Austin Okere is the Founder of CWG Plc, the largest Systems Integration Company in Sub-Saharan Africa. An Entrepreneur in Residence at CBS, New York, Okere also serves on the World Economic Forum Business Council on Innovation and Entrepreneurship after the body in 2014 adjudged his CWG as Global Growth Company . Apparently, this has given the background to why he has strong passion for development of Nigeria’s informal sector.   How to go about this development and some of the benefits, are what he discussed with our Hi-Tech Editor,   PRINCE OSUAGWU.

THERE’s the belief that government has not been able to aggregate the potentials of the informal sector and put it out there for people to know where to invest. Is that not a setback to companies like CWG, especially for the business and plans you have for that segment?

Austin Okere

If we don’t address it, it will be a setback for us. It’s good to celebrate successful moguls like Dangote, Elumelu and others; they are billionaires, which is fine. But the true motivation is to have a situation where a billion Naira is spread over a million entrepreneurs.

Each will then have access to N1m to invest in their respective ideas. I believe the impact will be more significant and inclusive. I am not advocating that you give out money to people as a gift, but give them to start a business from which they will pay back and uplift others.

Innovation and entrepreneurship

If people are empowered to start businesses, it will in turn create more jobs, this is more impactful and better than having just ten billionaires in a country of 170 million people.

Why has CWG not spearheaded this?

What we did as a company, is to be listed in the Nigeria Stock Exchange in 2013 because we have always emphasized that CWG is not going to be a one man company that dies with the owner, we have to make it a strong institution. Like I said earlier, I retired in 2015 and I am happy the new leadership is taking the company in the direction that we jointly laid out, which is very good.

CWG was recognized in 2014 by the World Economic Forum (WEF) as a Global Growth company, and I was invited to serve on the WEF Business Council on innovation & entrepreneurship. I was also invited to serve as an Entrepreneur in Residence (EIR) at Columbia Business School, New York after they did a case study on our company.

Why is it so important that govt must develop informal sector

So, the informal sector is very important and should be developed and formalized at every opportunity because if people, for instance, are unbanked, any monetary policies of the government is blunted because the money is not in the formal sector. Government must target the informal sector; I appreciate the mobile money, which is targeted at bringing the informal sector into the banking sector. Businesses in the informal sector must be empowered to grow just like CWG has grown.

CWG is in four countries; Nigeria, Ghana, Cameroun and Uganda; we also have six partners in Africa and together cover 28 countries; it’s exactly what we do here that we export to those countries to empower their SMEs. So in these 28 countries, we are addressing a consolidated market of over 600 million people.

This has helped us to form a big trading block that has economic power, that when we are negotiating deals, we can negotiate as a strong block and get significant discounts from our foreign suppliers, which we can pass onto our customers. The problem is most of the local companies operate in small, isolated units so they hardly get a good deal that consolidation brings, and are not able to scale.

The informal sector is very important to us, and we are helping the government to generate ideas that can move the sector; mind you, those in this sector are not poor people, they are only disenfranchised. If I live in a place where the nearest bank is very far away, I will not be encouraged to go to the bank, but if you can bring the bank to my phone, then you have taken me from the informal to formal.

There is also the need to train marketable graduates that can learn how to learn, which is what their peers in the advanced countries are doing. We must be able to train our graduates to follow global trends and adapt them to local markets.

How is the forex market affecting the ICT industry?

The forex market is presently a disaster for all of us. Every time we find ourselves in this forex situation, Nigerian businesses bear the brunt. In 2008-2010 when the global recession happened, a lot of businesses died mainly in the Stock Broking sector. Now, businesses are dying again because you find a company that has for instance a $10 million trade bill, and by the time the company signed a contract with its foreign partner, the dollar was N178.

Foreign partner

Now, the dollar has moved to above N300, they still have to repatriate to their foreign partner because if the local company doesn’t repatriate, the foreign partner will not supply again or they will take the local company to court. o, either way, it is the local companies that are going to suffer the exchange loss, not the customer nor the foreign supplier. This is not only happening in the IT sector, but also in other sectors because we are all importing raw materials and machineries, which must be paid at the new exchange rate. A lot of companies are going to die because of the forex market; and it is going to be very painful because it means a lot of jobs will go too.

You were part of a broadband initiative called NgRen, how did it just suddenly die?

