Telcos in Somalia finally under statutory regulation as President Farmaajo assents to law

Telecommunications companies in Somalia will now come under a unified statutory regulatory regime thanks to President Mohamed Farmaajo’s assent to the Telecommunications Law Monday.

The President’s signature effectively ends an important phase spanning over a ten a year period to institute a legal framework for the telecommunication, broadcast and internet sectors and opens a new one-implementation.

The law which was passed last month by the Federal Parliament creates the National Telecommunications Authority vested with the power to oversee the licensing of telecommunication companies, allocate frequencies for broadcast companies among other functions. The Authority will also play a critical role in arbitrating in cases from consumers or within the industry, and in safeguarding the rights of consumers. The body will also ensure fair competition in the industry to allow growth.

Crucial with the passage of this law is boosting domestic revenue which Somalia is in much need of to finance its recovery process and cut down on reliance on foreign aid. The government estimated the coming into force of the law could earn it up to $100 million annually. This will be a departure from the current lump-sum negotiated presumptive tax of $5 million.

In the 2017 budget, Finance Minister set a 15% sales tax on telecommunication companies. The World Bank in its second Somali Economic Update mid this year proposed a 5-10 per cent tax on the value of airtime sold by cellphone companies and a further charge on landlines and revenue received by telephone companies for handling incoming international calls.

Implementation of the law is the second major step for the federal government.