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Report on Universal Service Funds in the Sub-Saharan Africa Region presented to the ITU Regional Office for Africa.

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Presentation on theme: "Report on Universal Service Funds in the Sub-Saharan Africa Region presented to the ITU Regional Office for Africa."— Presentation transcript:

1 Report on Universal Service Funds in the Sub-Saharan Africa Region presented to the ITU Regional Office for Africa

2 Introduction Prepared by Edgardo Sepulveda Objective is to present the specific experience of UASF's in SSA Region Based on primary data collected directly from the SSA Region countries via a questionnaire and on secondary national-level economic, demographic and telecommunications-related data obtained from international sources.

3 Mechanisms to promote UAS Traditional state-owned monopoly Model License-based roll- out/coverage obligations Market-Based Reform - Competition Market-Based Reform – Privatization Establishment of UASF Government-funded initiatives.

4 Collection The most common and generally most sustainable financing mechanisms is telecoms sector levies/contributions Other forms of financing includes direct funding from Government or the proceeds from privatizations, auctions, license fees The best practice is to calculate sector contributions based on a percent of revenues.

5 Administration Legally independent and separate administrative entity, UASF, that controls the UASF account Legally dependent and distinct administrative entity that controls the USF Third-Party entity administers and manages the USF account Establishment of the USF account only

6 Size Most UASF's mechanisms generally collect less than 5% of sector revenues Usually in the range of 0.5% to 2.5%. The largest UASF's in the world are in India (about US $450-500 million per year collected) and in the United States (about $5,600-6,000 million per year collected).

7 UAS Providers (USPs) Prior-designation of USP ( One operator, typically incumbent fixed operator, is obligated to provide/maintain designated services in designated area ) ; Project-by-project selection of USPs (the designation, on a project-by-project basis, of one operator to provide and maintain, on a mandatory basis the UAS)

8 UAS conceptual framework

9 Countries in the Study 48 ITU Member-States in the SSA Region A total of 26 countries responded to the Questionnaire by May 6, 2009 22 Non responders

10 26 Responder Countries

11 22 Non-Responder Countries

12 UASF's in Responder Countries 18 out of the 26 countries have legally created UASFs 7 of the remaining 8 countries not yet created UASF's expect to create it in the future 10 countries have operational UASF's (collect or disburse monies) oBurkina Faso/D. R. Congo/Ghana/Ivory Coast/Madagascar/Mali/Mauritania/Nigeria/ Rwanda/Togo

13 Collection & Disbursement Collection per year about US$ 118 Ms Total cumulative of about US$ 396 Ms Disbursement cumulative total of about US$ 38 Ms oGhana/Madagascar/Nigeria/Rwanda/Togo ocumulative total disbursements 9.6%

14 Administration & Governance of UASF's Administrative Entity or Account oNo Disburse > Account only oYes Disburse > Administrative Entity & Account Distinct and Separate oNo Disburse > Account managed by the NRA oYes Disburse > Distinct, but not Separate Single or Multi-sector ono significant difference between the No and Yes Disburse

15 Administration & Governance of UASF's (ctnd) Governance of UASFs oNo Disburse > Management Committee, chaired by a Minister oYes Disburse > governed by a Board of UASFs or NRA FTE staff in UASFs oNo Disburse > 0 (zero) full-time equivalent staff oYes Disburse > is About 9 Strategic and/or Operational Plan oNo Disburse > is No oYes Disburse > is Yes

16 Administration & Governance of UASF's (conclusion) UASF's that have been established as distinct Administrative Entities, governed by a Board (of the UASF or the NRA) with a handful of dedicated staff and a strategic plan are more likely to be able to disburse USF monies.

17 Projects & Modalities of UASF's No significant variation between countries with respect to the Projects awarded and the Project-related modalities : oMost countries have implemented 3 or 4 types of projects oMost Projects were awarded based on a competitive selection process, and the subsidy level was established by selected candidate based on its proposal. oIn terms of services, there was a focus on some combination of public voice access, private voice service and public Internet access. oGenerally, most countries allowed all eligible operators to participate in the selection process. While there was some cost-sharing, in most cases the projects were 100% UASFs financed.

18 Consultant Analysis Countries followed reform-oriented recs to create/establish UASF's Legal/administrative framework of UASF's in Countries is consistent with those of outside the SSA Region Collection mechanism of the UASF's is consistent with those of outside the SSA Region.

19 Consultant Analysis (Ctnd) The disbursement mechanisms UASF's is consistent with those in low income countries outside the SSA Region Note that the disbursement ratio issue is likely also a problem among those Non-Responder Countries that have established UASF's

20 Consultant Recommendations Rec #1: Establish a UASFs as a distinct Administrative entity, governed by a Board (of the UASFs or the NRA) with a group of dedicated staff. Rec #2: Make it a legal requirement that the UASFs shall operate based on a Strategic Plan.

21 Consultant Recommendations (Ctnd) Rec #3: Outsource the UASFs disbursement function to professional third- party commercial entities. Rec #4: Establish a sunset provision on UASF's so that their performance may be reviewed every 4-5 years and they may be disbanded if necessary, with any surplus monies returned to the operators in proportion to which they paid and/or transferred.

22 Consultant Recommendations (Ctnd) Rec #5: Establish a graduated collection amount, with a relatively modest maximum in the range of 1- 2% of sector revenues that varies year-by-year depending on the demonstrated capacity of the UASFs to disburse.

23 Consultant Recommendations (Ctnd) Rec #6: Undertake practical capacity- building based on learning-by-doing, including the identification, design, tendering and awarding of projects. The initial focus of such activities could be on targeted pilot projects involving limited geographic areas, rather than large-scale national deployments. The pilot projects should be designed to maximize a successful outcome while also providing step-by-step implementation experience and support for the UASF's.

24 Consultant Recommendations (Ctnd) Rec #7: International and regional development partners do not generally need to focus on providing subsidy financing – money is not an issue for UASF's in Responder Countries. Rather, they should focus on providing hands-on and comprehensive technical assistance to help the UASF's disburse once they have been established.


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