitely in support,

but 5 observed of the staff, out of the 4 expected frequency were indefinite in

support of the provision. None of the staff was indefinite or undecided in this issue.

26 observed of the customers were undecided making it 24% of the respondents

that were undecided.

TABLE 4.24 Frequencies distribution of the rural telephony, village farmers and rural economy

Customers 19(31.5) 31(26) 5(4) - 26(19.5) 81(75℅)

Total 42(39℅) 35(32%) 5(5%) - 26(24%) 108(100℅)

Respondents

Responses

Very True True To an

Extent

Not True Undecided

Total

Staff -(8.5) 11(2) 8(6.5) -(3) 8(5) 27(25℅)

Customers 34(26) 5(2) 18(20) 11(8) 13(16) 81(75℅)

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From the table, it reveals that 31% of the respondents believed that village farmers

has benefited very much from the rural telephony. While 11 observed of the staff

indicated that it is true, 8 observed frequencies believed that it is to an extent.

None of the staff believed that it is not true but 11 observed of the customers, out of

8 expected frequencies believed that it is not true. However, 19% of the

respondents were undecided.

4.2 RESEARCH RESULTS

To test the validity of the hypotheses, three statistical analyses were

employed: Correlational analyses and chi-square (X2) techniques.

TABLE 4.25 Calculations of Correlational Analyses and Chi-square (X2) of the Questionnaire Items

Total 34(31℅) 16(15%) 26(24%) 11(10℅) 21(19%) 108(100℅)

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Items Calculated

X2-Value

DF Critical X2-

Value

C Y(X2)

0 - - - - -

1 18.59 4 9.48773 0.383 12.419

2 9.362 4 9.48773 0.2824 8.682

3 10.6526 4 9.48773 0.29963 7.70214

4 13.0979 4 9.48773 0.3278 10.5726

5 22.9536 4 9.48773 0.17528 17.9987

6 6.8548 4 9.48773 0.00356 4.12372

7 38.8548 4 9.48773 0.51437 39.02376

8 20.6468 4 9.48773 0.40126 20.23181

9 14.8946 4 9.48773 0.27644 14.39371

10 22.8995 4 9.48773 0.418257 20.8239

11 25.17277 4 9.48773 0.43176 25.37740

12 20.5329 5 11.0705 0.399680 21.76623

13 0.59158 4 9.48773 0.075207 0.650433

14 31.06191 4 9.48773 0.58468 52.48020

15 4.55585 4 9.48773 0.48311 4.506316

16 10.73408 4 9.48773 0.06116 4.42487

17 9.97111 4 9.48773 0.11888 5.590214

18 13.05628 4 9.48773 0.02948 5.612652

19 9.74012 4 9.48773 0.05073 7.979180

20 7.19445 4 9.48773 0.01096 1.028298

21 23.07716 4 9.48773 0.03664 12.9849

22 6.43893 4 9.48773 0.237192 6.020477

23 33.79516 4 9.48773 0.46819 34.98280

24 30.107746 4 9.48773 0.218001 30.70798

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Source: Fieldwork, 2008

The aim of employing the Correlational analysis is to test the extent

to which the variables explain the growing of the telecom industry.

In testing the significance of these variables it is shown that

majority of the X2–Calculated Value greatly exceed the X2–Critical

Value. The table 4.25 shows that X2-Value Calculated is greater than

that of X2–Value Critical in seventeen (17) out of twenty-four (24)

sampled items. Only seven (7) items show lesser X2-Value

Calculated.

4.3 HYPOTHESES TESTING

The three hypotheses were empirically tested in this study using the

most related items from table 4.25. The results of the empirical tests

are shown below:

HYPOTHESIS 1

H0: Communication FDI has no significant benefit from

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the cheap Labour provided by Nigerian Labour Market

H1: Communication FDI has significant benefit from

the cheap Labour provided by Nigerian Labour Market

TABLE 4.26 The Significance Benefit from the Nigerian

Labour Market

Item Cal.-X2 Value

DF Critical-X 2 Value C Y( X2)

