By William MCbain
Nigeria gained its first rudimentary internet connections in the 1990s, but more than two decades later, Africa’s most populous nation and the continent’s largest economy remains principally reliant on deficient networks.
Just 37.8% of Nigerians have access to broadband. But its rapidly expanding population of 200m – which includes over 40m smartphone owners – means the country is ranked inside the top 10 highest number of internet users in the world, according to Internet World Stats.
In January, in a bid to tackle this disparity, the Nigerian Communications Commission (NCC) announced investment of N265bn ($732m) into revamping and building infrastructural fibre networks. The government will invest N65bn ($137m) as part of a new National Broadband Plan (NBP), with the bulk of the remaining sum to be provided by six private infrastructure companies.
The joint public-private initiative hopes to achieve 70% broadband penetration by 2025, according to minister of communications and digital economy Isa Ali Pantami.
The intention is to lay 30,000km of fibre, adding to the existing 41,000km network. Yet investment has traditionally been constrained by regulation, red tape and Nigeria’s patchwork of state authorities. Private companies have often been reluctant to assume the risk and cost of building out networks.
“There will be data everywhere in the country, and it will be cheap,” declared Umar Garba Danbatta, the executive vice chairman of the Nigerian Communications Commission.
To help things along, a universal fee for allowing private companies to lay cables has been agreed for all of Nigeria’s states. Abuja will have to display its skill in coaxing state governors to resist arbitrary price increases, given reports suggesting that some 14 states have already reneged on this agreement.
In early February Pantami condemned the rises as “disheartening” and said they would result in increased costs for the telecoms companies that would be passed on to consumers. He called on the state governors to reconsider these decisions in the interests of Nigerians “as well as for the socioeconomic growth and development of the country”.
Pillar of growth
Analysts believe President Muhammadu Buhari’s government has woken up to the necessity for broadband growth as a major pillar for national development, as he seeks to diversify an economy overly reliant on commodity exports.
Broadband penetration is directly proportional to GDP. A 2009 report by the World Bank estimated that for every 10% increase in broadband in developed nations, GDP will grow by more than 1%. A 2019 study by the International Telecommunications Union (ITU) argues that a 10% increase in mobile broadband penetration yields a 2% increase in GDP in low-income countries, and an increase of 2.5% of GDP per capita.
While the number of internet users is growing, those with access to broadband are blighted by the high cost of data and stuttering connectivity. The Speedtest Global Index ranks Nigeria 115th out of 140 countries for mobile speeds, while the country’s ranking for its fixed broadband is 149th out of 177.
Despite these obstacles, the growth of the broadband market in Nigeria is driven by the young and tech-savvy, and now Internet Service Providers (ISPs) are bringing down the cost of data bundles as competition ramps up.
Local ISP Smile, which operates in several other African markets – and was the first to provide 4G LTE in 2014 – now offers an unlimited monthly mobile data plan for $27, available in Lagos and eight other urban centres nationally. The average monthly salary of a Lagosian is currently $585.
Dynamic market
“Nigeria is a very dynamic market,” says Smile’s CEO Ahmad Farroukh. “Anything for adoption in Nigeria comes out quickly, so when you put your data bundle into the market you can feel the impact of whether it’s successful or not in one week, and from my experience in any other market it would take one month to two months. South Africa takes maybe forty or fifty days to understand”.
He says that the market has seen two recent peaks. The first was driven by the growth of WhatsApp and Facebook around 2014; the second arriving in 2017, with the increased demand for video streaming content and the emergence of an increasing number of tech startups in Lagos. The ISPs are pinning their hopes on a future expansion of the broadband infrastructure.
Increased broadband penetration has other positive impacts, including reducing rural to urban migration. Lagos is already predicted to become the world’s most populous city by 2050, according to the United Nations, as it draws in rural Nigerians from across the nation.
“If the [NBP] target is met then people can say, ‘I can do business without having to move my family to urban areas’, they could know what’s happening in the world, and I think people can be more creative with what they do with that connectivity,” says Faroukh.
Building a resilient network
It is not only land infrastructure that needs a boost. As more people move online, additional submarine cables – which are not a focus of the plan – will be needed to meet the growing demand.
A January breakage in two of the five undersea cables routing broadband to Nigeria from Europe caused internet outages for three days, causing MTN – the largest telecommunications company in Nigeria with a 38% market share – to send an SMS apology to its 67m customers.
In 2018, 10 West African countries were completely offline for 48 hours due to damage to the Africa Coast to Europe cable (ACE). When a cable breaks in West Africa, one or two specialised ships from a small international fleet typically sail to fix the cable, but repairs can take weeks.
The key is diversity of network, according to principal analyst Patrick Christian of TeleGeography, a telecommunications market research and consulting firm.
“In Africa, there’s been a ton of growth in networks, especially submarine cables, but there are many countries that have only one sub-cable or two. It’s only lucky ones like Nigeria with five, with two or three more on their way. The more sub-cables you get in means the better the route diversity, performance, and resilience, so that’s another reason to build.”
Facebook’s Simba cable and Google’s Equiano cable will offer 20 times more network capacity than cables currently serving the region, and form part of Google’s $47bn investment in global infrastructure.
A step in the right direction
“For Facebook and Google,” says Patrick Christian, “Nigeria is like the gem, and they’re looking into Nigeria and its population and saying, ‘we’ve got to get there’. This is good news, because what they want is end users, they need end users; so they want to make sure prices are dropping in the market. It’s a good thing when Facebook, and Google, and Microsoft arrive, and they’re actually already there in force in Lagos now,” he says.
If the NBP is successful, and coincides with increased literacy and ICT skills in the country, then doubling broadband penetration has the potential to significantly boost growth.
And while an initial $732m may not be enough for this ambitious target, it’s a necessary and important step in the right direction, says Christian.
“In other markets the correlation shows that once you have a good network infrastructure, it makes everything easier, and opens up new ecosystems of businesses and opportunities. The more connectivity, the better, more successful, and profitable the region, city, town, and country will be.”
Source: https://africanbusinessmagazine.com
