Omoniyi: Telecoms Will Facilitate Digital Economy Drive

telecom - November 5, 2020

Group Managing Director/CEO, VDT Communications, Mr. Biodun Omoniyi, speaks with Emma Okonji on the imperatives of digital economy and the need for government to support small telecoms businesses to fast-track digital transformation. Excerpts:

What is your view about broadband penetration in the country and how will it help in achieving Nigeria’s digital economy drive?

Nigeria has come a long way in broadband penetration. As at 2015 when the current EVC of the NCC, Danbatta, was appointed, broadband penetration was between four per cent and six per cent. In December 2018, the country surpassed its 30 per cent broadband penetration target and today the country can boast of 43.3 per cent broadband penetration, with another target of attaining 70 per cent broadband penetration by 2025.
So with the current broadband penetration level, Nigeria is ripe to achieve its digital economy drive. We have reached a point at our broadband penetration level, where nothing can stop us as country from achieving our dream of digital economy. With sufficient broadband penetration, businesses will grow and new businesses and companies will spring up. With broadband, companies will save cost and the country will generate new streams of revenues, despite the challenges that come with digital economy.

People have called for collaboration in order to achieve digital economy. What form of collaboration do you think can lead to achieving the digital economy?

I quite agree that collaboration is necessary to achieve digital economy. VDT, which I operate, for instance, has its focus on providing the enabling infrastructure for broadband growth in the country. In achieving digital economy, we have to consider all sides of the digital economy framework like the consumer side, producer side, enterprise side, and regulatory side. The enterprise side of it has to do with industries, factories and offices, and that is where VDT plays a key role in the country’s digital economy drive. Our retail, business is fast growing and supporting the digital economy growth of the country.

Telecoms operators are asking for seed funds to sustain their telecoms business. Do you see funding as a challenge to achieving digital economy in Nigeria?
Nigeria is an emerging market and as a player in the emerging market, I strongly believe that telecoms operators need seed funds for their businesses. Naturally, it is very difficult to operate in an emerging market because the cost of sustaining business is on the high side. There are so many things militating against raising funds in an emerging market like Nigeria. The Nigerian economy for instance, has not enjoyed economic salability, and the country has to devalue her currency severally to stabilise the economy, yet the economy kept dwindling and it is difficult for businesses to thrive in a dwindling economy like ours. For this reason, funding of long term projects like the telecoms project has been a herculean task for business owners. The situation is also affecting infrastructure companies because they need huge money to purchase equipment for infrastructure rollout. VDT operate on the infrastructure aspect of telecoms business and I can tell you the fact that it is difficult to raise money for infrastructure and service rollout. Those clamouring for seed funding for telecoms business are right and government must see to that in order to keep telecoms business running. Just like the Bank of Industry and the Agricultural Development Bank, the telecoms sector needs a telecoms bank that will fund telecoms business in the country.
The multinational players in the telecoms sector do not have much funding challenges like the local players do, so government must support local and small players in the telecoms sector to grow and sustain their telecoms businesses.

So how small is VDT in the telecoms sector, when it has operations outside of Lagos?

VDT is a small telecoms operator that is focused on retail aspect of telecoms business, but even at that, there are several telecoms operators that are even smaller than VDT in terms of their operational capacities. If VDT, as small as it is, still struggle to raise funds for major projects, you can imagine how the smaller operators will be struggling even more than VDT to raise funds for capital projects, hence the need for seed funding for local and small telecoms operators.

Given the scenario where only few companies are offering fiber-to-home services in Nigeria, where the majority of people now work online from home as a result of the new normal caused by COVID-19 pandemic, what is the possibility of sustaining working from home?

Connectivity has gone far beyond offering fiber-to-home services. Today, many operators offer wireless services just like VDT. With wireless services, people can still work conveniently from home with thier wireless devices without depending outrightly on fibre-to-home service that has to do with fiber optic cables. So the combination of wireless and wired services can conveniently sustain the new normal, where people can work from outside of their offices without getting to the office. Once there is adequate coverage of fiber and wireless connectivity, the tempo could be sustained. It is technology enabled and it is all about internet and broadband connectivity. For example, today, Nigeria boasts of 43.3 per cent broadband penetration, but 40 per cent of that penetration level is from wireless connectivity, and that is where VDT operates, providing wireless connectivity services to homes, offices and schools. What we need is incentives.

What kind of incentives do local operators need to remain competitive in the telecoms business where the big players operate?

The incentives can be in various forms. The telecoms regulator, the Nigerian Communications Commission (NCC), said they were giving palliatives to infrastructure companies (InfraCos), but such palliatives need to go round the small operators and VDT should be considered for palliatives because we need support to sustain our kind of telecoms business.

VDT is into wireless connectivity, just like several other operators, yet we have little presence of free wireless hotspots in public places where people could connect to the internet for free like it is the case with most developed countries of the world. Why is the case of Nigeria different?

Yes, people could get free connectivity in public places like airports and malls in developed countries, but it is not so in Nigeria because of the issue of lack of adequate funds to operate free internet services in public places. The free wireless internet services you experience at airports and malls in developed countries, were installed by small players who got funding from the government, but in Nigeria, it becomes difficult to set up free wireless hotspots where there is no funding from government. Lagos State tried it some years ago by using small operators to establish free Wi-Fi hotspots in some parts of Lagos, but I do not know if those hotspots are still working because of funding and sustainability. There has to be continuous funding for installation and maintenance for such projects to be sustained. The operators cannot go to the bank to take loan for such projects because of the two digits interest rate that is involved in bank loan, which makes highly expensive and risky to take bank loan for telecoms business.