1 18.59 4 9.48773 0.383 12.419

16 10.7340 4 9.48773 0.0611 4.424

18 13.0562 4 9.48773 0.029 5.613

19 9.7401 4 9.48773 0.050 7.979

20 7.1976 4 9.48773 0.010 1.028

21 23.0771 4 9.48773 0.036 12.984

22 6.4389 4 9.48773 0.237 6.020


X2 = ∑ (o-e)2

e

df = 4 @ � =0.05 significance

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Decision Rule:

Accept H0 if X2 < X20.05

Reject H0 if X2 > X20.05 =9.48

Since Cal-X2 Value > X20.05 except in the items 20, 22

Therefore, Reject H0 and Accept H1

HYPOTHSIS 11

H0: There is no relationship between the increased

Paid-up Capital with the Federal Reserve System

and Communication FDI in Nigeria

H1 There is relationship between the increased

Paid-up Capital with the Federal Reserve System

and Communication FDI in Nigeria

TABLE 4.27 The Relationship between increased paid-up

Capital and Communication FDI

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Item Cal.-X2 Value

DF Critical-X2 Value

C Y(X2)

1 18.59 4 9.48773 0.383 12.419

6 6.8548 4 9.48773 0.00356 4.12372

7 38.8548 4 9.48773 0.51437 39.02376

8 20.6468 4 9.48773 0.40126 20.23181

9 14.8946 4 9.48773 0.27644 14.39371

10 22.8995 4 9.48773 0.418257 20.8239

11 25.17277 4 9.48773 0.43176 25.37740

12 20.5329 5 11.0705 0.399680 21.76623

13 0.59158 4 9.48773 0.075207 0.650433

14 31.06191 4 9.48773 0.58468 52.48020

15 4.55585 4 9.48773 0.48311 4.506316

17 9.97111 4 9.45773 0.11888 5.590214


X2 = ∑ (o-e)2

e

df = 4,5 @ � =0.05 significance

Decision Rule:


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Reject H0 if X2 > X20.05

Since Cal-X2 Value > X20.05 except in the items 6, 13, 15


HYPOTHESIS 111

H0: There is less Growth Rate of Teledensity in the

Communities even with the Mobile Penetration into

Nigerian Economy

H1 There is high Growth Rate of Teledensity in the

Communities with the Mobile Penetration into

Nigerian Economy

TABLE 4.28 The Growth Rate of Teledensity

Item Cal.-X2 Value

DF Critical-X2

Value C Y ( X 2 )

1 18.59 4 9.48773 0.383 12.419

2 9.362 4 9.48773 0.2824 8.682

3 10.6526 4 9.48773 0.29963 7.70214

4 13.0979 4 9.48773 0.3278 10.5726

5 22.9536 4 9.48773 0.17528 17.9987

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9 14.8946 4 9.48773 0.27644 14.39371

15 4.55585 4 9.48773 0.48311 4.506316

17 34.98280 4 9.48773 0.11888 5.590214

23 30.70798 4 9.48773 0.46819 34.98280

24 30.107746 4 9.48773 0.218001 30.70798


X 2 = ∑ (o-e) 2

e

df = 4 @ � =0.05 significance

Decision Rule:


Reject H0 if X2 > X20.05

Since Cal-X2 Value > X20.05 except in the items 2, 15


4.3 INTERPRETATION OF THE RESEARCH FINDINGS AND

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RESULTS

All the hypotheses have been statistically tested. H0 was rejected. By

implication, the result shows that developing economy has been the

source of workforce for investors. Foreign investors depend on the

growing economy for market and vice versa.

From the baseline, data provided that 53% of the respondents

disagreed that Nigerians are losing because communication FDI is

sucking from their labour market. Asia countries like China,

Malaysia, or Taiwan provides higher labour market for foreign

investors than Nigerians.

The analysis of the pilot testing reveals that 89% agreed positively

that the employment rate has increased simultaneously with the

growth of the foreign-owned investment in the communication

subsector. While 64% agreed that the presences of multinationals

have helped to improve the quality of the skilled labour. From all

indication, what will keep the employment rate to continue its

growing is the support from the household, firms or organizations,

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and government. Nigerians have witnessed FDI in other sectors but

communication subsector has reached the paupers in the streets

more than the others. From the analysis, 28% of the respondents

agreed that it has a relatively positive influence on the standard of

living of Nigerian youth.

