Report on Universal Service Funds

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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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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.

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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.

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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.

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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

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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).

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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)

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UAS conceptual framework
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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

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26 Responder Countries
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22 Non-Responder Countries
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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)
• Burkina Faso/D. R. Congo/Ghana/Ivory
  Coast/Madagascar/Mali/Mauritania/Nigeria/
  Rwanda/Togo

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Collection Disbursement

• Collection per year about US 118 Ms
• Total cumulative of about US 396 Ms
• Disbursement cumulative total of about US 38 Ms
  
• Ghana/Madagascar/Nigeria/Rwanda/Togo
• cumulative total disbursements 9.6

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Administration Governance of UASF's

• Administrative Entity or Account
• No Disburse gt Account only
• Yes Disburse gt Administrative Entity Account
• Distinct and Separate
• No Disburse gt Account managed by the NRA
• Yes Disburse gt Distinct, but not Separate
• Single or Multi-sector
• no significant difference between the No and Yes
  Disburse

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Administration Governance of UASF's (ctnd)

• Governance of UASFs
• No Disburse gt Management Committee, chaired by a
  Minister
• Yes Disburse gt governed by a Board of UASFs or
  NRA
• FTE staff in UASFs
• No Disburse gt 0 (zero) full-time equivalent
  staff
• Yes Disburse gt is About 9
• Strategic and/or Operational Plan
• No Disburse gt is No
• Yes Disburse gt is Yes

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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.

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Projects Modalities of UASF's

• No significant variation between countries with
  respect to the
• Projects awarded and the Project-related
  modalities
• Most countries have implemented 3 or 4 types of
  projects
• Most Projects were awarded based on a competitive
  selection process, and the subsidy level was
  established by selected candidate based on its
  proposal.
• In terms of services, there was a focus on some
  combination of public voice access, private voice
  service and public Internet access.
• Generally, 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.

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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.

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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

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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.

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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.

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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.

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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.

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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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• THANKS FOR YOUR ATTENTION