Nigeria's hostile business environment is hurting its tech ecosystem

For technology in Nigeria, the implications of this hostile business environment is that one of the main tools necessary for the development of the ecosystem remains elusive: infrastructure, more specifically fibre optic cables.

Just so you understand how important such infrastructure is to the development of Nigeria’s tech ecosystem, here is some context: “Between 2009 and 2015, Africa saw a 20x increase in available bandwidth, because of submarine cables like Seacom and Wacs,” according to the TechCabal newsletter.

That means it’s been proven that the availability of fibre optic cables will directly translate into more bandwidth and ultimately access for more people to get connected to the Internet. However, while ISPs are ready to do the needful, the majority of the associated costs of doing so is tied to money they have to pay to the government to let them do it (something called Right of Way).

In fact, there may not ba any Yaba tech cluster to speak of today if the Lagos State government had not waived some of those Right of Way fees for MainOne to lay its fibre optic cables back in 2010.

Also, the amount of internet users — despite the 200+ million population — is still too small to justify the costs of laying fibre optic cables. Throw in the fact that the amount of people on the internet aren’t spending enough to justify an Internet Service Providers (ISPs) (or anyone’s) investment in such infrastructure and the story get gorier.

Speaking to Reuters recently, Google Nigeria Country Manager Juliet Ehimuan-Chiazor said the government needs to ‘simplify taxes and reduce the fees involved in laying fibre optic cables to encourage the development of tech infrastructure.’

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That statement is particularly important because Google (one of the biggest tech companies in the world) runs a program called Project Link (launched in 2013) to solve problems like this.

The idea is simple: Google lays the cables, sells available bandwidth to ISPs at much lower rates than they would normally spend, more people would have access to the Internet which also means more people will use Android, Google’s services and Google will make more money — everybody wins.

The program has already been used in countries like Uganda, Ghana and Cote D’Ivoire but will not be coming to Nigeria because of the low number of Internet users, dearth of local internet services and the multiple fees (both at Federal and State level) which Google will have to pay have made the economics of it very much untenable.

All of this leaves Nigeria’s tech advancement in a terrible, vicious cycle: Local startups cannot gain traction because there aren’t enough people who spend money online, there aren’t enough people who spend money online because the available Internet is slow and expensive (no fibre optic cables remember?), and the internet is slow and expensive because there aren’t enough people using it (the internet) to justify the cost of investing in the solution (infrastructure).

Although the Federal Ministry of Budget and National Planning advised the government, back in March, to encourage local production of technology hardware to reduce Nigeria’s dependence on imports and generate much needed foreign exchange, there is nothing concrete to say the government is headed in that direction.

Which begs the question: Can Nigeria’s tech ecosystem grow beyond where it is without the necessary infrastructure? Drop your answer in the comments section below.