Liberalising Ghana's telecoms sector - the positives and the negatives

Details: Category: Trends & Forecasts; 11 November 2009; 11147 views

Two Ghanaian journalists, Emily Nyarko and Lawrence Quartey, have been looking at the strengths and challenges that the ICT sector faces in their country. What follows is a shortened version of their recent report on the impact of liberalisation...

Ghana is a country striving to meet its Millennium Development Goal targets by 2015. She has been at the forefront of the ICT revolution in Africa for almost two decades: after liberalising basic telecoms services in August 1994, the country took an important step to embrace the potential of competition to generate growth and innovation in the sector.

This report by telecoms specialists Emily Nyarko and Lawrence Quartey forms part of an assessment of the impact of the liberalisation of ICT trade on the private sector. The project in question falls under the PANOS West Africa Institute's LICOM Project.

In turn, LICOM is short for “The International Liberalisation of Trade in ICT Services: Challenges for the Private Sector and Implications for the Implementation of Public Policies in West Africa." This latter initiative is sponsored by the International Development Research Centre (IDRC) and the Consortium pour la Recherche Economique et Social (CRES). Ghana, Senegal, Nigeria and Benin form part of this project.

To build on the encouraging foundations already mentioned and to make Ghana a knowledge-based information society, her government (consistent with its ICT policy) acknowledged the need to integrate Ghana into the emerging economic order where information and knowledge are fundamental to achieving competitiveness, investment, development of human capacity and good governance.

The basis is that through appropriate use of ICTs in an open, participatory and facilitating environment, Ghana will create wealth and prosperity. To help realise these objectives, the national telecommunication infrastructure must be developed and promoted in an open and competitive environment. The country's National Communication Policy, therefore, defines the framework within which telecommunication will evolve.

Today, Ghana has recorded an impressive performance in the telecoms market, with mobile phone lines exceeding fixed lines by 40:1 and recording one of the highest percentages of mobile phone usage in Africa. With a combined tele-density of more than 50, further potential exists for basic voice and broadband data services (2009 Ghana Telecom market statistics and forecast).

How Ghana liberalised

Telecommunications is one aspect within a wider trend of technological and market convergence; it encompasses broadcasting, information technology and electronic commerce. Liberalisation began in the early part of the 1990s to provide consumers with better, new and less costly services.

Emerging as one of the first countries to lead the way in liberalisation and deregulation in Africa, Ghana encouraged and promoted private sector participation. The effort was to complement activities of the then Ghana Posts and Telecommunications (which had monopoly power), increase coverage, introduce value-added telecoms services and increase subscriber access to terminal equipment.

Ghana launched the Accelerated Development Plan (ADP) for telecommunications which became a blueprint for liberalisation to:

ensure sustained improvement in the availability, reliability and quality of public services;
improve public access in rural and urban areas to telecoms services through the provision of payphones;
expand the coverage of mobile phones; and
enhance Ghana's competitive advantage in the region through provision of high-quality communication services to the business community.
The ADP adopted strategies which included:
privatisation of Ghana Telecoms (Ghana Post and Telecommunication Corporation);
creation of a competitive duopoly by licensing a second national network operator (Westel) with similar rights and obligations as Ghana Telecoms;
data transmission, paging and payphones; and
the establishment of a regulatory agency for the sector.

This gave credence to the broad national policy of Ghana becoming the "gateway" to West Africa.

In 2002, the government began an ICT policy, known as the Information and Communication Technology for Accelerated Development (ICT4AD), to further enhance the liberalisation process. It pursued an ICT-driven socio-economic development policy and plan for the developmental effort and also to facilitate the process to become a knowledge-based information society and economy in the shortest possible time.

Priority areas of the ICT4AD Policy included: Human Resource Development, Education, Governance, Private Sector Development, ICT Products and Services, Industry Development, Agriculture and Agro-Business, ICT Community buy-in, National Health and Research.

Penetration of services

Ghana has witnessed improvement in the penetration of telecoms services due to liberalisation and the ADP framework which encouraged private networks and saw large corporate organisations setting their own networks. The Volta River Authority, the nation's flagship energy producer, for instance, set up its own network to promote effective communication between sub-systems.

The regulatory agency, the National Communications Authority (NCA backed by Act 524, 1996) has had its ups and downs but has largely promoted competition through the regulation of wire, cable, radio, television, satellite and similar means of technology for orderly development and operation of efficient communication services in Ghana. The NCA achieved this feat through set objectives which include protecting operators and consumers from unfair conduct by other operators with regard to quality of communication services and payment of tariffs in respect of the services. The NCA also grants licenses, assigns, allocates and regulates the use of frequencies in conformity with international standards, providing guidelines on tariffs and advising on policy formulation and development strategies for the communication industry.

Ghana’s infrastructure and networks

Services available in Ghana include voice fixed telephony, mobile cellular, data, paging, private networks, and other value-added services. There currently exists a new submarine fibre-optic cable tapped from Voltacom in addition to Vodafone's SAT3 and, most recently, the landing of Glo's submarine cable. Two more fibre-optic facilities will be added to the existing ones very soon and these will help create competition and do away with the current monopoly provider of international bandwidth by Vodafone Ghana as well as support the ongoing convergence of technologies.

Statistics released this year show that as at December 2008 the country's total fixed lines in service were 279,000. However, liberalisation has made mobile phones very attractive to many Ghanaians who want to enjoy flexibility in communication. The country ended January 2009 with an active subscriber base of 11.96 million.

The statistics, issued by NCA, revealed that the number of mobile subscriptions grew by 16.8% of the total subscriber base, followed by Tigo with a subscriber base of 2.8 million or 23% of the total base. Zain Ghana, which launched operations in November 2008, ended January 2009 with 463,824, leaving behind Kasapa with 386,732 subscribers. Glo Ghana has yet to begin operations.

NCA statistics further reveal that mobile penetration in Ghana has reached 98%. One positive gain is the direct result of the implementation of key strategies adopted in the ADP, ie, liberalisation, establishment of a regulatory agency and increased public access to payphones. Problems encountered so far are blamed on the lack of a strong regulatory agency, especially regarding interconnection negotiations.

Experts argue the NCA lacks the full complement of staff, making it vulnerable to the actions of politically supported incumbents and new entrants. Consumers' associations and civil society groups have therefore advocated that the NCA be strengthened for effective development of firmer regulatory oversight.

More info: