The economic benefit of telecommunications is enormous, both as a growing industry in its own right and in terms of its influence on economic development.
Telecommunications is making the world a smaller place and creating new information highways of high speed electronic data exchange.
The economic implication of ICT are far-reaching; mobile telephones, satellite television and automatic teller machines are just a few examples of the way in which ICT is changing how people communicate, become informed or do business.
The relation between ICT and economic development and benefit has been a topic of numerous studies. And all agree that there is a close relation.
Also, the social benefits of ICT in Nigeria are invaluable it has also reduced inequalities of opportunity between rural areas and the Urban Centres with the introduction of Internet Services, which delivers educational programmes to remote locations.
Educational institutions are becoming more dependent on telecommunications to access super computers and broadcast instructions. This has paved way for the introduction of distance learning, which can improve educational achievement in rural areas.
However, with the changes that have been made and the problems that have been solved, Nigerian ICT sector entrepreneurs have identified challenges such as human capital deficit, inaccessible funding, infrastructure and insufficient awareness on the benefits of their products and services as major hurdles to doing business in the fast thriving sector which accounts for about 10.24 per cent of the nation’s rebased GDP.
“Human capital deficit is a major issue” Jay Alabraba, Co-Founder, Head Sales and Distribution, Pagatech, said at the FBN Capital’s just concluded 4th Annual Investor Conference in Lagos, Nigeria.
“On the financing side, we have been very fortunate to have investors that support us” he added. He said the founders of the organisation thought that the mobile phones, given the number of people who have access to them, could be the primary means to make efficient payments and perform low cost financial services.
Mike Ogbalu, Head, Mobile Financial Services, First Bank of Nigeria, on the seemingly slow adoption of mobile money in Nigeria, said the adoption of mobile money typically takes the form of a curve as awareness and reliable technology typically precedes adoption.
“I can’t say we haven’t come a long way. We have 2 million subscribers. And we have seen transactions grow from when they were only a couple of thousands and today they are almost approaching a hundreds of thousands in a day. Therefore, we have made progress” he said.
For Olumide Olusanya, Chief Executive Officer, Gloo.ng, raising funds have been the biggest challenge the industry has had to face.
“It is difficult raising money within the country for a business like ours because most potential investors or financial institutions are not really familiar with how an online business really works, so they take a traditional approach and the right questions are not usually asked and this creates a disconnect between the entity trying to raise the funds and the people that have the funds.
However, despite the seeming difficulty in accessing funds, Eghosa Omoigui, General Partner, EchoVC Partners, was of the opinion that beyond funding for the sector, the development of local entrepreneurs appears to be an even greater challenge.
In his view, local entrepreneurs can be mentored in the paths that would enable them acquire sufficient credit from investors to grow their businesses.
Speaking from an investor side of the divide, Omoigui, said it takes just 60 seconds to ‘see through’ an entrepreneur. “It is really depressing because it means you are going to have no chance to make a second impression. which means you have to go in prepared, and that is where it gets really hard because we’ve seen consistently how entrepreneurs are very unprepared, probably because they haven’t been mentored” he said.
As in other businesses, the challenge doesn’t end after getting the fund to run the business. Customers must be made and kept. Stella Obinwa, Chief Marketing and Business Development Officer, Wakanow, said three factors can help ICT firms create a growing and committed customer base; transparency, customer service and delivery.
Nigeria’s ICT sector is strategic and highly significant in this phase of the nation’s economic growth, especially with the evolution and progress of the telecoms sector, despite its numerous challenges.
Given its contribution to GDP and potential to develop, experts have called for the encouragement of investors to invest in the sector, to enable an increase in the quality and quantity of local Nigerian companies running ICT businesses.