What happens to the USPF funding for telecoms operators. Why can’t small players take advantage of such funds to provide free Wi-Fi hotspots?

If the telecoms regulator channels the Universal Service Provisions Funds (USPF) to small operators, then I think they should be able to provide free Wi-Fi hotspots in some designated public places across the country. In developed countries where you experience free Wi-Fi hotspots, they are being funded by government and we need our government to do so in Nigeria.

Telecoms development is largely tilted towards urban cities, while the rural and underserved areas remain impoverished of telecoms services. Is it not possible for the operators to use the gains made from cities to deploy services in underserved and unserved areas of the country?

The NCC had rightly said Nigeria has 114 access gaps and about 25 million Nigerians are not connected to broadband. Nigerians should not expect telecoms operators to invest their gains in unserved areas of the country because investments love profit. Every business person will want to invest in areas where investments are easily recouped. They invested money and the need profit and they cannot get that kind of profit in underserved and unserved areas, and no investor will want to invest in such places unless there are incentives from the government and that is exactly what the USPF funds are meant to achieve. More profits are made from urban areas because of the population and no operator will install a 3G and 4G networks in rural areas where return on investment in very low.

Given the fact that Nigerian youths and small business owners form the bulk of Nigerian population and start-up organisations, to what extent can government tap into the strength of their numbers to drive tech development across the country?

Youths and start-ups, no doubt, have the numerical strength to drive technology development and help Nigeria to achieve its digital economy drive a lot faster, but they do not have the capital for expansion. So the government needs to see their numbers as opportunity to tap into by providing incentives for them. One of the incentives is to provide them with cheap capital, supported by training and education. Government also need to provide a better business enabling environment for our youths and SMEs to enable them thrive and become employers of labour. They need protection in their business with special preference to help them grow with less stress. It must be a conscious effort on the part of government to address youth unemployment in the country, and this is one of the better ways to achieve it. It is not enough for government to be collecting taxes from organisations without developing its youths. So part of the money generated from taxes should be invested in youths and SMEs development. If the SMEs are protected today, they will surely grow large to compete with the exiting large enterprises in the telecoms sector, who also started very small, but became very large with time because of the initial support they got from their government.

What is your view about regulating technology activities in the country, in relation to the Nigerian Data Protection Regulation(NDPR), which the National Information Technology Development Agency is championing?

The NDPR, which the National Information Technology Development Agency (NITDA) is currently promoting, is a good move by NITDA, and they should be commended, because data protection and regulation have become global issues. The data regulation embarked upon by NITDA, will compel big and small organisations to be mindful in handling personal data, because data is now the new oil that will boost the Nigerian economy, if properly regulated, analysed and put into proper use.

Do you agree with those calling for monetisation of data, who felt that Nigerians are sitting on huge amount of data that are not properly being utilised?

I quite agree with those calling for monetisation of our data because Nigerians are not making good money from data, yet we have data all around us. We need to first organise our data before we can monetise it. This is true because data that needs to be monetised, must first be structured, organised and cleaned up, to enable monetisation. We have a lot of personal, organisational and national data all around us, but we need to structure them to make the best out of the data.
For instance, in the retail part of our business, it was after we reorganised our organisational data that we started making good money from it. So data must be first organised and structured before monitisation of the data can work effectively. Data simple helps organisations to make good business decisions and predictions that will help the organisation to avoid wastages and in turn make good profit. So data has to be organised, and well analysed for better decision making that will be profitable to the organisation.

How will you assess the implementation of the new National Broadbased Plan, which seeks to achieve 70 per cent broadband penetration by 2025?

Efforts on the part of government to meet the 70 per cent broadband target as enshrined in the new National Broadband Plan, is ongoing, but some people are of the view that we could effortlessly achieve the target by 2025, because of the springing up of start-ups and FinTech operators who are actually driving new software applications that will make digital transaction a lot more possible. Telecoms operators are also busy deploying 3G and 4G networks, which are broadband enablers. All these put together will fast-track broadband penetration without conscious efforts.

You chaired one of the panel sessions during the National Dialogue Forum on Telecoms and ICT, recently organised by the Association of Telecoms Companies of Nigeria (ATCON). What is your assessment of the forum?

I must congratulate the organisers of the National Dialogue Forum on Telecoms and ICT because it was a huge success in promoting telecoms and ICT activities in the country. So much was said about how Nigeria could harness her digital resources for the building of our national economy, and the Minister of Communications and Digital Economy, Dr. Isa Pantami, was able to give guidelines and timelines on how Nigeria will achieve her digital economy drive. The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Danbatta, was also able to throw more lights on what the commission is doing to achieve digital economy through the commission’s Eight Point agenda, which majorly focused on broadband penetration and utilisation. We can’t talk of digital economy without talking about telecommunications technology on which the digital economy rides on, and I quite appreciate what that ministry and the NCC are doing in this regard. Paper presentations at the forum were focused on broadband, funding, investments, regulation and the challenges and opportunities that abound in digital economy and how best to harness the opportunities and also turn the challenges into opportunities.

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