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High cost of funds pushes the price of internet data – Ikechukwu Nnamani

Engr. Ike Nnamani. President of Medallion Data Centres
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The immediate past president of the Association of Telecom Companies of Nigeria (ATCON) and President of Medallion Data Centres, Engr Ikechukwu Nnamani is one of Our TOP 20 CEO’s 2022/23, he spoke with Tayo Adewusi on myriads industry issues. Excerpt.  

A school of thought says Nigeria is one of the largest ICT marketsin terms of telecoms, as having a large share of the telecom market in Africa. Has Nigeria lived up to this expectation?  

Ikechukwu Nnamani: Well,it is an interesting one. Few weeks ago I happened to participate in an event with the regulator, Nigerian Communication Commission and this subject matter came up. If we take the state of the industry assessment, you would find out that in the area of voice telephony, we’ve done well from a subscribers-based. However, if you look at other areas, especially the digital economy, emerging technologies, broadband penetration, and access to content like e-applications, vis-à-vis 5G, you would notice that Nigeria is just starting. I am not surprised because past president Muhammadu Buhari launched the digital economy in 2020.

That is more than two years. Therefore ,it would take a while. I know we are building infrastructures to move us from where we are but we need to do more work to achieve that. Therefore, from a voice telephony perspective, yes, we are the biggest in Africa. We have done well but the industry and service evolution is moving away from just voice to the era of data. You hosted an event last year on data. The theme said data is the new oil. If you recall even in that event the concept is that it is not yet the new oil for Nigeria. It is potentially the new oil from the revenue-generating standpoint but we are not yet there. We still need to put in all the building blocks that are necessary to make that happen.

Data is everything now. Let us look at it from the context of the data centres in Nigeria. Are the data centres complying with government directives about hosting local content in Nigeria?  

IN: The answer is yes. We are on the right track but we also need to be realistic. The infrastructure before now has not existed at the level it should exist. The infrastructure is just being put in place. Companies like ours are spending much to put this infrastructure in place. The reality is that until the core infrastructure is ready to support these services, you cannot do anything about it. Therefore, the effort really should be towards accelerating the progress, towards ensuring that the core infrastructure needed like data centres, fibre connectivity, etc. are in place. Then, there is the issue of electricity. You know, we still do not have a good utility power supply and then you have other issues. However, if you take this trade, for instance, it is still a long way to go but they all have to work together. So it is only when the infrastructure is available that you can have access to it. That is when you can enforce the policy. If not, what are you going to enforce? If somebody tells you today and says ‘Hey, I need to host my infrastructure in Sokoto.”There is nothing in Sokoto as of today.

There is no data centre in Sokoto. So, where will the man host the data? It is either he comes to other states. Alternatively, he finds himself hosting the data outside the country. Therefore, that is the reality, and it is a work in progress. I know much effort and resources are being put in place as we speak to establish the infrastructure. The only thing is that everybody, especially the government, has to realize this gap and support the process to make it happen. It is not the case of a government building the infrastructure. What the government should do, for instance, is to provide power. Ordinarily, a private citizen should not get involved in power generation. Removing the bottlenecks such as multiple taxations, multiple regulations, forex, and the right-of-way and other issues that have hampered the spread and growth of fibre networks.

If you do not have access to forex, your project is dead on arrival. These are government roles that would assist the private sector in ensuring that the infrastructure is in place. Once this is available, we can start talking about usability because the demand also has to be there. The enabling environment has to be ready to ensure that when these infrastructures are in place the usability is also good. Therefore, the government has to digitise its operations.  I would refer to the last event you hosted. The keynote speaker, the EVC of NCC said, “We shouldn’t be naive to assume that these things would happen in one day. These things take time.” Most times if you start a new data centre project, for instance, the minimum time it will take is three to four years. You would start from design to implementation. This is dependent on what you are building. Therefore, that is the rarity of it. 

In terms of internet penetration, NCC said there is a particular expected target and that it has surpassed its target. The cost of data is still expensive. For instance, 1 GB of data is still expensive. With the existing infrastructure, why is the cost of browsing still expensive?

IN: Very simple. What is the cost of funds in Nigeria compared to the cost of funds outside Nigeria? If you go to a bank today and you want to take a loan, the bank will charge you a minimum. When you add everything, you are averaging 25-30% per annum. Abroad, if you take a similar facility, they are charging you not more than 5%.If you add everything, no matter what the bank added, most times it hovers between 1 to 2%. It is the cost of funds. It is as simple as that. The government does not finance these things. Private people are financing the private funds and the cost of funds is simply too high now. Now the way these things work if you check the graph, the higher cost, and investment are at implementation, then over time as usability increases the unit price starts to go down for everybody. It is just what it is.


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