Communication FDI paid up huge amount of money to Nigerian

government whenever a GSM operator is issued a license. 56% of the

respondents believed that their assets have helped to reduce the cost

of internet services. With the value and composition, earnings

capability, market acceptability of their services, and/or caliber of

management that revolves their linkages to Nigerian economy and

the globe, 29% of the respondents agreed that international GSM

operators has played a major role in the making of Nigerian economy

a less regarded ‘high-risk’ country for investment. While 71% of the

respondents definitely agreed that room should be provided for more

international GSM investors. 29% of the respondents are very definite

about this. 33% strongly agreed to the responses that they ought to

reinvest part of their earnings to related sectors to further growth of

their industry but not on insistence. However, 26% disagreed with

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this totally. 37% thinks that whether Nigerians are gaining or not

their parent enterprises are benefiting more in terms of capital flight,

tax waivers e.t.c. After all, 30% accepted that they are promoting

importation of services more than exporting as regard to technology

and/or skilled labour. GSM operators have their cell sites mounted at

different strategic location. 53% has very strong belief that their

networks services have been accepted in almost all localities even

with the problem of ethnicity, dichotomy or unrest from NigerDelta.

28% also have strong belief but 17% believed that they have rarely

achieved what is expected from them. 69% believed that it has very

high effect on the growth of telecommunication in communities.

Though 9.25% believed that, it has low effect on the community

development. Most mentioned the facts that it has helped farmers in

marketing their cash crops and their other trading. It has also

reduced road traffic in mainly overpopulated areas. In effect, the

efficiency of their coverage in the rural communities has been

regarded by 60% to be good, but 13% thinks that they are very bad.

Some of the respondents think that poor infrastructural development

has been a cause. It might have caused high cost of tariff in calls.

Relative to similar damages, they also suffer in other countries such

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as extreme weather, which sometimes causes real structural

damages on facilities, and this is rare in Nigeria. The respondents

believed that multinational telecom companies should not use it as an

excuse for their poor services.

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an analysis of foreign direct investment and growth of the communication subsector: a study of nigerian telecommunication industry eze, edith uchenna dec.,2008

The interdependency by

the less developed

countries for financial

loans or grant on the

developed economy has

not helped the countries

economically. There is

need for stronger foreign

contact that will

encourage challenges

and improvement of

human resources.

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CHAPTER FIVE

5.0 SUMMARY, RECOMMENDATION, AND CONCLUSION

5.1 SUMMARY OF THE STUDY

The aim of this study is to provide a comprehensive analysis on the

relationship between communication FDI and its effect on the growth

of the Nigerian economy vis-à-vis telecommunication industry.

An investigation is carried out to analyze the impact multinational

telecom companies have on Nigeria employment rate. In addition, an

examination was done on the effect the paid-up capital from

communication FDI had on the Federal Reserve System as well as

assessing the quality of services provided by these telecom

companies to meet the demand of the consumers, and development of

urban-rural communities.

The research findings reveal that most of the respondents can really

justify if Nigeria has an efficient labour market for the foreign

investors in spite of the brain drainage. More on this, majority of the

respondents believed that the presence of communication FDI in

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Nigeria has helped to improve the quality of the skilled labour, in the

sense that course training have been

given to the staff of such companies. Communication FDI according to

some respondents has encouraged disguised unemployment with

this “umbrella people” at every side and corner of streets, roads,

paths, etc. Most respondents do not see the issue of cheap labour as

a source of underdevelopment, since it has helped to uplift the

standard of the living of most Nigerians. Besides, it is seen as an

alternative for job seekers, low-income earners, and has rendered

services demanded aggregately.

To add more, some of the respondents stated categorically that the

indigenous companies in the race have not motivated their staff more

than the foreign-owned companies have. In the issue of who gained

more, some of the respondents believed that part of their main

objective with corporate affairs commission might be to make profit.

Nigerians are not losing because their investment must have yielded

to the aggregate demand. Farmers in the villages have benefited from

the rural telephony. At least it has helped to reduce the frequency

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cost especially in the marketing processes. Besides, Nigerians have

no alternative since they have no comparative advantage over other

industrial countries.

