By Dr Ousman Gajigo
Pura recently announced a price floor for mobile data prices, meaning the regulatory agency is prohibiting mobile operators from lowering the prices they offer to customers in their competition for market share. In other words, Pura has taken the extraordinary step of preventing these companies from reducing prices. Local media quoted Pura as stating:
“This measure is aimed at safeguarding the quality of telecommunication services in the country, amidst a severe pricing crisis where data tariffs have plummeted to record lows, making them the cheapest in the world.”
Pura’s core responsibilities
In the telecom sector, Pura’s role should primarily focus on ensuring fair competition, protecting consumers’ interests, and encouraging innovation. Telecom companies can compete on the range and quality of services they provide, with pricing being one of the key levers of that competition. Consumer protection would be warranted in situations where telecom companies engage in collusion rather than competing on price. One of the most effective drivers of innovation occurs when competition drives prices low, forcing all companies to become more efficient or face the threat of market exit.
Once a regulator removes that competitive pressure, the incentive for innovation is effectively eliminated. In other words, preventing telecom companies from competing on price is the one action Pura could take that would go against all of its core responsibilities.
The commercial reality
All mobile operators in the country are supposed to operate on a commercial basis, including the state-owned Gamcel. Qcell, Africell, and Comium are private companies with profit-seeking owners—sophisticated investors who have put millions at stake. These owners are far better stewards of their resources and finances than anyone in government, including Pura.
By stopping competition, Pura is essentially claiming it knows more about the long-term profit strategies and commercial viability of these telecom companies than the companies themselves. Does anyone believe that Pura is better positioned in this regard than the management of these firms? It is the fiduciary responsibility of these mobile operators’ management to determine the best marketing strategies, including offering promotional data packages. Unlike Pura’s management, the tenure of the management in these firms will be determined by their market performance.
I suppose one can forgive Njogu Bah for missing the above point. It is certainly not performances that explain his tenure in the Yahya Jammeh or his recent appointment to head Pura.
Proper regulatory approach
If Pura is serious about regulating telecom companies to ensure Gambian consumers experience a minimum level of quality service, there are far better approaches than prohibiting price competition. The opportunities to insist on better quality existed well before this current competition—why hasn’t Pura acted then?
The claim that data prices offered by Gambian telecom companies are now among the lowest in Africa is questionable. Mobile data prices in The Gambia remain higher than the African average. Short-term promotional offers do not suddenly transform the overall data service landscape. The recent price competition initiated by one of the mobile operators is actually a positive development.
What if intense competition causes one of the telecom companies to fail? Would that necessarily be a negative outcome? Answering this question requires considering whether we have too few, too many, or the optimal number of telecom companies in the country. On a per capita basis, The Gambia has one of the highest concentrations of mobile operators globally. Is this consistent with the rationale provided by Pura?
What is the real reason?
In all likelihood, Pura’s intervention stems from the government favoring a particular politically well-connected company. There must be a specific telecom company struggling to compete with the lower prices offered by its competitors. Instead of competing fairly and allowing the market to reward the most efficient company through consumer choice, one company has appealed to authorities for protection.
This wouldn’t be the first instance of such intervention in The Gambia. We’ve seen similar cases with cement, where the government helped one company (Jah Oil) at the expense of its competitors and the Gambian population, and with GACH, where the government attempted to allocate part of a forest reserve to the company. The question remains: who is the politically connected beneficiary this time
