This week, the Nigerian Communications Commission (NCC) made a shocking announcement: after December 30th, all SIM cards without an associated National Identification Number (NIN) will be deactivated.
Just a week earlier, the Commission suspended the sale, registration and activation of any new SIM cards as part of its audit of the country's subscriber registration database. This has raised a host of questions: can mobile subscribers comply with the registration requirement before the deadline? What will happen if the NCC follows through on its threat? Why is the NCC even doing this?
Before I go any further, let me make something clear: the NCC's directive is a very bad idea. On a scale of charging stamp duties to closing borders, this is as bad as Nigerian government policies get.
What won't happen: Meeting the deadline
The obvious problem with the NCC's directive is that most Nigerians do not have a national ID number. By October this year, only about 42 million people had been enrolled by the National Identity Management Commission (NIMC). This is less than half of the 99 million unique mobile subscribers in the country according to estimates from GSMA Intelligence. Assuming everyone with a NIN is also a mobile subscriber, the number of people that would need to be registered is staggering.
If all 57 million mobile subscribers without a NIN decided to get one, the NIMC would have to enrol more people in two weeks than it has registered in the last eight years.
That is simply not going to happen. Instead, COVID-19 cases are likely to rise as people crowd into NIMC enrolment centres and mobile network operators' offices trying to comply with the policy.
What could happen: An economic catastrophe
Now we've established that compliance by the deadline is not achievable, let's see what happens if the NCC immediately enforces SIM deactivation.
There are currently 207 million active GSM lines in the country. I'll consider the potential impact of the NCC's policy under three possibilities. The best-case scenario is that each of the 57 million subscribers without a NIN has only one active line. That would mean blocking 28% of all active lines in the country by January. On the other extreme, if subscribers with NINs only have one active line registered, then 165 million SIMs are at risk of being blocked, and mobile network providers would lose 80% of their customer base at the end of the year. The most likely scenario is that subscribers with and without NINs have the same number of lines on average, meaning that GSM users would decline by 58% due to the NCC's directive.
The economic consequences would be disastrous. Last year, GSM providers made ₦1.96 trillion in revenues from 184 million active lines—that's an average of ₦5.3 billion earned per day. Let's get a conservative estimate of the potential impact of blocking SIMs without a national ID number. All customers are not equal, so I'll make the standard assumption that 80% of mobile network subscribers are responsible for only 20% of the industry's revenues. This means GSM operators earned about ₦2,600 per line from most of their subscribers last year or a daily revenue of ₦7 per line.
Therefore, even if we suppose that the most valuable customers all have NINs, the industry stands to lose ₦399 million in revenues every day from blocking 57 million SIM cards. Under the worst-case scenario, the daily losses could be as high as ₦1.16 billion. It would be unthinkable to deal such a devastating blow to a sector that currently constitutes 11.2% of Nigeria's gross domestic product (GDP), especially during an economic recession.
And that's just the direct impact on the telecommunications industry alone. Once we consider the knock-on effect of locking out millions of Nigerians from mobile communication and internet access, the costs are beyond any possible benefit of the policy. This would affect everything from logistics to agriculture and financial inclusion.
The socio-economic implications are also significant. NIN registrations are currently concentrated in states with major cities. People in rural and conflict-afflicted areas, the poor and internally displaced, and women are all less likely to have a NIN. Therefore, the NCC’s policy could end up taking away mobile connectivity from some of the most vulnerable people in society.
What will probably happen: A deadline extension
Let's make the charitable assumption that the NCC is aware of the implications of its policy and doesn't actually plan to cripple the Nigerian economy in a single day. Why would it announce something like this?
The NCC may be trying to show Nigerians that it takes the national ID registration exercise seriously. The Commission asked citizens to begin submitting their NINs to mobile network operators in January 2020. Perhaps indicators have shown that most people did not comply with the earlier directive, and the recent announcement is meant to spur people into action. The NCC will likely extend the deadline and continue to put pressure on mobile network operators to speed up compliance.
How much of an extension would we need? Between June and October this year, only about 740,000 people were registered for a national ID number. That's an enrolment rate of 185,000 people a month. At that rate, it would take 25 years to enrol all 57 million outstanding subscribers. However, this low figure was likely due to the pandemic. Under usual conditions, the NIMC's monthly registration capacity is about 500,000 people, and the director-general has pledged to ramp up enrolment to 2.5 million people per month. If he can deliver on this figure, all current mobile subscribers could have a NIN by the end of 2022.
In the meantime, the NCC would have to lift the suspension on new SIM card sales. We shouldn't be blocked from buying SIM cards for the next two years just because the government wants to update its database.
What should happen: Smarter strategies
Here's the thing: what the NCC is trying to achieve isn't bad. In fact, if the national ID database was up and running, a lot of things should get easier. We could just submit our NINs when opening new bank accounts or getting a new SIM card without having to go through a different registration process each time. And the country would not keep wasting precious resources every time an agency decides to do biometric capturing because they could simply get the data from NIMC.
However, Nigerian government agencies need to learn a crucial lesson in policy implementation. If compliance with a policy is low, we should first ask why. Is it because compliance is hard, or are people just unwilling to comply? The NCC seems to believe the problem is the latter, but NIMC's constrained enrolment capacity clearly indicates that ease of registration needs to be fixed first.
Thankfully, there already appear to be steps in this direction. In February this year, the World Bank approved $115 million in financing to support the NIMC's efforts in establishing a national ID database with a target of raising total NIN enrolments to 148 million by July 2024. Nigeria will receive an additional $315 million from the European Investment Bank and the French Agency for development for its identity management system. According to the project appraisal document, NIMC will revise its approach to make the registration process more inclusive: by reducing the number of documents required, making offline registration possible and, most importantly, partnering with other agencies and mobile network operators to supplement national ID registration efforts.
Following through with the proposed changes would vastly improve the ease with which Nigerians can get a national ID. Already, all mobile network providers have been licensed to carry out NIN registration. This would significantly increase the country's enrolment capacity by leveraging their existing SIM registration infrastructure. However, getting everything set up will take time. Until then, the NCC needs to get out of the way.
Want to better understand Nigeria's economy? Register to receive our newsletter.
