Johnson: With ICT, Opportunity to Grow SMEs is Tremendous

Minister of Communications Technology, Dr. Omobola Johnson, shed insights on leveraging ICT to grow today’s small and medium enterprises, in a Fidelity Bank SME radio programme monitored by Sandra Alumona

You recently launched two world class projects- the Main One (Tier III data centre) and the Secure ID project.   What is the significance of these two projects to the Nigerian economy?

These are two major investments in the ICT sector. First of all, the MainOne Tier III data centre is a world-class data centre that provides hosting services to companies all across Nigeria. What this means is that our Internet traffic can be local and faster.  One would not need to go across our borders or off shore to manage our Internet traffic. Also, it would be cheaper for SMEs and companies to host their data locally rather than abroad. So, this not only has an implication on the cost and speed of the Internet but also on the cost of hosting data.

The second facility that I commissioned was the Secure ID Smart Card plant. The plant has the capacity to produce 200 million Smart Cards. Today, we have about 150 million active SIM cards, 110 million biometric ID cards, and 15 million credit and debit cards in Nigeria. As we continue on our quest for financial and digital inclusion, we are going to need a lot more Smart Cards.  This means that we would be (increasingly) producing them locally, hence creating more jobs and wealth. In totality, we are seeing more local investments in the ICT sector, beyond broadband and beyond device assembling.  People are beginning to see the significance of this sector and how much it can contribute to the development of our economy.

Can we then say these projects are growing our ability to conserve and earn foreign exchange?
Absolutely, conserving foreign exchange, (I’m talking about the data centre), is about hosting locally and not having to pay dollars to host in other countries. With the Secure ID Smart Card plant, we don’t have to import these cards anymore.  We are actually manufacturing these Smart Cards from the raw materials all the way down to the embedded chips in the Smart Card. These are all done at the factory.
Also, 95 per cent of the Secure ID staff members are Nigerians and hopefully in the next year, 100 per cent of staff members would be Nigerians. 100 per cent of the investments are from Nigerians and supported by the Bank of Industry.  This is the same with the Main One Tier III data centre.

We are also beginning to build high and low-end technical skills. That is the beauty of the IT industry; it can accommodate both high-end and low-end skills. This is what we are seeing in this industry today.

You had likened what you are doing to what the Nigerian Local Content Board is doing for the oil and gas sector. Why is this significant in the ICT space and what are the opportunities?
When the ministry was created in 2011, we performed an assessment on the ICT industry.  We found that, in very successful industries, such as the Telecoms Industry, when we looked at the local companies’ level, we were playing at the fringes.  There were a few large companies, but not that many. We decided to create structural space for multinationals and local companies to be able play side by side in this very lucrative environment. What we are looking to do is to create “a level playing field”.  We are not saying that we don’t recognise multinationals.  We do need them, because it’s a global industry, a global supply chain.  What we are trying to do is to create more opportunities for local companies to thrive and grow.

The last few days have been very exciting for us as a Ministry because we have commissioned the Secure ID Smart Card and the Main One Tier III data centre. That is local content at its best. We are working on other areas as well.  Our goal is to do more in the IT sector locally, and increase the “domestic value-add” in the sector.  Software development is another area that needs a lot more local value added because we have the skills and the competence in this area. We are ensuring that Nigerian companies participate more meaningfully in this very lucrative and fast growing sector.  We would like to see more Nigerians working in this sector because the opportunities are there.

Your ministry has launched a couple of initiatives that are very relevant to SMEs and start-ups.  There is the Ideas Lab, the Tech Launch Pad and the Equity Fund initiative. What are these initiatives about and what are the opportunities for SMEs here?
These initiatives tie back to the local content development.  When we talk about manufacturing, software development is another area where we see tremendous opportunities for Nigerians. The Ideas Lab is an incubator and an accelerator, to support young Nigerians who are developing software, mobile and PC apps, to support them in taking those ideas from concept to commercialisation.  So, the ones (ideas) that are very viable are hosted in the Ideas Lab.
They get mentoring support from senior people in the industry, training and exposure. They get to transform their ideas from a piece of code or software to an actual company.

While they are in the Lab, they get observed and they have the opportunity to get investment or venture capital from the fund that we have just launched. The government has ceded that fund, we raised about $16.2 million and basically we are ready to make our first investment.  These companies can obtain a venture capital from this fund. Any local start-up can actually apply and get funds, so long as it is a viable commercial idea.

Why must every start-up be “IT enabled” to drive their businesses successfully?
There are two major things that IT enablement does for an SME. First of all, it can provide access to markets.  If you are on the Internet, your market is not just your immediate surroundings, it’s the whole world.

The second thing is on productivity.  This is very important because when you are a start-up, you are looking for the most efficient way to do your business. Those two things are critical for any start-up.

I would like to refer back to the link between the manufacturing, the ID cards, and what SMEs are doing.  With Tier III data centres, you don’t have to own your own application software; you can use the application as a service.  The applications are hosted on “the cloud” and you can use them on a pay-as-you-use basis.  So local SMEs that cannot afford to buy major enterprise applications in accounting or HR, can just buy whatever they need on the cloud.

