Infrastructural Support for Tech-Startups through Tech Hubs
By: Ventures Platform
Tags: Nigeria, Tech Start Ups, Publicprivate Partnership, Africa, Ecosystem

Today’s article was written by Gift Agboro, Our Google Policy Fellow. This is especially for startups, policy makers and stakeholders in the tech ecosystem. Please forward to a friend and share on your social media. As always, we love to get feedback and suggestions, you can send them here. Happy reading!

Infrastructural Support for Tech-Startups through Tech Hubs

“Nigeria has vast digital possibilities and with the right policies and infrastructure, the balance could tilt significantly, raising millions out of poverty while moving Nigeria to the standout league”. [1]

The Nigerian tech-ecosystem can be characterized by the robust increase in tech-startups, investors, venture capitalists, and tech/innovation hubs. According to Disrupt Africa’s Startup Funding Report for 2018, Nigerian startups led the bulk of investment on the continent in 2018 with 58 startups raising a total of $94.9 million from various sectors.

The 2018 “Tech Entrepreneurship Ecosystem in Nigeria” report reveals that the innovation hubs and accelerator programs are the strongest links of the Nigerian Tech ecosystem. Innovation hubs are seen to be social communities, work-space or centers that provide knowledge, strategic innovation and support for startups. Hence, providing infrastructural support for hubs would invariably support startups using technology to solve a problem.

However, “Nigeria struggles with fundamental infrastructure problems that overshadow most of the initiatives undertaken to foster tech-entrepreneurship.” Also, the Economic and Business report for February 2018, the Financial Directives Company (FDC), stated that the under-investment in infrastructure in Nigeria over the years had widened the infrastructural gap across the country.

An article published by Punch, reveals that “Nigeria’s under-investment in infrastructure left it with a core stock of infrastructure of just 20 percent to 25 percent of Gross Domestic Product, compared to an average of 70 percent of the GDP for more advanced middle-income countries of similar size. Which brings to bear, the precarious situation in the infrastructural space in Nigeria as compared to more advanced countries.

A 2019 research and needs assessment exercise carried out by Ventures Platform revealed three top infrastructural pain-points faced by innovation hubs in Nigeria to include: “Poor Broadband Internet Penetration”, “High cost of internet service” and “Erratic Electricity Supply”.

On Erratic Electricity Supply

Across the power sector value chain, the infrastructure from generating electricity to transmission and distribution is grossly inadequate. Even if power generation goes above the 5,073 MW threshold, the transmission system is yet to be optimized.

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A look at the government’s plan to reverse and reposition the electricity sector shows that government budgetary provision is grossly inadequate. The budgetary allocation of N85.9 billion is far from what the government needs to do in the immediate to reposition the sector towards growth. [3]

On Poor Broadband Internet Penetration and High cost of internet

In 2018, the Chairman of the Nigerian Communications Commission (NCC) announced the harmonized right of way charges across the country. This would require that telecom operators be required to pay N145 per meter to lay fiber cable anywhere in the country as opposed to N4,000-N5,000.

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Despite this welcome development, some states still implore indiscriminate charges on Right of Way of about N1,500-N5,000 per meter. It is believed that the refusal to adopt this harmonized charges, could amount to withdrawal of telecom operators in laying fiber-optic across the country as it would be expensive for them to lay. The cause of action could amount to poor-internet penetration which may invariably translate to high cost of internet.

With high costs of internet, it would be difficult and in some cases too expensive for tech hubs to carry-out their day to day activities, one of which is supporting startups within their community who need internet.

Policy Recommendations:

In order to create an enabling environment for tech-startups to thrive in Nigeria, Ventures Platform organized the fifth edition of the Ecosystem Dialogue Series (EDS) themed “Infrastructural Support for Tech-Startups through Tech Hubs”.

The objective of this edition was to discuss challenges and policy recommendations to provide infrastructural support for startups by strengthening tech hubs as well as encourage wide-ecosystem policy participation to enhance policy intervention.

To address infrastructural problems stated above, recommendations gleaned from the event included: the need for Government to refocus its efforts at developing the country’s renewable energy potential, to serve as an alternative source for the increase in power generation. Also, the Government should adopt the public-private partnership approach that enables collaboration between government through its agencies and the private sector through service providers with the aim to provide infrastructural support for startups through tech hubs. In line with this, Government through such partnership with the private sector can provide sustainable, cost-effective infrastructure at innovation hubs and workspaces. Subsidized electricity generation, high-speed internet connectivity, designating vacant government buildings in the heart of tech-clusters for the use of innovation hubs.

The private sector can play a pivotal role in improving the power and internet situation. By focusing on creating a more enabling environment, the government will help enable greater private sector financing. Creating a policy framework that would ensure returns on investment in the sector would go a long way in assuring potential investors. [5]

Such partnerships with the private sector can be seen in countries such as France, South Africa and the United Kingdom(UK) where they exist partnerships between tech hubs and mobile operators as seen particularly with Orange, MTN, and Vodafone respectively.

Another key recommendation was the need for innovation hubs to form a strong support network amongst themselves to tackle these challenges.

Conclusion:

We can safely say that while the Nigeria Tech-Ecosystem is growing with full potential, there is still room for more growth and infrastructural development to meet up with international best practices as well as to set herself on par with other countries such as India which had readily created an enabling environment through its #StartupIndia policy.

The role of key stakeholders in government, academia, entrepreneurship, private sector and civil society groups can not be overemphasized. Hence, the “gospel” on private-public partnership does not only need to be preached but also implemented across the country.