This makes me so sad. Yes, in 2013, the World Bank and the Federal Government through the Nigeria University Commission put out a bid for the Nigeria Research and Education Network (NgREN), which CWG and a Consortium of local IT companies delivered. The first phase of the project which connected 27 Universities, the CVC and the NUC, with over one million users, delivered 155mbps capacity to each university and providing high definition telepresence capabilities for real-time collaboration, voice over internet protocol, shared access to research content and joint experimentation projects.

The second phase was planned to cover five more clusters of about 100 institutions and five million users. Subsequent phases were to cover all higher education institutes numbering over 600; Federal, State and Private. The network was to be connected to the London Open Exchange via an international private leased circuit, and offer additional services such as web hosting, unified communication, digital library collection, video bridging and archiving services.

This indeed would have afforded Nigerian Universities the opportunity to take a quantum leap in standards, and significantly improved their low ranking in quality of teaching and research output, and thereby bringing them closer to their global peers. But alas, this is not to be, as this laudable project has been shut down for the past eleven months due to non-payment of the segment bandwidth fees. The consortium of local providers have however, left all the equipment intact in good faith, awaiting the provision of bandwidth to restore services.

How can services be restored?

Apart from the immense benefit in value and standardization, the economies of scale of the project saves the universities immense costs, as embarking individually on such a project will be grossly suboptimal and prohibitively expensive.The NgReN provided a very fast Internet, 20 times more than what the Universities could have gotten if they have done it by themselves, albeit at a fraction of the cost.

What the government needs to do is to pay for the subscription so that the system will come back up. The question is where is the willingness? The responsibility to pay is being transferred between TeTFund, Ministry of Education and the National University Commission. As a Nigerian, I feel very bad about it because it doesn’t take anything to turn it on; it is like somebody who already has Decoder and the Dish for DSTV, all that is needed is just to pay for the subscription to get the service. It is really painful because it’s like taking one step forward and two steps backward.

In what areas do you think private public partnership can help protect the infrastructure needed for a viable ICT industry?

This is important because the handshake between the public and the private sector is crucial. It’s true that we can leapfrog with digitalization into a middle income country. We have proven that in Nollywood; out of nothing, we created a very big industry that is recognized anywhere you go in the world; Nigerian films and music are being watched and listened to far and wide. But the question is, are we getting the value for it, are they being paid the right royalties?

Digitalization can democratic distribution and optimize revenues, but digitalization rests on the availability of power; if there is no power, the guy that wants to use his phone for e-commerce and mobile banking cannot charge the phone and is locked out. Fixing the power situation is fundamental to leveraging technology to leapfrog. We have developed solutions along with our foreign partners that address revenue losses in the power sector and are discussing with some of the DISCOs on availing them of the technology.

Another obstacle with leapfrogging with technology is regulation. Innovation is moving very much ahead of regulation. In America, for instance, the new disrupters like the Uber and Airbnb are moving way ahead of regulation. Where regulation has not caught up with them, they just create theirs and continue because there is demand for their service. Uber for instance doesn’t have any license, but the government has not been able to intervene it because everybody needs the service due to the perception of value and convenience.

If the majority is seen to be breaking the law who will you arrest? Netflix was illegal, but today it has become the de facto video streaming service. So, popular request and demand will shape regulation if it doesn’t move with the trend. The new digital economy is like a moving train; three things can happen: if you stand in front of the train, it will crush you; if you stay on the platform, it will leave you behind; or you get on the train. So, I believe the public and the private need a handshake, especially in the area of regulation evolution.

Another area where help is needed is fair trade; look at the big companies like Microsoft, Oracle and the others that have offices in Nigeria, how much tax do they pay? It seems that the Resellers are being saddled with the taxes of these companies. The National Office for Technology Acquisition and Promotion (NOTAP) has a code of guidelines for engagement between Original Equipment Manufacturers (OEM) and Value Added Resellers (VAR), which was derived from consultative meetings, after which a communiqué was published.

But from all indications these guidelines are being vagrantly flouted. The essence was to establish fair trade terms for the parties. The guideline stipulates that the OEMs take 60 percent of any technical support contract, while the local VAR takes 40 percent on the support revenue. It also stipulates that the VAR be trained to acquire the competence to earn her share of 40 percent.

But as I speak to you, local companies do these support jobs for a pitiful for 5-10 percent and also incur the liability that the OEMs should pay. By the time these taxes are withheld, the local companies end up making a loss. This is one of the main reasons why most of these local companies are dying. While NOTAP acted in the best interest of the local companies, enforcement is seriously lacking.