Nigeria telecom companies have faced challenges while deploying infrastructure from both government agencies and communities, have things improved?
Truly, many challenges are bedeviling the sector. There are the social problems: theft, vandalism, community issues and so on. And also, there are the business environment issues: multiple taxation, unfavourable or harsh government policies, forex scarcity and lack of long-term capital for investment in infrastructure in local currency. All these are the issues. Then of course, you also look at failure in power supply. Availability of power is important since telecoms infra-structure which is distributed across the country all rely on energy.
So, we have to now invest additionally in providing energy for our customers. This actually drives up the cost and it makes us susceptible to all the shocks in the energy market and that, sometimes, makes our business difficult. If you look at it, the environment of doing business, capital adequacy, and power infrastructure, those are the things that are really affecting the growth of our sector.
What actually motivated your decision to go for a towerco licence, and not other categories of telecoms operations in the industry?
Well, there are opportunities everywhere in the industry and its various segments. However, based on the vision of the founders, this is an area that needed the most attention and it is a good sustainable asset class. So, it is not some-thing that you do and go away. It requires long term planning and it has long term rewards. If you look at the environ-ment of business, people who build infrastructure have long term vision.
In Africa and Nigeria, there is huge infrastructure gap and this makes this segment as an area that has not really been tapped and it is an underserved area. There are many areas where you still do not have telecoms service coverage today and there are areas where you have capacity deficit that someone has to build up. For us, it is a good business opportunity and it also resonates with us as citizens where we do not just do short end trading type of activities, which most people try and do because they do not have long term faith in the country.
We are just like Dangote and other indigenous companies, once they put a factory down, you know they are not going anywhere. But when you see someone who is just importing containers, the moment they see there is a problem, they stop and ship their containers to the next city. But this is infrastructures and we are building it in every part of the country. So, we all have to join our hands and build the country together. We have both nationalistic and African busi-ness orientation. It is a good business and our vision is to help fill that $136 billion telecommunication infrastructure gap that already exists in Nigeria.
Within a space of two years, Pan African Towers has built over 1,000 towers and 300 towers in Nigeria and Ghana re-spectively. What other countries are you targeting next?
We have planned to go into about three other countries, based on the opportunities that we have identified over the next couple of years. Of course, Nigeria, as a large market, will be a key focus for us. But there are many other areas that are underserved around us in West Africa and Africa as a whole, that we have identified and are in the process of executing market entry. And it will just be done in phases because it is capital intensive, and we have to take a lot of environmental factors into consideration.
What do you think the government can do to further strengthen you in the face of competition with foreign counter-parts?
Well, it is expected that foreign companies will have an advantage, because if you look at the kind of company that comes to Nigeria, they have access to long term funds, they have access to expertise. They probably are also coming in as a global partnership with companies they want to serve in Nigeria. So, when they buy a portfolio, Nigeria just hap-pens to be one of the places they are coming to. That is welcomed frankly, because most Nigerian companies do not have what it takes here to seize the whole opportunities in Nigeria.
So, we would always need that. And if you look at our particular sector, the technology sector has no colour, it has no country; it just has to do with the resource. Regardless, where the government should look at, first and foremost, is helping with the right policies for the Nigerian companies who want to do this to grow. For instance, we have got funds earmarked for certain sectors of the economy to cushion coronavirus pandemic effects. Government should earmark for infrastructure companies as well. The Central Bank of Nigeria (CBN) is intervening in almost everywhere but in a key sector like this, they expect us to go and be looking for dollars.
One of the risks that have happened here is that long term funding at dollar rate is a problem but the CBN, I think based on what they have been doing recently, is trying to drive the interest rate down in local currency. Hopefully, a lot of local long term lending will start happening and that is a good thing. But the other issue is around cohesion around government agencies, so that the issue of taxation, stoppage of works and co should be eliminated so that people can actually deploy this infrastructure quickly.
That is for everybody though, not just for Nigerian companies. And there should be some incentives for people who are willing to deploy their time and capital into this area to grow. For example, government should increase resources for the Universal Service Provision Fund (USPF) to increase funding so that the rural connectivity target can be met. People in the rural areas also need access to the internet, and access to telephone. But what is earmarked for them is just too small.
As everyone keeps the hope to see a post pandemic era, what opportunities have you seen as the bright side of the situation?
We thank God that we are alive and that is first and foremost. Nobody saw the pandemic coming. No analysts fore-warned us about it. It is quite unfortunate that quite a number of people have paid the ultimate price. However, there are many lessons to be learned from it. One is that our health infrastructure in Nigeria and transportation infrastruc-ture have no resilience at all. People were unable to really keep themselves going during the period of the pandemic.
Technology cannot replace all those things, and neither can the TowerCos do all those things. Also, the government cannot do everything. It is expected to create an enabling environment so that people can come in and build all this infrastructure that is missing. For our own industry, we are negatively correlated to the pandemic in the sense that people now realise what essential service really is. They want to talk and be able to communicate with people and the way it is done today, that is where the services that we render come in.
So, we are part of essential service. Again, the government needs to look at what they have been classifying as essen-tial service using this pandemic as a case study. If you know that when you were locked down at home and you had nowhere to go, you needed a telephone, you needed to talk to the external world as you could not fly down there but you were able to talk to them via telephone, that should let you know the importance you should attach to the sector that is making that possible.
For example, if you have $30 million and you are thinking of investing in aviation, because you think it is essential, maybe you should think twice and divide it into two and put some in the telecoms sector. Even if you remove tele-coms from other sectors, including aviation, there will be problem. Telecoms contribution to the gross domestic prod-uct (GDP) has been growing year after year. In Q2 of 2020, it grew by 18.10 per cent according to the National Bureau of Statistics, helping the ICT sector to contribute 17.83per cent to Nigeria’s GDP.
Its impact on other sector is important such that a one percent growth in broadband leads to five per cent growth in GDP. So, I am happy that there is a dynamic Minister of Communication and Digital Economy. He has been engaging with the industry and we believe the government is listening to him. If he is able to win the heart of the government, governors and the private sector, I believe the telecoms sector will continue to be better.