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Sudan Democracy First Group

Out of Coverage: Politics, Corruption and Lack of Transparency in the Telecommunication Sector in Sudan

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Overview

The importance and function of the telecommunication sector

The objective and function of telecommunication is to maximize the benefits of scarce resources, especially in developing countries, by facilitating business, reducing costs and enhancing efficiency of production and service industries to make them competitive in the global markets. There are other equally important objectives such as scientific research, free media and social networking.


Telecommunications is a service sector, like education and health. It is considered one of the most important pillars of modern business and is necessary to create ample job opportunities. However, the rise of any economy depends mainly on production, i.e., sectors, companies and institutions producing goods and commodities, which constitute the bones of an economy. Services, however, make up the nerves, so to speak, keeping the structure together and providing it with necessary strength to operate efficiently. When the telecom sector overrides other productive sectors, it is considered a sign of an unhealthy economy, taking into account that services are provided locally and their primary role is to support and improve production, rather than be exported in the case of developing countries. Domestic production whose comparative advantage makes it marketable globally enables the purchase of basic goods and services such as educational, military, and medical services and simple software products.

 

Using the telecom sector as the primary resource for the government’s coffers by levying direct taxes on phone calls and business profits makes this sector a real burden on both the citizen and overall production costs. The value-added tax (VAT) on telecommunication services has been raised progressively from 10% in 1999 to 20% in 2001 to 30% in 2012. There is a proposal now to increase it to 35%. Although the growth of the telecommunications sector in Sudan is indicative of increasing globalization and openness, its benefits cannot be achieved without offering consumers a fair chance to choose, be it at the level of phone calls or data service. In this respect, two opposing views present themselves.

 

Economically, the consumer acts according to the quality and price of the service and may not care whether the provider is a national or foreign company. The government, on the other hand, focuses on increasing revenue from telecommunication services in order to meet its expenditures on development and other things. The former could be called an “economic logic” and the latter a “political logic.” A sparring between these two positions comes up at times of crisis, which requires insight from the service regulator in each country.


On the other hand, the nature of the telecommunications sector and technological devices is such that it can generate a profound knowledge of its customers: individuals, institutions and companies share dizzying details through telecommunication. This reality invites the attention of the security sector, especially state security. This reality underpins various arguments about whether the sector should be publicly or privately run.

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