Opeke: Digital Economy Still Untapped in Nigeria

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Funke Opeke

The Chief Executive Officer of MainOne, a service provider of internet, voice, data centre and cloud, Funke Opeke, spoke to Emma Okonji about the new national information communications technology  strategy, digital infrastructure in Nigeria, and other  issues affecting  the industry. Excerpts:

 

What is your take on the recently unveiled the National ICT strategy?

Nigeria’s information and communications technology (ICT)sector is now contributing 11.34 per cent of real gross domestic product (GDP), as reported by the Nigerian Bureau of Statistics for third quarter (Q3) 2019. With growing ICT activity in our economy and global acceleration of the 4th Industrial revolution juxtaposed with Nigeria’s macro-economic challenges of slow economic growth and high unemployment, it has become evident that we need a National strategy to leverage ICT to drive economic growth and create jobs.  So, there is no better opportunity as we seek to diversify the economy from our dependence on oil, but to adopt strategies that will enable us leverage ICT to create jobs and economic growth in Nigeria and the recent charge to the Minister to specifically address issues of the Digital Economy is responsive to the challenges we face as a Nation.

 

What are the constraints to developing digital infrastructure?

  When you review the statistics, even though mobile teledensity in Nigeria is close to 95 per cent, broadband penetration still hovers around 35 per cent. Critical analysis shows that majority of the infrastructure we have is concentrated in our urban areas with a glut of submarine cable infrastructure on our shores, and overlapping terrestrial fiber networks in our largest cities and interconnecting them while secondary cities, towns and rural areas are poorly connected.  So, while over the past 20 years, we have benefited from investments in telecoms which resulted in the teledensity we have today, those investments have slowed over the past 10 years and we have not made the kind of comparative progress that we could achieve relative to other countries as broadband adoption has exploded globally.  In order to achieve better broadband penetration, we need infrastructure coverage that does not leave out our most vulnerable citizens. The economics therefore dictates that such infrastructure be deployed as shared infrastructure and that the fees and taxes to deploy the infrastructure cannot be prohibitive for financial viability.  It has become increasingly difficult to deploy infrastructure because there is a belief that every telecoms company is a cash cow and companies must pay various government agencies and even communities numerous fees for Rights of Way (RoW)and Base Station installation to play. These developments deprive our citizens, especially our youth and less privileged access to services, which could help them achieve better financial outcomes. Advanced economies with much higher GDP per capita impose regulation to ensure telecoms infrastructure is shared, and we need to do the same in Nigeria. Shared infrastructure will reduce costs to the operators and translate to price reductions to the consumer.  Given the current economic environment, it is not for government to fund the infrastructure, but it is for government to reduce the barriers and ensure that permits are granted quickly and at low cost, and ensure policies and incentives are in place for companies to adopt shared infrastructure and penalties put in place for not sharing.

 

You refer to the recently released World Bank report titled ‘Nigeria Digital Economy Diagnostic.’ What does this report tell us and why should we care?  

The report indicates Nigeria is capturing only a fraction of its digital economic potential and will need to make strategic investments to develop a dynamic and transformative digital economy. It says that with improvements in digital connectivity, digital skills, digital financial services and other core areas of digital development, Nigeria can fully unleash new economic opportunities, create jobs and transform people’s lives. The report provides an assessment of the state of the country’s digital economy around the five pillars of the Digital Economy for Africa initiative (DE4A); improving digital infrastructure, digital platforms, digital financial services, improving the policy environment for digital entrepreneurship and closing the digital skills knowledge gap, which are key foundational elements of a digital economy.

 

Would you say that the minister’s 8-Pillar strategy addresses the issues raised in the diagnostic? 

The minister acknowledged the diagnostic in presenting the strategy and it is commendable to see a response from government within six months of the minister’s appointment and immediately the diagnostic was released to the public. All of the five pillars highlighted in the diagnostic are included in the national 8-pillar strategy which goes further to address issues of digital literacy, indigenous content promotion and digital society issues which are critical for our National Development. The strategy addresses all aspects of the ecosystem such as innovation hubs/incubators, startups, micro small and medium enterprises (MSMES), government and society at large.

 

How can we increase the number of jobs available through ICT for young Nigerians? Is there any way we can fast-track job creation using ICT? 

We know technology creates jobs. In 2013, MainOne built some fiber in Lagos championed by ccHub and connected some of our start-up companies. Today, we see companies such as ccHUB, Andela, Iroko, Jumia, Paga, Lifebank raising hundreds of millions of dollars in foreign direct investment, creating jobs, and attracting global players like Mark Zuckerberg and Jack Ma to invest in Nigeria. But technology can also be extractive because a lot can be done across virtual borders with no physical presence in Nigeria. So, as we build our National Digital Economy plan, we need to put in place a proper framework to ensure our companies grow to Pan-African and global scale. Many countries do not allow foreign businesses play in certain areas because the indigenous companies need to create local jobs. Such protections are also critical for national security and economic stability in an increasing cyber enabled world.  In this virtual world where almost any service in Nigeria can be delivered from offshore, we need to be deliberate about our strategy so as not to remain simply consumers of technology.  We need to encourage global players to domesticate technology platforms and create jobs here. We need these players to collaborate and invest in our economy. Too much of the profits from the 11 per cent GDP generated by ICT goes to foreign companies rather than grow our economy. If our citizens do not have jobs, we will remain largely unable to afford to consume these technologies over time. So, it is in all our enlightened self-interest to ensure we are creating jobs in Nigeria.

 

The minister’s directive to reduce the cost of data was not positively received by your industry. What is your assessment on the directive? 

 

As a Nigerian consumer, I can identify with the minister’s directive. In addition, these services are utility services, so we need to be careful about affordability and service to our citizens to achieve goals such as financial inclusion. That is the reason why the services are regulated and telcos are issued licenses with conditions. Of course, profit making businesses do not like to be told to reduce their prices. But the minister stands on global best practices in taking this position. In the United States, price caps have been used by regulators in the telecoms industry to meet social goals. In South Africa, the regulator ICASA is currently also requesting that mobile operators reduce data prices or face prosecution. Our regulator is guided by policies set by the minister, so it is not out of place for him to make a policy statement requesting cost reduction.  Obviously, to achieve the reduction, if the operators do not act voluntarily, the telecoms regulator has to enforce the policy position, unless the operators can provide evidence as to why not.

 

In a similar line, the federal government recently signed a letter of intent with the UK Government to develop a broadband strategy that sees an increase broadband penetration level in the country. Do you think this is realistic and what kind of plans would you like to see the strategy address? 

 

We need ambitious goals and we need all the support we can get. There is a lot we can learn from partners who have traveled down this road before, albeit under different circumstances. With a focus on implementation which will only come from our government, we can indeed achieve 66 per cent target by 2025 and hopefully that will enable a digital economy contributing much more to our national well-being.