Moreover, it is believed that Nigerian has gained re-engineering

system from the technology transfer from these foreign trading. Its

devices provide effective communication over wider distances and

even through walls and ceilings. The above-mentioned research

finding was obtained with the structured questionnaires distributed

to the Enugu urban geographical coverage. The researcher reached

the staff of MTNN and Zain in their offices as well as companies at

their neighborhood. Those handset repairers at Ogui Road, Zik

Avenue, main market and the phone vendors within the areas were

sourced for data. While the questionnaires were distributed,

interviews were carried out as well. Related literatures were

reviewed and secondary data was retrieved from it and online. A

sample size of 108 units was selected randomly from each stratum.

At the surveying, respondents were selected as far as they met the

selection criterion. The statistical tools used to determine the

standard error of mean was chi-square(X2). The tools used to

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calculate the degree of relationship between the variables is the

Pearson’s coefficient of contingency, and Yates’ correction formula.

5.2 POLICY RECOMMENDATION

The presence of wireless phones has changed the face of Nigerian

market. Nowadays, with the advanced telecommunication, buyers

and sellers have ease flow of communication, making it a key driver

of trade. Therefore, there is need for this following recommendation to

address:

1. These multinational companies need to adopt grassroots

approach to reach rural communities for their corporate social

responsibilities. If they use practical appraisal or rapid rural

appraisal (RRA) technique to reach the needs of the peoples,

they will be able to assess the needs of the communities and

assist them according to the scale of preference. This will help

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them in relation building and market expansion of their

services.

2. One of the problems Nigeria has is keeping data or records. The

researcher cannot confidentially state the rate of profitability

from the communication FDI. This is because of poor statistical

report on their transaction in the Nigerian stock market. Unlike

the developed economy that reviews their economic situation

through electronic media to encourage competition, information,

and marketing. If these multinational corporations are opening

up to the developed nations, why are they not doing the same in

Nigeria? Steps should be taken to see that there are changes in

their report reviews.

3. NCC has a work to do on stable market pricing with the GSM

operators. This will help the new coming investors, such as

Etisalat mobile operator, to fit into the telecom industry and

encourage competitiveness in the telecom market.

4. The federal government organization such as NDE should

collaborate with multinational corporations to provide

microenterprises, skill training etc as part of their corporate

responsibility to the communities. It will help in the check and

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balance of their activities and report on community

development.

5. The government should encourage domestic market in

manufacturing made-in-Nigeria phone handsets, recharge

cards, simcards pack, microchips, and other accessories. China

is one of the biggest labour markets in the globe because of the

determination of the government and the Chinese people.

Therefore, government inclusively should encourage the

roadside handset repairers. This will help in the

entrepreneurship development programme and improvement of

the human capital sustainability.

6. The issue of insulation of mast in highly density over populated

areas has received rejection from residents. They opposed

because it has been medically proved that the masts generate

rays that causes cancers and other health hazards.

Government should use policies and programmes to fight for the

welfare of the people by stopping these companies insulate

masts in residents’ compounds. Such companies should have

an alternate for life-saving of their customers; after all, the

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multinational companies will not go contrary in the developed

countries.

7. Since poor infrastructural facilities have been one of the

problems, these multinational corporations are facing in

developing nations. They have made an effort for the success of

their business by providing high stand by generator for their

base stations in communities, efforts should be made to see that

they are not vandalized through any means. Therefore, the rural

elites or local leaders should see that the community policing

protects them.

5.3 CONCLUSION

Although Nigerian GSM operators are not doing badly, it is a truism

that foreign contact in developing economy still provide the backbone

on which this networks runs. The saying, ‘necessity is a sob that

aids digestion,’ explains the reason why Nigerian government is

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cutting out all weeds to make the environment conducive and healthy

for foreign investors.

NCC empowered and mandated to act as a watchdog has so far so

good, catch more fatty bones from the global market for the growing

of this subsector. Just as Ernest Ndukwe states, “Digital wireless

and mobile communications systems can help Nigeria leapfrog into

the circle of the world’s information-rich economies.” This research

has recognized the effect of communication FDI in the aggregate

output. From all indication, its values is shifting out from ‘gain – loss

– gain,’ rather it is progressively shifting to ‘gain – gain – gain.’ In

other words, it may not be quantify as highly significance, yet it is

encouraging for international investors to invest and reinvest back

into the economy as far as the capital flight is on check.

