FG Orders Deregulation of Airtime Credit Market to End Capital Flight

The Nigerian federal government has ordered the deregulation of the airtime credit and data advance market, a move aimed at curbing capital flight and fostering the growth of indigenous financial technology companies. President Bola Tinubu has reportedly approved the dismantling of the 12-year dominance of South African firm Optasia in this sector.

This decision follows extensive consultations between the Presidency and the Federal Competition and Consumer Protection Commission (FCCPC). The FCCPC argued that Optasia's prolonged market control had stifled competition, limited local participation, and facilitated significant profit repatriation to South Africa. Sources indicate that Optasia allegedly repatriated approximately N3 trillion annually in profits while paying minimal taxes locally.

The FCCPC convinced the Presidency that opening the market would support the administration's economic agenda, which emphasizes promoting local content, strengthening the digital economy, creating jobs, and retaining more value within Nigeria's financial system. The deregulation is also seen as a way to encourage competition, support the 'Nigeria First' Technology Policy, generate employment, and reduce the outflow of resources.

Optasia, formerly known as Channel VAS, has operated almost exclusively in the airtime credit and data advance segment for about 12 years, primarily serving MTN and its African affiliates. The FCCPC raised concerns about the company's limited local presence and minimal contribution to Nigeria's technology ecosystem, despite its extensive operations. The commission maintains that deregulation will stimulate innovation, create opportunities for Nigerian firms, and reduce the outflow of capital that has benefited Optasia for over a decade.

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The Commission’s argument is that deregulating the sector will promote competition, the Nigeria First Technology Policy, employment for Nigerians and discourage capital flight to South Africa as hitherto perpetrated by Optasia.