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‘Forex issue adversely affecting ICT’s growth’



‘Forex issue adversely affecting ICT’s growth’

Mr. Biodun Omoniyi is the Managing Director of VDT Communications Limited, one of the providers of broadband services to organisations in Nigeria. In this interview with KUNLE AZEEZ, he shares his thoughts on a number of salient issues in the ICT industry, ranging from broadband penetration target, quality of service, forex, local content in ICT as well as challenges confronting the industry. Excerpts:

How would you appraise the role of ICT in terms of growth and contribution to the economy?

To start with, the ICT industry is currently worth over $68 billion. The industry is doing quite well generally. It is one of the growing paths of the economy.

Be that as it may, I think because it operates in the economy, which is currently in recession, we cannot really expect any superlative growth in the ICT sector but definitely, ICT is actually doing better than most other sectors in the economy right now.

For instance, data from the National Bureau of Statistics showed that the telecommunications sector contributed N1.399 billion to Nigeria’s Gross Domestic Product, GDP, in the fourth quarter of 2016.

For the mere fact that many of our companies need efficiency and many of our processes require better efficiency; definitely, means there would be more need for ICT in the lingering recession period.

What do you consider the key trends shaping the industry, which businesses and organisations need to  pay attention to for their competitiveness?

From the standpoint of the broadband section of ICT industry, where VDT plays, I will say that broadband is still very key because the issue of access is still a problem in Nigeria and when we have that access and we have it in abundance, it is going to actually activate a number of things such as .net services where the kind of Uber and others came from.

Also, online trainings are going to come in. However, the issue of wearable devices, for instance, is still a bit behind. So, it may not be something that will immediately galvanise growth of the industry.

The issue of ease of access and quality of access are key trends that, when fully realised in a ubiquitous manner, will have far-reaching positive effects on the economy as a whole. Of course, Internet of Things (IoT) is not just about wearables, but it is even digitising all the small things that we do manually now and these kinds of things are in layers.

So, you cannot jump that layer. What we are, therefore, pre-occupied with now is processing efficiency. In there is where we have identity management, online purchases and you will realise that many of those have recently improved significantly in Nigeria.

It is going to be the processing efficiency first, before we now begin to talk of IoT. The IoT will not be something that will happen overnight but then, let me state that we have it in our gaze and we are watching the horizon.

But as I said, we need to, first of all, ensure the issue of having connectivity access in a pervasive manner in Nigeria through deepening broadband penetration in Nigeria, before we now begin to talk of IoT.

What do you make of the 30 per cent broadband penetration target in the country by 2018? Is the timeline for the target achievable?

Going by the statistics that we are seeing, I think the 30 per cent broadband penetration target, as set in the National Broadband Plan  (2013-2018), is still achievable because, just as we had in the voice segment, you now have a lot of wireless companies that are going to accelerate further broadband penetration from its current 21 per cent.

They are going to have very good penetration and they are going to over-lay the broadband services on their wireless voice infrastructure. What that, then, means is that achieving the 30 per cent target would be a lot easier.

There is also increase in the number of people that actually carry smartphones these days.

If you think back two years ago and the kind of people carrying smartphones now, you will realise that everything is tending towards data, which are easily accessed on smartphone. So, once you can transact businesses seamlessly using your smartphones, it means you actually have good broadband access.

How is the ban on forex for ICT companies affecting the industry?

Well, forex scarcity affects ordinary man on the street not to talk of corporate entities and when you talk of Nigeria, we can just go on and on, about things that need to be improved upon and forex issue may be one of them.

Forex scarcity is adversely affecting the ICT industry. It is affecting the industry in terms of quality of service that we talked about.

We need forex to bring in equipment. We don’t manufacture any of the equipment locally and they need to be imported. We also know that prices of services have not risen overtime; you also know that the exchange has crashed by more than 250 per cent in the official market. In the parallel market, it is even worse because it has crashed by 300 per cent.

The question now is. How does this affect the industry? How it affects the industry is that for you to import your equipment, you resort to going to source the FX in the parallel market, which had actually risen by more than 300 per cent in the last two years.

So, it is a lot of strain on the operators in replacing their equipment and in being able to actually service the equipment as well. Operators do record damage, operators need to upgrade; they need to expand to be able to capture new services.

For all these, they need forex. So, placing a ban on operators’ access to forex is actually compounding the problem of quality of service.

That would be the simplest way I can put it to suggest that the issue of forex is actually at the root of the poor quality of service that we are experiencing in the communications industry that the consumers are experiencing now.

Forex has contributed to lack of accelerated expansion by ICT companies. So, it is unfortunate that operators are recording the same level of revenue as they were recording the two years ago in Naira terms.