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APPENDIX I

Institute for development studies University of Nigeria, Enugu Campus, October 3, 2008 Dear Respondents, I am an MSC student in the above-mentioned institute conducting a project research on the analysis of Foreign Direct Investment (FDI) and the growth of the Communication sector in Nigeria with a study on the Nigerian Telecommunication industry. This field surveying is to enable me to gather relevant information for the statistical data analysis. You are kindly requested to answer the questions very objectively.

I solicit your cooperation in responding to the questions, which are purely for academic purpose, and should be treated in strict confidence.

Thanks in anticipatory co-operation

Yours Sincerely,

--------------------------------------- Eze, Edith Uchenna PG/MSC/06/46348

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APPENDIX II

PERSONAL INTERVIEW

PERSONAL DATA:

1. What is the name of your company?

2. What is your position in this company?

3. What is your academic qualification?

4. How long have you been with the company?

RESEARCH DATA:

5. How will you classify the shareholding of your company?

6. To what extent has your company affected the growth of

telecommunication sector?

7. What is the rate of employing indigenes in your company?

8. How has your company affected job opportunity in the Nigerian labour

market?

9. How far has your company supported the electronic industry based on

technology transfer?

10. How far has your company affected the infrastructural development?

11. To what extent has your company gone with signing MOU agreement in

order to build a good relation with the community?

12. To what degree have your company provided scholarships and skills

development programme?

13. How do you view capital flight in connection with FDI?

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APPENDIX III

THE STRUCTURED QUESTIONNAIRE

The study is to analyse the activities of the multinational companies in communication subsector

and its relation with the growth of the Nigerian telecommunication services. Therefore, given

that you maybe a staff or a mobile phone user/subscriber to any international GSM operator,

you are kindly requested to fill out this questionnaire paper in a self-administered manner.

Sample question:

Please tick the best option

(1) Not at all

(2) Very rarely

(3) Rarely

(4) Don’t know

(5) Often

(6) Very often

(7) To a great extent

How would you rate the impact of these

international GSM operators on the rural

telephony development in your community?

(1) (2) (3) (4) (5) (6) (7)

X

In this question, it is assumed that the respondent marked option (4) to indicate that the

multinational telecom companies has not touched the rural communities since their presence

has not yet been felt.

Research Team:

Prof. Ikechukwu Nwosu ---------------- Project Supervisor

Eze, Edith Uchenna ---------------- Research Student

Contact Address: Institute for development studies

Postgraduate school, UNEC, Enugu State

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QUESTIONNAIRE COMPONENTS

Indicate your response with a mark:

Personal Data:

(i)What is your highest level of educational qualification?

First degree or its equivalent

Advanced degree or its equivalent

Professional

Doctorate degree

(ii) Which of this is your age group?

11-20 21-30

31-40 41-50

51-60

(iii) To what extent can you differentiate multinational telecom companies from Nigerian

GSM operators?

Not at all Very rarely

Rarely Surely

Very surely

(iv)Which of this category do you belong?

A staff of international GSM operator

A mobile line subscriber of Zainnigeria

A mobile line subscriber of MTNN

A subscriber of other international telecom company

Neither of the above

Section A

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(1) Do you think Nigerian government has been encouraging foreign direct investment (FDI) in

telecommunication so far?

Yes No Don’t know

To an extent Undecided

(2) Do you think that if either MTN or Zain is given a chance to be a national operator carrier in

Nigeria, there will be an improvement in the quality of service?

Yes No To an extent Undecided Don’t know

(3) To what extent do you think that communities have accepted the network services of GSM

operators in their locality?

Very strongly strongly

Rarely No idea Undecided

(4) Do multinational telecom companies have access to modern information technological

applications more than Nigerian telecom operators?

Strongly agreed Agreed

Strongly disagreed Disagreed No idea

(5) How efficient is the coverage of Zain or MTN in the rural communities in Nigeria?

