‘ICT will double $25billion investment target by 2020’
What is your assessment of the ICT industry in 2013 with respect to the national GDP?Well, I think we need to measure the growth in the industry with respect to Gross Domestic Product growth. In 2010, the ICT market is about $7 billion and we are targeting to reach $25 billion by 2020. So, that […]
What is your assessment of the ICT industry in 2013 with respect to the national GDP?
Well, I think we need to measure the growth in the industry with respect to Gross Domestic Product growth. In 2010, the ICT market is about $7 billion and we are targeting to reach $25 billion by 2020. So, that is where we are but what has happened is that these figures are verified because the Minister of Communication Technology has set a new standard to say that she wanted us to reach 25 per cent of GDP in the next five years. So, I would say we are probably at about $10 billion right now which is between 40 or 50 per cent above the $7 billion where we were before.
But the question is: ‘Are we on course to achieve the $25 billion in target in the next five years? I think we can do more of that and the reason is simple: Look at the boom that came with the telecommunications liberalisation and GSM companies that came in. We are going to experience the same boom with the power sector that has been privatized. The new handlers of the power sector will need Information Technology (IT) equipment to run their operations and so, I think the $25 billion we are talking about in the next five years is quite competitive and we would probably double that.
In term of GDP contribution, Nigeria GDP today is about $280billion and if you take 10 per cent of that, it’s $28 billion. This is what we were targeting before. But, the Minister of Communications Technology says we are going to do 25 per cent. So, 25 per cent of that is going to be double of $28 billion, which is about $56 billion and I am saying we would probably be about $50 billion in GDP in the next five years.
Do you think the 25percent is achievable considering the economy challenges?
The challenges are known and are being resolved. The major challenge, if you ask anybody, is power and once you solve that, you’ll be surprised how the economy will take up. Even small business such as vulcanising, hairdressing and barbing all rely on power. So, our businesses rely on power. If I show you the power farm we have as an IT company, you will be surprised that we are not a power company. If we solved this power issue, which is on the verge of being solved, then, we will have more Small and Medium Enterprises coming.
Today, there are 17 million Micro, Small and Medium Enterprise companies that cannot access bank loans for two reasons: They do not have transparent books and they do not have collateral. So, when they go to banks for capital to invest in their businesses, the banks cannot give them because the banks are spending people’s money and it cannot be spent when they are not sure the money would come back. So, what would unleash the businesses is the capital, which the banks have. How are the banks going to solve these two problems?
To solve these problems for banks, CWG, as a company, has launched CWG 2.0 technology. The CWG 2.0 is to tell those 17 million companies that they should not bother to buy their own computer systems to do their accounting because this approach is very expensive to buy and run. So, just like Google, Twitter and others, we would put an Enterprise Resource Planning, ERP, applications on the cloud which the SMEs would pay for on a subscription basis to run their businesses.
With ERP in the cloud, it means the ERP system is going to sit in our data centre and businesses can subscribe to it to do their accounting, inventory, access management and so on. So, automatically, as a business owner, you then have enough time to concentrate on your key business operations. Also, with the ERP and at any point in time, your stocks and sales, are being managed so that when the banks comes and look at your books over the last three years, they would know exactly what has been going on. Invariably, we solve the problem of transparency of books with the CWG/SME ERP, as we call it.
How do you think the issue of collateral you raised above can be solved?
Yes, the next problem that needs to be solved, as I earlier said, is the issue of collateral. Now that the banks know your books are clean, how can they borrow SMEs money without collateral? To address this, we are saying directly to the government and its agencies such as the National Information Technology Development Agency, NITDA, not to give money directly to the entrepreneur because it is not sustainable. When the money finishes, the business finishes. Rather, we are telling the government to set up a collateral guarantee for them. For instance, we are advocating that the N9 billion raised by the government for MSMEs funding be put as collateral to the bank and we would say ‘lend money to so-and-so enterprises’ because their books are cleaned. Such enterprises have also done due diligence and they would stand guaranteed. Even if they are in a case, where they don’t have collateral, they would stand guaranteed. That way, all entrepreneurs will benefit from this small money and it’s sustainable. If you take N9 billion and share among 17 million businesses, how much will each person get? Of course, it’s a little money. For me, this one is a big problem if they now had power to add to it, what then do you think would be left for them to run their businesses? So, their businesses need soft loan which they can get if the two problems have been solved. Aside the loan, they also need broadband because, they would need to take their businesses on the internet for wider customer reach. The reality is that, just like Jumia and Konga, all businesses need the internet to enable other people to do business with them. They don’t need to maintain a big shop.
By so doing, you will start witnessing growth among the 17 million SMEs. For instance, if 10 per cent of them is able to bring themselves to a point where banks can invest in them; that is about 1.7 million people or companies and out of these, if we are able to take 10 per cent to become companies that could be listed on the stock exchange, the equivalence of that will be 170 companies.
Currently, records show that there are about 200 companies listed on the Nigerian Stock Exchange. So, by what I have just described, we can double the number and a large number of people can easily get jobs through expansion arising from the growth of those companies.
So, we at CWG believe that, instead of having 10 billionaires, it is better to have a thousand millionaires, or, better still, have a million people with $100,000 and you would see the wonders they can do. We started with less than that. CWG started with $16,000 and that is 21 years ago and today, we are doing a turnover of $130 million a year. Look at the growth! Tremendous.
What advice will you offer for the telecoms sector growth in 2014?
Government should get out of business. Government should be a regulator. I have said it in many fora including when the people I am talking about are sighted. If you have a company that is competing with private sector, it is an unfair advantage. If I want to do business, I go and borrow money from the bank at 21-23 per cent. How much do you think Galaxy Backbone borrows money at? It is you and I’s money. I mean it is public fund from government. So, how can I compete with that company? When it wins a project, it says it has won a project; you didn’t win a project, it was given to you. If I was running Galaxy, I will win all projects of the governments. So, the government needs to get out of the business where private sector is running. There are some places where private sectors are not operating. If you take for instance the Universal Service Provision Fund, USPF, it is because people don’t want to go to rural areas to set up communication companies and because they won’t get their money. So, government could do business in those rural areas that are not commercially viable for private sectors.
Again, if private sector would have to go there, then, leave them to do it and you regulate it. Like broadcasting, when we were born, there were just two stations, maybe the NTA at national level and states’ NTA stations but today, there are Channels, Silverbird and a whole lots of others. Is the government still going to compete with them? So, I will say government should get out business and regulate by providing a common level-playing field so that businesses can strive.
Government should only do business in the situation or area that is not ripe for commercial viability. If it does that, you would see that everything will be going on fine. Come to think of this: Why is it that we don’t have a government portal where we can do business with government? I think government should put services onto the portal so that citizenry can secure their drivers’ licence, pay their taxes, their utility bills, secure passport online and also register their companies online instead of spending three nights in Abuja.