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by Michael Malakata

Nigeria Investigates ZTE Cybersecurity Contract

Dec 09, 20113 mins
Data and Information SecurityLegalTelecommunications Industry

Critics charge that due-diigence guidelines have not been followed

Nigeria’s lawmakers have given the go-ahead to a joint committee of police, public procurement, debt management and IT officials to investigate China’s ZTE over a $470 million contract for the Nation Communication Security System.

The investigation is supposed to determine whether the award of the project to ZTE conformed to due-process guidelines for government contracts. The committee also has been given the mandate to investigate allegations that substandard material was used by ZTE.

The move by the Nigerian lawmakers highlights the growing controversy surrounding the awarding of information and communication technology (ICT) contracts to Chinese firms in the region.

It comes less than four months after the Ugandan government blocked a $74 million loan from the Import and Export Bank of China (EXIM) meant for a digital migration project, in order to check into allegations of procurement flaws and overpricing. The Ugandan government has not indicated whether the loan process has been restarted.

In Kenya, controversy surrounded the award in August to the Pan African Network Group of China for the country’s digital TV signal distribution operation. Opposition Kenyan lawmakers accused the government of flouting the tender process and knocking local companies out of the bidding.

Nigeria is currently facing security challenges with terrorist groups, including Boko Haram, that are carrying out deadly attacks in several cities in the country.

As a result, the Nigerian government entered into a contractual agreement with ZTE to install the National Public Service Communication System (NPSCS) in the Federal Capital Territories at a total cost of $470 million.

The project was conceived by the Nigerian government to enable security agencies deal with national security challenges and emergency situations in the country.

The project also consists of the installation of close circuit television (CCTV) cameras in many strategic parts of the Federal Capital Territories.

However, allegations have emerged that the awarding of the contract to ZTE may not have been in conformity with the due process in the awarding and the terms of the contract. There are also allegations of lack of transparency in the contract as well as the use of sub-standard material.

The Nigerian Federal Government has already paid out 15 percent ($70.5 million) in advance payment for the project and has signed a sovereign guarantee to the tune of $399 million to enable ZTE to source loans from Chinese government for the project.

“There have been several complains of corruption practices in the Nigerian telecom market. At the same time Chinese companies have also been facing several corruption allegations in Africa and therefore ZTE has to clear its name this time around,” said Edith Mwale, telecom analyst from African Center for ICT Development.

The Chinese government has funded several telecom projects in Nigeria, Africa’s largest telecom market by investment and subscriptions, through loans whose conditions are that supply and installation contracts are given to Chinese companies. China has also been funding projects in other African countries.

Last year, Huawei Technologies was embroiled in a controversy over a tender to lay fiber-optic cable in Uganda. The national transmission backbone and e-government infrastructure was a $106 million project, funded by a loan from EXIM Bank of China. The project was temporarily halted over controversy involving allegations of inflated costs and the use of incorrect cabling.