Very good Good

Very bad Bad No idea

(6) What impact will the Zain borderless network service have on the valuation of Nigerian

currency?

Positive Negative

No idea Undecided None

(7) Do you think that with the growth of MTNN and ZAIN, Nigeria is less regarded as a high-risk

country for investment?

True Not true at all To an extent

Undecided No idea

(8) The National Communication Commission should give room for new international GSM

operators to stimulate stronger challenges into the system?

Very definite Definitely

Indefinite Extremely indefinite Don’t know

(9) To what extent has the poor power generation affected the growth of GSM operation in

Nigeria?

Very high High

Average Low Undecided

(10) Do you agree that NCC and National Investment Promotion Council should insist that

international GSM operators ought to reinvest their profit in other sector of the economy?

P a g e | 144


Strongly agreed Agreed Undecided

Strongly Disagreed Disagreed

(11) Do you think that this transnational telecom companies has enthused increment in the

import promotion rather than increasing the exportation of Nigerian product?

Yes No To an extent

Undecided Don’t know

(12) To what extent has the presence of the international GSM operators helped to reduce the

cost of internet services to their users/subscribers?

Very high High Average

Very low Low Undecided

(13) To what effect has FDI in telecom industry helped Nigerians bridge the digital divide gap?

Very high High Low

Very low No idea

(14) Do you agree that the unequal share of the benefits from the investment is more beneficial

to the parent enterprise than the host economy?

Strongly Agreed Agreed

Disagreed Strongly Disagreed No idea

(15) With the deregulation of communication subsector, the operation of Nigerian GSM

companies would have been successful without the presence of the foreign contact?

Very certain Certainly

Rarely Very rare No idea

(16) Do you think that Nigerian labour market has gained the knowledge of telecom techniques

from the international GSM operators?

Very exact Exactly Undecided

Not at all Don’t know

Section B

(17) To what extent has the problem of insecurity in Nigeria affected the market expansion of the

GSM services?

Very high High

Relatively high Not high Undecided

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(18) Has the presence of FDI in telecom industry helped to create more job opportunities than

that at the other sectors of the economy in Nigeria?

Very true True

To an extent Not true Undecided

(19) Do you think that the international GSM operators motivate their staff more than those

employed by the Nigerian telecom companies do?

Highly motivated Motivated Relatively motivated

Not motivated Don’t know

(20) Will you say that most of the phone vendors are using mainly the business line of either of

the international GSM operators for their business?

Often Seldom Not at all

Relatively No idea

(21) Do you agree that the GSM entrepreneurship programme and their ultra low cost handsets

have positive influence on the standard of living of Nigerian youth?

Very sure Surely Not sure

Not at all No idea

(22) Will you agree that the use of cheap labour by the communication FDI has lead to the

underdevelopment of Nigerian economy?

Strongly agreed Agreed

Undecided Disagreed Strongly Disagreed

(23) Do you support the universal service provision fund given to the GSM operators by the

federal government in support of rural telephony to reduce their cost of operation/production?

Very definite Definite Indefinite

Undecided Very indefinite

(24) Do you agree that the rural telephony will have positive effect on the farmers and their

business in the village?

Very true True

To an extent Not true Undecided

APPENDIX IV

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Table: 2.2.1 Communication Sector (1991-1998)

System 1991 1992 1993 1994 1995 1996 1997 1998

Telephone 497,975 3,765 376,515 405,586 405,586 396,962 535,155 604,252

Telegraph 58,575 4,644 102,763 20,187 20,187 9,240 3,2147 3,523

Telex 9,282 7,310 635 7,280 7,280 6,549 6,571 6,582

Postal facilities

3,547 3,580 3,602 3,623 3,623 3,982 3,935 3,944

Source: CBN; Nnanna et al 2003

Table 2.2.2: Mobile Subscribers 1998-2006 YEAR SUBSCRIBERS 1998 21’500 1999 25’000 2000 37’000 2001 352’000 2002 1’463’500 2003 3’351’000 2004 9’386’000 2005 [sept.] 16’755’000 2006 [est.] 20’000’000+ Source: EMC and Global Mobile data; Corporate Nigeria

