‘Why Nigeria is losing ICT investments to other countries’

‘Why Nigeria is losing ICT investments to other countries’

Funke Opeke

Funke Opeke is a Nigerian electrical engineer, founder of Main Street Technologies and Chief Executive Officer, MainOne Cable Company, a leading communications services firm based in Lagos State, with spread across West Africa. In this interview with ADEYEMI ADEPETUN, Opeke spoke on why Nigeria is losing ICT investments to other African countries. While calling for more measures towards broadband development in the country, she admitted that her company was yet to meet the expectations of its shareholders. Excerpts: 
 
What is your assessment of Nigeria’s efforts at enthroning a broadband regime?
The economic recession in the last two years have slowed us down, the plan was put in place in 2013, to achieve certain benchmarks by 2018 and many others by 2020.  The general consensus across the industry now is, we have a lot to do as a country to achieve those set targets for 2018.
 
In parallel, we have examples from South Africa, and Kenya, especially as it relates to the strides they have made. The process appeared to have slowed down a bit in the country, some people even said we have reached an impasse, but I think it is time to get it done as fast as we can. We can’t afford to be left behind. There have been lots of discussions about Information and Communications Technology (ICT), and broadband not being a telecommunications operators issue alone, but a national development, which mean that the drive for broadband penetration should be an overall economic agenda of the country.
 
It is also important that in the development of ICT, and penetration of broadband Internet among others, we should not forget the area of ease of doing business in the ICT sector. It has become critical that we get things right in order for us to move forward as a nation and be able to attract investments.

As a major stakeholder, what are those things that can fast-track Nigeria’s move to deepen connectivity?  
I think we should work on infrastructure sharing, create the enabling environment (a relaxed tax environment, no over regulations and others), ensure national fibre backbone, InfraCos should be licensed etc.Stakeholders have given concrete examples of how those things can be addressed, building of local content, business application, metrics for broadband enablement, data stored locally at data centres. When all these are in place, ICT will impact healthcare, education, transportation, and many others.

What is the situation with your InfraCo licence?
We have started so many things. If you look around, you would have noticed that. Though, we are waiting for some permits to build some other needed infrastructure.

Nigeria recently lost a major ICT investment of about $30b to South Africa, what is your take on this?
We clearly have some catching up to do especially when Nigeria, which should be the largest market in Africa, is being left out of investment announcement compared to Kenya, South Africa, and the others.
 
Ordinarily, by now Nigeria should have been leading economic and investment discourse on the continent, but I think some challenges are repelling investments. Nigeria is clearly lagging behind. Factors like harsh economic environment, poor and lack of infrastructure, no ease of doing business metrics, the barriers of entering the ICT and telecoms business in Nigeria are quite high. We also need to recognise that there is competition among these countries in attracting investment and they are creating the right incentives for other nations and businesses to come, which I think we should do too.

What specific measures can help reverse these barriers?
Ease of doing business, enabling environment, ease of building  infrastructure, overhead of taxes, the companies coming are global in nature, so there should be support for the enforcement of the rule of law and contract because  these are global companies bringing in funds into the country.
 
The questions they are asking are: What will it cost me to host my African hub in Nigeria, against other markets? Will it be competitive enough? What additional taxes will I have to pay if I need to expand my infrastructure? How easy will I get the permits to import the technology I require, the security, the costs? What markets are most ready for broadband solutions? Will people be able to afford our services at a reasonable cost?
  
So, those other markets may be smaller in terms of size and  population, for example Kenya, most mobile broadband connections are greater than 10 mbps, which means that Kenyan subscribers can more readily access content compared to Nigeria, and they can also service their neighbouring countries as well.We have the underlying infrastructure but we have not progressed industry-wise in terms of the kind and quality of our service, affordability, the reach of our services. I think we have to go back to the drawing board to achieve that.

Has MainOne met the expectations of its shareholders?
MainOne is yet to meet the expectations of shareholders. We have created value, we are not immune to the challenges every company playing in the international space is affected with. We are however, focused on ensuring the business continues to grow. We are making strategic investments, though, it seems not profitable in the short term, but when we look at it on a long term basis, we believe and our shareholders also believe the company will return value, a huge one for that matter.

Apart from MainOne being an indigenous operator, what other things have kept you going in this terrain?
MainOne has always been about development; we are a business and also focused on developing the society and Nigeria. We are not relenting because the economic decisions are harsh. When you look around, Nigerians still need the services we bring. These services, technology innovations and the support we bring to the market are part of what is absolutely required in greater quantity to help Nigeria get out of the economic challenges we face today. If we are able to do more broadband by bringing it to education, through it we can improve distance learning, impact the quality of education. In the areas of financials, we can deploy those services to banks for them to gain greater efficiency. For instance, we have the FIRS, which is now collocated in the MainOne Data Centre, thereby making a big push to e-FIRS. So, if people pay their tax electronically, we can get more people to pay tax and the government can get more revenue. We see beyond the short term challenges; we see the tremendous impact ICT and broadband can have in terms of transformation on our country and West Africa. We have a long commitment to this region, and we are confident that as growth happens, we will be successful, even as a Data centre operator.

How is MainOne able to run a Data Centre efficiently in an environment with erratic power supply?
It is challenging that our market is not attractive relative to other markets because of the cost of doing business here is high, but if we refuse to do business here, then we are not helping the cause of businesses that have to exist here.   
 
What we have been able to do at our Data centre is to provide that economies of scale that sees banks, Fintech companies, eCommerce companies that want to run here can get something cost effective by coming to us, and sharing the benefits of the economies of scale than trying to do it on their own. But, it is still more expensive compared to the global market where power is more reliable, affordable and they do not have to pay for those extra charges to get the services delivered to them.

If that segment is profitable, are you seeing fast adoption?
We are seeing adoption but not a faster one because of some of the environmental issues we have in Nigeria. When we talk with colleagues in South Africa for instance, the level of power disruption they had a few years ago is much lower than what we had here because as soon as it happened, all their big businesses realised they had no business buying big generators and they just moved to commercial Data centres. Then again, with a little bit of a better environment, rule of law, contract enforcement, accountability, better infrastructure so it was easier for them to see that adoption. Here, we still have to do a lot of convincing to do in Nigeria, to woo offshore investment and indigenous investors, which we are doing at MainOne.

What are the expansion plans of MainOne?
We are planning to build a Data centre in Sagamu. We are looking at strategic point of presence. Currently we have in several states, the southern part of the country, across West Africa – Ghana and especially in Nigeria, to meet the needs of our customers.
 

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