This is what we encourage SMEs to do.  You need to have technology from the very beginning.  You need to have a website, even if it’s just a simple publication website to get your information out there.  Later on, you can start doing transactions on your website.
Again, what is happening currently, is that a lot of organisations have these e-commerce platforms, where SMEs can acquire virtual space to sell their goods and services.   SMEs don’t have to worry about finding the right web developer or about being able to update their website.

The ICT sector has witnessed a lot of dramatic growth in the past five years, but what is probably going to be more dramatic is what is going to happen in the next 10 to 15 years, so when you look forward, how exciting can this industry be in terms of opportunities?
I think it is tremendously exciting. I was at an international conference about two months ago and what was said was that big data is the new oil, and big data is a very small part of the ICT sector. But because of the ability of the Internet and all the information that we are generating, we are now seeing it as wealth. And big data is the new oil.
Even if you look at Nigeria, we are looking at the e-commerce sector, which is growing in leaps and bounds every year. As we expand the broadband infrastructure, more people are coming online. So e-commerce is one area where there are lots of opportunities.
If we look at financial inclusion, which is actually about getting many more Nigerians into the financial system, we can actually begin to offer products and services that can lift people out of poverty. Financial inclusion is driven by technology; particularly mobile technology and again I see tremendous opportunities for growth in that particular area.

We have 17 million SMEs in this country, so if we get the ICTs more embedded in SMEs, the opportunity to grow our SMEs from small to medium, from medium to large, is tremendous. Our ICT sector, presently contributes 9.58 per cent to the gross domestic product (GDP). But what is actually more interesting is that it contributes an additional 2.6 per cent because it enables other industries as well. Take agriculture for instance, there is the e-wallet programme of the Ministry of Agriculture; there is now the ability to send information to farmers on market prices.  It an extension service through the mobile phone. So the opportunities that the ICT sector has for the Nigerian economy are tremendous.

So, to answer your question, I am very excited and I believe that we are barely scratching the surface, even at a 9.58 per cent contribution to GDP.  I think that we would really begin to see a sector that is not only in its own right, but that is actually enabling many other sectors in the Nigerian economy and becoming much more strategic and important than it is today.

What exactly does digital economy mean and how is your ministry fast-tracking Nigeria into the digital space?
A digital economy is actually one that is enabled by software, and by access to broadband.
We are really working very hard to ensure that we have a lot of locally developed software that are relevant to our context. We are seeing a lot of things right now in agriculture, and in finance. That’s one area.  It is that content on the Internet that attracts people to the Internet.  If you have contents that are relevant to you, then you will be more interested in browsing the Internet.
Let me say that the entertainment industry is growing in leaps and bounds because of the ability to broadcast films and videos over the Internet. This is what we are talking about. Once we have the content, the broadband infrastructure to enable fast and ubiquitous access to the Internet; we would begin to build up a digital economy and all that goes with it, i.e. manufacturing, devices, cloud hosting services and the smart cards.  All these drive access to the Internet. So, that is what a digital economy is about. It is really an economy that is software facilitated, but also enabled by having access to the Internet.

How is ICT relevant to those in the traditional space, for instance a vegetable oil seller?
It is very relevant to them. For instance, they should have a website that advertises what they are manufacturing. This gives them ability to sell to a broader market.  If they don’t have a website, they can put their products on some of these online market places.  Doing so gives them much broader access to sell than if they were to just put their goods in a shop.
Again, using ICT in accounting, in logistics and production is relevant to the production sector.

With the current lack of infrastructure, how do we get the broadband delivered by the cable operators (SAT 3, Main One and Glo1) to the hinterland (across Nigeria), because that’s where the SMEs are?
The challenge we have today, is to get that broadband capacity infrastructure inland to all the different parts of Nigeria.  The National Broadband Plan recognizes this.  There are a number of things that we are doing to resolve this.
First of all, the bulk of these infrastructures are going to be deployed in the areas belonging to the State Governments. So we are working with the State Governments to ensure that the “Rights Of Way “ we (the Ministry and the Industry players) need, to lay the fibre, is at the lowest possible cost.  Right now, it costs about four to five million naira per kilometre in some States. The cost is quite high.  But the Federal Government roads only cost one hundred and forty five thousand naira per kilometre.  There is a big difference.
Secondly, as we lay this fibre, we need to dig the roads.  When we dig the roads, we want a ‘Dig Once and Pay Once’ policy. Once we dig the roads, we want everyone to pass their fibre through it, while the State or Local Government charges us once. This is very important.

Thirdly, the Nigerian Communication Commission is licensing Infrastructure Companies InFraCos.  We are going to license seven InFraCos to cover the Lagos area, and six other geo-political zones (Abuja, Port-Harcourt etc). These InFraCos will have a mandate to lay fibre in these regional areas.  This means that we would be able to get fibre and distribute it much more equally across the country; decentralizing it, basically.  That’s what we are doing.
And, we are seeing some traction here. We’ve moved from 6% when we launched the National Broadband Plan, to about 8% broadband penetration today.  We hope to get to 30% by 2017.  30% is quite good, because 30% broadband penetration would mean that eighty to ninety million Nigerians are connected to fast Internet.

What are the security concerns with data and cloud based services?
Main One Tier III data centre has tremendous amounts of security, both physical and virtual security.  This is what they guarantee by being Tier III.  Tier III is the second to the highest level of security. It means that your data would not be tampered or interfered with. That is why we need to continue to promote more Tier III data centres in this country.

Culled from: http://www.thisdaylive.com