Table: 2.2.3 Sectoral Composition of FDI in Nigeria, 1970-2001 percentages Year Transport and Communication Miscellaneous Services 1970-1974 1.0 2.7 1975-1979 1.4 6.1 1980-1984 1.4 6.5 1985-1989 1.1 5.2 1990-1994 1.7 15.4 1995-1999 0.4 25.3 2000-2001 0.4 21.5 1970-2001 1.1 10.9 Source: CBN Statistical Bulletin (various issues) Ayanwale 2007

APPENDIX V

Table 2.2.4: Telecoms and Technology Forecast

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2004 2005 2006 2007 2008 2009

Telephone main lines (‘000) 1,110 1,384 1,670 2,039 2,348 2,647

Telephone main lines (per 100 population) 0.8 1.0 1.2 1.4 1.6 1.7

Phone sets(‘000) 1,431 1,821 2,254 2,802 3,484 4,331

Mobile subscribers(‘000) 7,644 10,689 13,122 15,369 17,546 19,625

Mobile subscribers (per 100 population) 5.6 7.6 9.2 10.5 11.7 12.9

Internet users (‘000) 729 950 1,185 1,449 1,923 2,461

Internet users (per 100 population) 0.5 0.7 0.8 1.0 1.3 1.6

Personal computers (stock per 1,000 population) 10 11 11 11 12 12

Telecommunications investment (US$m) 214 240 367 467 595 758

Source: Pyramid research economic intelligence unit; Corporate Nigeria 2006/2007

Table 2.2.5: Growth of the Nigerian Telecommunication Industry

2000 2001 2002 2003 2004

Fixed 553,374 600,321 702,000 888,534 1,027,519

Mobile 35,000 266,461 1,569,050 3,149,472 9,174,209

Total 588,374 866,782 2,271,050 4,038,006 10,201,728

Internet User 107,194 153,350 420,000 1,613,258 1,769,661

Internet Penetration 0.1% 0.1% 0.3% 1.3% 1.5%

Net New Additions (Fixed) 80,058 46,947 101,679 186,534 138,985

Net New Additions (Mobile)

Fixed

- 231,461 1,302,589 1,580,422 6,024,737

Net New Additions (Total) 80,058 278,408 1,404,268 1,766,956 6,163,722

Teledensity 0.46% 0.72% 1.89% 3.36% 8.50%

Fixed Growth % 16.9% 8.5% 16.9% 26.6% 15.6%

Mobile Growth % - 661.3% 488.8% 100.7% 191.3%

Total Growth % 15.7% 47.3% 162.0% 77.8% 152.6%

Growth in Internet Users % - 43.06% 173.88% 284.11% 9.69%

Teledensity Growth % 16.7% 46.9% 162.5% 77.8% 153%

Source NCC, FOS 2006

APPENDIX VI

Table: 2.2.6 Total Connected Lines and Teledensity Operator 2001 2002 2003 2004 2005

Fixed 600,321 702,000 872,473 1,027,519 1,223,258

Mobile 266,461 1,569,050 3,149,472 9,174,209 18,587,000

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Total 866,782 2,271,050 4,021,945 10,201,728 19,810,258

Teledensity 0.73 1.89 3.35 8.50 15.72

Source: NCC, FOS, 2005

Table: 2.3.1 Nigeria: Foreign Direct Investment, 1970-2002

Year Nominal FDI FDI as percentage of GDP Real FDI

Nm Nm

1996 1,112,995.0 4.06 42,189.27

1997 110,452.7 3.89 3,857.62

1998 80,750.4 2.92 2,564.16

1999 92,792.5 2.91 2,763.66

2000 115,952.2 2.39 2,955.09

2001 132,433.7 2.39 3,102.90

2002 225,036.5 3.93 4,368.37

Source: CBN Statistical Bulletin (various years); Ayanwale 2007

Table: 2.3.2 Fixed Assets at Cost (Transport and Communication) (=N=’000)

Year Real Estate Machinery & Equipment Furniture & Fixtures 2001 763,412.0 208,904.0 14,639,619.0 2002 768,135.0 214,320.0 14,642,463.0 2003 9,813,013.0 1,992,084.0 15,689,265.0 2004 20,666,866.6 4,125,400.8 16,945,427.4 2005 12,033,032.4 7,538,707.7 18,955,287.2 Source: External Sector Statistic, Central Bank Of Nigeria Annual Report, 2006

