When fully utilised, the $400 million credit facility from China Exim Bank for laying of fibre infrastructure across states in Nigeria would enable pervasive broadband penetration and also a possible forieign dominance of technology assets in the country.
The loan is primarily to support Nigeria’s National Information and Communication Technology Infrastructure Backbone Phase 11 (NICTIB II) between Galaxy Backbone Limited and Huawei Technologies.
On the back of recent reports that some conditions in the loan could undermine the sovereignty of Nigeria, Galaxy Backbone (GBB) explained that “the NICTIB Phase II is a sovereign loan of national scope and for national infrastructural development in the area of ICT national broadband between the federal republic of Nigeria (Federal Ministry of Finance, Budget, and National Planning) and China Exim Bank representing the Republic of China.”
Galaxy Backbone is supposed to be an implementing agency under the supervision of the Federal Ministry of Communications and Digital Economy. At completion, GBB expects the project will deepen the broadband penetration in Nigeria and improve the internet and network communications experiences of not just agencies of government, but of the entire country.
Following the recent decision by a few Nigerian states to either eliminate or adopt the National Executive Council (NEC) approved N145 fee for the right of way (RoW) there has been increased drive by operators to lay cables across the different states. MTN, the largest mobile network in the country has requested approval to lay 160 kilometres of fibre in Ekiti, the first state to adopt the N145 fee. The state has also signed an MoU with O’odua InfraCo to lay 606 kilometres of fibre.
As significant as the renewed interest are, they are only a drop in the ocean of what is needed to improve broadband penetration in the country which is currently at 41 percent. Nigeria has only deployed 38,000 kilometres of fibre optic cables. The country requires an additional 120,000 kilometres of fibre network to achieve wider broadband coverage.
Armed with the $400 million loan, Galaxy Backbone expects fibre infrastructure to cover a sizeable portion of the country’s landmass. Olusola Teniola, President of Association of Telecommunications Companies of Nigeria (ATCON) and a member of the steering implementation committee for the National Broadband Plan 2020-2025, told BusinessDay that the project plans to coordinate efforts of other stakeholders in the private sector to ensure that the country reduces the deficit of 120,000 kilometres by 2023.
“The aim of this project is to ensure that there is a backbone for the federal government of Nigeria and also it would also be available on an open-access phase which aligns with the Nigerian broadband plan of 2020-2025. Why is it an Open Access model? It is because we want to avoid duplication,” he said.
Phase I of the project which has been completed saw the commissioning and coverage of 1484 kilometres of fibre cables spanning 13 states in the southeast, south-south, north-central, and southwest of Nigeria and base stations installed in 17 cities. The 17 cities include Abuja; Akwanga; Lafia; Makurdi; Ugbokolo; Enugu; Awka; Onitsha; Owerri; Port Harcourt; Eket; Uyo; Asaba; Benin; Ore; Ijebu Ode; and Lagos. The fibre infrastructure is expected to provide services such as internet bandwidth, clear channel, dark fibre, last-mile connectivity, and video conferencing.
Galaxy Backbone expects that by the end of phase II of the NICTIB, the backbone would have increased to 3441 kilometres of optical fibre traversing 41 cities including cities in the northeast, northwest, and southwest of Nigeria. This will close Nigeria’s fibre ring for better protection and give an assured 99 percent availability and better quality of service.
Although Huawei’s role in the project is not made public, the company is clearly in the best position to manage a project of that magnitude given it is one of the largest technology infrastructure providers in the world with a network of professionals with vast experiences in managing such infrastructure. Moreover, it is likely in the best interest of the lender, China to trust its company to oversee the management of its investment.
The vast majority of infrastructure financing arrangements done by China in Africa are financed by the China Exim Bank, which (like any Exim Bank) is devoted primarily to providing export seller’s and buyer’s credits to support the trade of Chinese goods. By providing preferred lines of credit to Chinese state-owned enterprises and foreign governments, the China Exim Bank supports the overseas expansion of Chinese firms in line with the country’s “Go Global” strategy whose long-run goal is to increase the productivity and competitiveness of these enterprises vis-a-vis their global competitors.
Huawei is expected to work with local stakeholders in the operation of the backbone project.
“The way we are going to achieve the targets of the Nigerian Broadband plan will be a collaboration between the private sector and the government,” Teniola said.
Nonetheless, Huawei managing 3441 kilometers of fibre infrastructure from 2023 puts it among the top operators in the country and a major foreign investor.
Facebook also plans to complete its 2Africa subsea cable which covers over 16 countries in Africa including Nigeria.
When the 2Africa cable is completed, Facebook expects it to deliver an expansive internet capacity, redundancy, and reliability across Africa; supplement a rapidly increasing demand for capacity in the Middle East; and support further growth of 4G, 5G, and broadband access for hundreds of millions of people. With thrice the capacity of existing cables, Facebook would by far become the largest network operator in Nigeria and Africa.
“Foreigners are buying up Africa’s future. Tech is the future. We know and have seen it, but rich Africans want zero parts because we don’t want to take the risk,” said Eleanya Eke, cofounder of Rise Vest. “When all your future strategic industries tomorrow are owned by foreign capital you all will complain.”
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