But in real term, the cost of equipment has not reduced by half. It has rather increased and this is affecting their profitability. If a business is not profitable, you are not likely to invest more in that business.

Aside forex issue, which is biting harder and affecting ICT infrastructure expansion, what do you consider other major challenges to the industry?

Apart from forex, the big problem on the list is that of power. What this means is that, it increases the Capex of the operators and again, I go back to the forex. They are earning the same amount of money. The cost of generators today is times three the cost I was selling two years ago.

Now, that is on the Capex side. The cost of diesel is also more than double of what it used to be two years ago. With this, what is likely going to happen is that operators are going to actually elongate the length of time that it would take them to replace their generators.

Now, those generators, whose length of operation have been increased, have the tendency to break down more often. If operators change their generators every two years before, they probably would be changing it every three years now.

The third year, the generators would break down more frequently and when this happens, it affects the quality of service.

These are a result of the irregularity of power supply. Secondly, there is problem of vandalism of infrastructure, multiple taxation, which we are familiar with and insecurity, among others.

Demand for enterprise data solutions is on the increase, how are companies meeting their rising demands amidst various challenges in the industry?

Well, permit me to answer this question from VDT perspective. VDT Communications is one of the broadband communication services providers in the country to corporate organisations in Nigeria. It has offices and operations at 102 Points of Presence (POPs) spread across the country.

From these POPs VDT is capable of providing quality Broadband Communication Services such as Digital Leased Circuit (DLC), Wireless connectivity and Corporate Internet in all the 36 states and using mainly terrestrial technology –all via national virtual private network (VPN)/ Multiprotocol Label Switching (MPLS) backbone.

The company’s network infrastructure design is structured towards providing a broad range of end-to-end efficient and reliable IP-based (data and voice communications) services while building a long term, trusted partnership with its clients.

Consequently, VDT provides services to about 95 per cent of banks and 80 per cent of insurance companies in Nigeria as well as leading multi-national companies, government agencies and blue-chip companies across all sectors.

VDT comprises young enterprising Nigerian professionals who have made a mark of excellence in the industry and represents the hope of the ICT industry in Nigeria when the prospect of a well-managed broadband landscape is considered.

Because of all these infrastructural and human assets, we have remained a key player in the provisioning of ICT services to enterprises, especially in the area of broadband services.

We operate in virtually all sectors of the economy, particularly, we are quite big in the banking and financial sector as I have said earlier.

Mainly, banks and insurance companies are the major users of connectivity services. We also work with manufacturing sector, logistics and, of course, with the government to actually bring about connectivity to businesses and government and its paratstatals. We are basically felt in all sectors of the economy.

Nigerian businesses want to be get high quality ICT solutions for operational efficiency. In what ways can ICT companies make this possible?

Let me start by saying that as VDT, for in-stance, we strive to offer the best broadband services to Nigerians and we have also confirmed this through quality standard certifications that we have worked towards to tell Nigerians that we offer quality services. Certification is a thirdparty testimony that we are delivering what consumers want in terms of service quality.

For instance, we have promises that we have made to Nigerians out there, the certifications that we achieved five and three years ago aided us in making sure that we keep those promises. First, it is going to be internal to us. We embarked on the certifications because we wanted to assure ourselves that we are delivering the quality that we promised the customers.

To the industry at large, the meteoric rise that we have had in the industry is fuelled by the ability of telecoms companies such as VDT to deliver on their promises. So, I want to believe that when others see that the certifications are aiding us to provide quality services, then, definitely, many other ICT companies are going to be striving to achieve some of the certifications.

In fact, we are going ahead for more certifications and recertifications of those services on which we had been certified before.

But all these certifications are actually about the customers – it is about the services we want to deliver to the customers. It should be stated that we are not under any compulsion to go for any of these certifications; rather, it is our decision in order to meet and surpass our customer demands across industries.

Having operated in Nigeria for 14 years and in the light of the challenges already highlighted earlier, how do you intend to address them?

Thank you. We are currently establishing a cloud business unit, wherein we are going to provide our services and encourage customers to move their operations to the cloud for faster and better service delivery and use cloud applications because connectivity has greatly improved in the country.

The other thing that we are doing internally to confront some these challenges is looking at the option of renewable energy, using solar at many of our base stations.

The project is in its pilot stage but at the rate I am seeing, we are likely to have covered half of all our base stations with solar energy within the next one year and by then, we would be dependent 75 per cent of time on solar. The pilot has been successful and it is one of the measures that we are taking to confront the many challenges that we have in the market place.

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