APPENDIX VII

Table: 2.3.3 Cumulative Foreign Private Investments in Nigeria Analyzed by type of activity (N, 000) Transport and Communication Year Paid-UP Capital & Other Total Percentage Reserves Liabilities Dist. of Total 1996 261.6 224.0 485.6 0.4 1997 285.8 386.8 672.6 0.5 1998 302.4 386.8 689.2 0.5

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1999 320.4 499.9 820.3 0.5 2000 320.4 499.9 820.3 0.5 2001 342.4 612.9 955.3 0.6 2002 890.4 845.9 1,736.3 1.0 2003 1,749.9 1,140.6 2,890.5 1.6 2004 2,707.6 1,573.5 4,281.1 1.7 2005 3,519.9 2,045.6 5,564.4 1.7 Source: CBN 2006

Table: 2.3.4 Components of Paid-Up Capital Analyzed By Holder (Transport and Communication N, 000) Year Common Stock Held By: Preferred Stock Held By: Nigerians Overseas Nigerians Overseas Parent/Affiliate Non-Residents Parent/Affiliate Non-Residents (1) (2) (3) (4) (5) (6)

1996 18,151.0 16,630.0 3,791.0 - - - 1997 20,786.0 23,366.0 3,791.0 - - - 1998 20,786.0 23,366.0 3,791.0 - - - 1999 20,786.0 23,366.0 3,791.0 - - - 2000 20,786.0 23,366.0 3,791.0 - - - 2001 20,786.0 23,366.0 3,791.0 - - - 2002 24,943.0 28,663.0 4,549.0 - - - 2003 39,909.0 45,861.0 7,278.4 - - - 2004 47,890.6 55,033.0 8,734.1 - - - 2005 62,257.7 71,542.9 11,354.3 - - - This represents the cumulative paid-up share capital (excluding reserves) in all foreign-owned companies in Nigeria

(1) Parent company is business enterprise which has controlling interest over and numbers of others affiliated to it with those located at different countries

(2) Non- Resident Shareholder is foreign investor in an affiliate company which does not hold share capital in the parent company located outside the country

Source: CBN, 2006

APPENDIX VIII

Table: 2.5.1 MTNNigeria market information and result

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Population (million)

Mobile penetration (%)

Market share (%)

Pre-paid/postpaid mix (%)

Revenue (Rm)

EBITDA (Rm)

Capex (Rm)

ARPU (US$)

Subscribers (000)

Data % of revenue

* Uuaudited 12 months

2006

138,9

19

46

99/1

14 900

8529

3674

18

12281

3

2005*

138,0

13

47

99/1

11377

6051

5249

22

8370

2

Source: Mobile telephone networks 2006

Table2.5.2: Mobile Cellular Operators in Nigeria

Operator System Launch Subscribers Annual Market Market Project

2005 Growth Share Share

2005 2005 2004

MTNNigeria GSM900/1800 08/2001 7’667’000 196% 50% 43.8% Y’hello Bahn

CELTEL GSM900/1800 06/2001 3’630’000 179% 21% 24.7% Share.Ourworld

Globalcom GSM900/1800 08/2003 4’165’000 220% 20% 23.1% Glo

MTEL GSM900/1800 03/2002 1’293’000 72% 9% 8.4% Talk the Talk

Total - - 16’755’000 182% - - -

Source: Corporate Nigeria2007/2008; Field Survey 2008

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2.5.3 CELTEL KIOSK AT OWERRE-UGWU, EDEM ANI


FIG 2.4.1 CELTEL PHONE VENDOR AT AMAECHI IDODO

INSTITUTE FOR DEVELOPMENT STUDIES

FIG 2.4.1 CELTEL PHONE VENDOR AT AMAECHI IDODO

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Abia State ADs

FIG 2.5.1 ENTREPRENEURSHIP EMPOWERMET OF NIGERIAN YOUTHS

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FIG 2.5.3 RURAL TELEPHONY PROMOTION

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2.5.3 CELTEL KIOSK AT OWERRE-UGWU, EDEM ANI

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