Marinho: Access to Finance Remains Challenge for Start-ups

0
Akin Marinho

Founder and Chief Executive Officer of Fiam Wifi, Mr. Akin Marinho, in this interview, speaks about how majority of Nigerians are penalised for buying data in small bits, and the need to make internet access affordable for rural dwellers. Emma Okonji presents the excerpts:

You recently launched an internet connectivity service in Lagos with plans to offer the service in densely populated communities. Why target rural communities?

I started Fiam WiFi in 2017 after leaving Capcom Telecom as Head of Business Development and Strategy in 2016. There are two co-founders, Robert Jibunoh, a former colleague from my time at FBN Capital, who is our chief financial officer (CFO) and Tola Fadeyibi another former colleague of mine from my days as a lawyer and she is our chief operating officer (COO). We currently have about 80 employees.

Fiam WiFi provides internet connectivity by installing Wifi hotspots to high density lower income communities and rural communities. We were licensed by the NCC in 2018. We commenced full commercial operations this year after spending the last few years perfecting our business offering. We have installed 25 WiFi hotspots in Ajegunle, with plans to install another 150 in Ajegunle before the end of the year.

I have 25 years legal, investment banking, private equity and telecoms experience gained from working in the United Kingdom, the United States and Nigeria. In the United Kingdom, I worked for one of the largest law firms in the world working on mergers and acquisitions and private equity transactions. I also worked at FBN Capital, the investment banking arm of First Bank as General Counsel and Company Secretary for a few years and RMB Nigeria as one of the pioneer staff. I left banking as a deputy general manager. My seven years of work experience motivated me into launching Fiam WiFi.

Why did you decide to go into WiFi hotspot?

The majority of Nigerians access the internet through a smart or feature phone and they typically buy data as and when they need it and usually 1GB at a time. The price for 1GB typically ranges from N300 to N1000 and these plans are usually time sensitive such as daily or weekly validity. People who can afford to pay N10,000 or N20,000 at a go for a monthly plan will pay about N150 per GB depending on which network they are on. In addition, the average Nigerian who earns N30,000 or even N50,000 a month won’t be able to afford a N10,000 unlimited data plan as they have other expenses to take care of. Therefore, the vast majority of Nigerians are penalised for buying data in small bits. This we believe is unfair.

Access to high speed internet should be available for all irrespective of ethnicity, class, gender and age. The benefits of high-speed internet are well proven and the World Bank, the United Nations and other organisations such as our partners at the Alliance for Affordable Internet, the United States based non-profit, have studies which show this and that 1GB needs to be priced at below 2 per cent of income. We will be, subject to NCC approval, offering 1GB at less than one per cent of the national minimum wage – N200 for 1 GB of data. Our pricing is clear, simple and transparent and we don’t have time sensitive plans. Our data plans have no expiry or validity period.

How commercially viable is this business especially your areas of coverage?
Our initial target market is Lagos and other high-density cities outside Lagos. Our strategy is to create a community network. Currently, we operate in Ajegunle and 90 per cent of our staff for Ajegunle business FiamWifi AJ City Internet, all live in Ajegunle. This means our customer engagement team, our site and technical maintenance teams are all residents of Ajegunle, so we create additional employment in the communities we serve. This is the model we will roll out across Lagos and beyond.
What makes us unique is our strategy. We drive down the cost of delivering connectivity to communities and ensuring we integrate into the communities we serve.

How will people be able to pay to access your hotspot service?
We have a dedicated team of sales agents on the ground and we have a number of recharge sellers who also sell vouchers for other networks. Customers will also soon be able to buy vouchers online.

What is your rollout plan and roadmap, since you are beginning from Lagos State?

We plan on covering as much of Lagos State as possible over the next 18 months. We will have operations in every local government in Lagos. We get messages everyday from people who have used our service or heard about our service asking us when are we coming to their community. In addition, we are also looking at places outside Lagos.

How much are you investing into your expansion both on the short and medium terms?
To date we have boot-strapped to about $1 million, which has come in mostly from the founders and some friends and family. We are looking to invest about $10 million over the next few years via a mix of debt and equity.

In developed cities across the world, WiFi hotspot is the easiest way of connecting people to the internet. Why is Nigeria lagging behind?

Power is one issue, the issues of limited grid power in Nigeria is a problem for all businesses so we power each of our hotspots using solar, inverters and batteries. Access to affordable smart phones is another factor. Recent studies have shown that in Africa it can take someone 100 days to work to afford a smartphone whereas abroad it is likely to be a few days. Access to finance for companies like ours is another issue. As a former investment banker, I was surprised at the number of times over the last year we have had meetings and discussions with banks and other financial institutions and they all declined to provide capital to our company to scale the business. Even though we had invested $1 million of our own money with a clear business model which was being executed and which was generating revenue. The common feedback was we don’t lend to start ups or your revenues are not significant enough or this or that reason or they ask you to bring collateral. I think this is the challenge many entrepreneurs face trying to start disruptive business in Nigeria. It is much easier also to find angel investors and institutions abroad who are prepared to take a risk on a start up in a capital-intensive business like ours. Rejection made us strive harder and we wouldn’t be where we are today if the road had been easy.

What do you think the government and investors should do to bridge the digital divide in Nigeria?
My view is that government can’t do everything, but it should create an enabling environment for business to operate and thrive. It’s only private finance that can bridge the digital divide. The larger telcos all mention Right of Way as an impediment to bridging this digital divide. Lagos State is at the forefront of this with its Unified Duct Initiative, Ekiti State and some other states have reduced its ROW charges. So, things are moving in the right direction.