Economic View


On the tech scene and digital infrastructure


What is being done to address digital infrastructure issues in Nigeria? What are the most pressing priorities for improving connectivity?

One big challenge is broadband infrastructure, specifically its availability and reliability. In recent years the Federal Ministry of Communications, in collaboration with the private sector, created the National Broadband Plan, which highlighted challenges affecting the entire industry. These included multiple taxation; end-to-end vertical integration and low rates of infrastructure sharing, which led to a lot of unused capacity; cable cuts; and high operational costs caused by providing backup power for base stations. Along with these challenges, the plan included opportunities for stimulating demand and building capacity in the marketplace. One of the successful outcomes from this was that Lagos State significantly slashed its right-of-way fees. It will be great to see more acceleration in the execution of the plan.

What can be done to make online access more affordable?

It’s really about creating an enabling environment that reduces cost drivers. For example, intervening on multiple taxation, and encouraging state governments to reduce right-of-way fees and simplify the obtaining process. Obviously these fees are a source of internally generated revenue for the states, so it is important to show alternative models through which they can monetise, perhaps by using one state as a lighthouse example. Also, policy interventions – such as declaring telecoms infrastructure a critical national asset and requiring the provision of ducts during road construction – can help address the issue of cable cuts. We are seeing more cases of infrastructure sharing, and this should be encouraged.

How would you rate Nigeria’s tech start-up scene? How does it compare against other emerging and frontier markets?

The tech scene is very vibrant at the moment, and we are seeing many start-ups coming through. Concurrently, we have also seen an increase in the level of venture capital funding. According to the “Disrupt Africa” report, in 2016 we had $46.5m in funding for Nigerian start-ups, which was right on a par with South Africa, and we are seeing interesting investors like US-based Y Combinator enter the market. It’s a very exciting time, particularly in the e-commerce space. Players like Konga, Jumia, Wakanow, and Cars45 are examples of start-ups successfully attracting Series A and B funding. This is a very promising trend.

What are the major obstacles facing tech companies in Nigeria, and what is being done to address them?

Access to capital is one issue; infrastructure and the creation of an enabling environment is another. This ranges from infrastructure for power and connectivity, to things like opening and registering a business. From the government’s perspective, there is currently an initiative to increase the ease of doing business by addressing different challenges such as cross-border travel, trade and obtaining relevant permits.
As far as the private sector is concerned, we are seeing the establishment of more tech hubs with increasing support from large organisations. These emerging communities are creating a supportive environment for start-ups and developers to share ideas and learn from each another.

What have been the most impressive innovations in Nigeria, and to what extent can they scale globally?

We are seeing more and more cases of local solutions being created to solve local problems. For example, there is an app focused on the budgeting process to help citizens stay informed about the national budget by comparing its allocation and performance against government plans. Another app was created for ride-sharing. Banks have been innovating SMS-based services, there has been a rise in unstructured supplementary service data banking transactions, and we have even seen the development of an app that provides very descriptive directions for locals travelling around Lagos. There is a lot happening in the app world and many solutions are being developed. Some of these apps are only applicable to local situations, but others – like gaming apps – have real potential to scale.