NIGERIA has been described as the preferred investment location in Africa by the honourable Minister of Communications Technology and supervising minister for Science and Technology, Mrs. Omobola Johnson, saying that Nigeria has lots of success stories within the Information and Communication Technology (ICT) to further attract Foreign Direct Investment (FDI).
Speaking at the just concluded International Telecommunication Union (ITU) organized World Forum in Bangkok, on ‘Spotlight on Nigeria’s Investment Opportunities and Success Stories’ Mrs. Johnson said that Nigeria is very attractive ICT industry.
“The telecommunications sector is the fastest growing of the Nigerian economy and is the fourth largest contributor to Nigeria’s Gross Domestic Product (GDP),” she declared, noting that Nigeria’s sub-sectors are driving growth through infrastructure services, integrated services, end-user devices, and e-commerce.
According to her, on infrastructure, the Federal Government of Nigeria’s policy focus and priority is to accelerate roll-out of robust, reliable, and cost effective ICT infrastructure to increase citizens’ access to ICTs.
Market Indicators, she said, have shown that four undersea fibre-optic cables with combined design capacity of approx 10 Tera bytes per second (TBps) worth some 100,000 kilometres (km) of terrestrial fibre-optic cable, couple with about 20,000 base transceiver stations and boast of about 52 million Internet users, which penetration stood at 33 per cent.
Mrs. Johnson also noted that Nigeria has existing broadband penetration of 6 per cent, while opportunities exist for entities active in deployment of terrestrial fibre-optic networks made up of fibre over power-line; deployment of wireless broadband infrastructure; and satellite networks in particular those providing connectivity to rural areas.
Specifically on infrastructure, Mrs. Johnson said that MainOne Cable Company Nigeria Limited is a success story, pointing out that it was founded in 2008 to develop first open access, private submarine cable in West Africa and owned 100 per cent by African institutions with Nigeria having 78 per cent interest.
The entrance of MainOne, she said, as a leading provider of wholesale Internet services in West Africa brought about crashed price of wholesale Internet by over 80 per cent on market entry, whereas the initial group capitalization of stood at $240 million, that is $120 million in equity as well as $120 million in debt from African Development Bank, DEG, First of Nigeria Plc (FBN) and Skye Bank and was later refinanced by Nigerian banks.
Another Nigeria’s success story, she named was ipNX which began operations in 2001 with head office in Lagos, branch offices in Abuja, Port Harcourt, Ibadan and Kano as well as corporate international branch office in United Kingdom.
ipNX, she said, owns and manages one of the largest Worldwide Interoperability for Microwave Access (WiMAX) networks in Nigeria launched in 2007, attained 20,000 subscribers by 2010, even as the company is currently building a fibre to the home (FTTH) network infrastructure in Nigeria’s biggest cities of Lagos, Abuja and Port Harcourt. FTTH network, she said, was launched in 2012 is expected to pass over 50,000 homes by December 2013 with a plan to reach two million homes in Nigeria by 2017.
Mrs. Johnson told participants at Bangkok that increasing adoption of ICT tools by the population and increasing local participation in relevant sub-sectors of the ICT industry. Maintaining that market indicators showed that consumer spending in 2010 was US$115bn; projected to increase to US$167bn by 2020, while personal computer (PC) penetration stood at 4.5 per cent with four PC assembly plants in country; producing an average total of 130,000 units. Of all PCs sold in Nigeria in 2011, 30 per cent were assembled and manufactured in the country.
She decried the fact that all mobile phones used in Nigeria are imported, which Mrs. Johnson sees as an opportunity actively in assembling and manufacturing of personal computers, laptops and mobile devices such as tablets, phones to name a few.
On the after-sales support, mostly for digital service centre, the Minister cited an instance with the success story of Otigba Computer Village in Ikeja-Lagos, which is the highest cluster of ICT traders in West Africa with its organic growth, even as the estimated sales revenue currently stood at $30m per month largely on hardware sales comprising new, refurbished and used devices - desktops, servers, laptops, tablets, phones, peripherals.
She pointed out that the sales of mobile devices are on the increase with current estimation to cater for between 60 and 70 per cent of sales. Although sales are mainly of imported hardware with significant opportunity for local Original Equipment Manufacturers (OEMs) to create channels at Otigba Computer Village.
On electronic commerce in Nigeria, Mrs. Johnson said there are wholesale and retail trade sector which accounted for 20 per cent of GDP in 2012; making it the second largest contributor to GDP after agriculture. However, she told participants that retail occurs in predominantly informal, fragmented market places.
“There are a few malls and fewer established nation-wide retail chains,” she declared, stressing that the demographic characteristics of demand cut across the young population which an average of 50 per cent of the adult population under the age of 33 years.
Low and formal salary levels mask the informal and other sources of income amounting to about 43 per cent of adult population earn incomes in the range of N18,000 to N70,000.
Nevertheless, she pointed out that increasing middle class plus increasing levels of disposable income in addition to increasing levels of aspiration spur growth of e-commerce. She underscored the fact that high usage of mobile phones, particularly for social purposes, increases opportunities in “culture” markets – such as music, books and films - that are shaped by social influences.
Yet, another Nigeria’s success story by Mrs. Johnson was the iROKOtv launched in 2011 as a venture in response to perceived lack of easy access to “Nollywood” content in the United Kingdom. iROKOtv initially negotiated directly with and purchased movie rights from Nigerian film producers Initially streamed for free through dedicated YouTube channel “Nollywoodlove” with the aim of attracting the attention of Nigerians in diaspora.
Advertising revenues, she revealed made iROKOtv venture profitable in two months, whereas it subsequently attracted $8m in investment from US-based VC fund Tiger Global and $2m from Sweden-based hedge fund Kinnevik in 2012.
iROKOtv, she said, currently operates a ‘freemium’ business model with about 95 per cent of customers access content for free, while remainder access the site through a subscription service called iROKOtv Plus.
“This service gives subscribers access to brand new Nollywood movies from 2012 onwards for $5 per month,” she disclosed, adding that the company has negotiated content distribution deals with YouTube, DailyMotion, iTunes, Amazon and Vimeo. iROKOtv opened offices in London and in New York in 2012 as well as in Johannesburg offices opened in 2013. In addition to the company partnering with leading technology firms including Nokia, which paved the way for the launch of iROKOtv app on the Nokia Lumia in January 2013.
Government’s role:
Government’s role in supporting the fledgling venture capital, she said, is to enable environment for innovation and ideation just as government seeded ICT focused venture capital (VC) fund to support first round of funding, thus paving the way for larger venture capital investments in the most promising companies.
Nigeria, the gateway to ECOWAS:
She maintained that Nigeria is the gateway to the regional West African market linking the 15 West African countries of the Economic Community of West African States (ECOWAS) with a 300 million population. Pointing out that Nigeria accounts for 47 per cent of the ECOWAS GDP, and 50 per cent of the region’s manufacturing capacity.
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