By Afolabi Oke

Director Global InfoSwift 10th April, 2013

• The West African Sub region consists of 16 countries including Benin, Burkina Faso, Cape Verde, Cote D’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. Whereas Burkina Faso, Mali and Niger are landlocked countries, the rest are coastal States with a total of 16,663 KM of navigable rivers and other inter-land waterways.

• However, as is seemingly always the case, where some investors see risk, others seek and reap reward. And it is these intrepid investors – those who look at promising economic figures and read the writing on the proverbial wall, that we commend for integrating with a cohesive West African market. This market is unwaveringly on the rise and we implore such international connectivity while at the same time the benefits far out weighs the media perception in most cases.

OVERVIEW OF THE WEST AFRICAN MARKET

• Nigeria is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in the north. Nigeria is a vibrant country with a rich and diverse culture.

• Nigeria is the most populous country in Africa and the eighth most populous country in the world. It is a member of the Commonwealth of Nations. Lagos alone has a larger population than Lebanon and Botswana put together.

• Nigeria has strong history, language and constitutional ties with many countries example, it is the UK’s 33rd largest overseas market and 2nd largest African market for goods. UK exports of goods to Nigeria were worth £1,235m in 2009 and the export of services was worth £1,279m in 2008. British investment in the country is in the region of over £1bn and still growing.

•

OVERVIEW OF THE NIGERIAN MARKET

• Nigeria ranks third on the African continent for factory output and fifth for services – this despite the fact that the nation operates at far below its inherent natural capacity.

• We have seen India seek to increase its trade with Nigeria as of late, and China has also placed greater emphasis on the Naira market – most notably by signing a major agreement to build an oil refinery in-country. It is from this impressive backdrop that the West African nation has emerged as the continent’s third-largest economy with a determinedly bright, globally-interconnected future.

OVERVIEW OF THE NIGERIAN MARKET

• The Nigerian market can boast of the following key strengths:

• English is widely spoken and accepted as the business language.

• Same time zone as Dublin / UK

• £1 Billion worth of UK investment in Nigeria with leading investors such as Shell, Unilever, Cadbury, Guinness, Standard Chartered, Blue Circle and British Airways resident in the country.

• New investors continue to find opportunities in Nigeria

• Nigerian economy is growing at a rate of over 3% per annum according to IMF projections.

• Investment incentives in form of Free Trade Zones, and tax holidays.

• Availability of support from lawyers, accountants and consultants already well established in Lagos to help foreign investors.

• Direct and interconnecting flights from Many parts of the World to Lagos and Abuja.

STRENGTH OF THE MARKET

6

THE NIGERIAN FINANCIAL SERVICES CLUSTER

8

Back Office

Operations

Cash Management

IT Standards

IT Infrastructure &

Services

Payment Systems

Transformation*

SHARED SERVICES PROGRAM

• Enable cost reduction through shared back office operations (centralized processing, collections; etc)

• Increase efficiency and reduce cost of operations/maintenance for IT and infrastructure (application management, data centre, shared network, shared power.

Facilitate growth of electronic payments Increase

availability, reliability and security of electronic channels

Industrialize Cash Management & Logistics (Storage, Processing & Movement)

• Align IT standards across the Industry to improve efficiency, while driving data integrity and enabling information exchange

• Reduce Industry cost-to-serve by 30% 1

• Increase access, convenience and service levels across the Industry

• Enable greater financial inclusion and integration of financial services into the economy, with its attendant positive impact on economic development

2

3

* Payments is the key driver of cost of distribution, which accounts for almost 60% of the industry cost base and embedded in the payments structure is cash management.

CBN AND THE BANKERS COMMITTEE INTERVENTION PROGRAMME CREATED THE SHARED SERVICES PROGRAM

Payment Channel Transaction Volume

ATM Withdrawals 109,592,646

OTC Cash Withdrawals 72,499,812*

Cheques 29,159,960

POS 1,059,069

Web 2,703,516

85%

14% 0% 1%

Cash

Cheque

POS

Web

Cash related transactions represented over 99% of customer activity in Nigerian banks as at December 2011. ATM machines were also used primarily for cash withdrawals.

2009 study with data from 17 banks in Nigeria

Total cash related costs for the financial industry is estimated to be 30%. This is broken down into branch physical space, employees and logistics for cash management.

This cost of cash and other expenses is appropriated to the entire banking customers, thereby making banking services expensive.

NIGERIA WAS A CASH BASED ECONOMY WITH RETAIL AND COMMERCIAL PAYMENTS PRIMARILY MADE IN CASH

Cost of Cash (CBN + Banks)

N114.5bn

Vault Management Cost (9%)

N18.1bn*

N69.1bn

Cash Processing Cost (67%)

N27.3bn

Cash in Transit Cost (24%)

Direct cost* of cash to Financial system (2009)

A 5-year projection of the direct cost of cash

to Financial System

An

nu

al T

ota

l Co

st (

NB

n)

-

50,000

100,000

150,000

200,000

250,000

2008 2009 2010 2011 2012

Source: A compilation of actual data from the CBN and17 banks in the FSI (data extrapolated for 24 Banks). *Does not include bank cash infrastructure costs and employee costs attributable to cash logistics

COST OF CASH TO NIGERIA’S FINANCIAL SYSTEM IS HIGN AND INCEREASING. IN FACT, DIRECT COST OF CASH WAS ESTIMATED TO REACH N192 BILLION IN 2012 ( $1.2b )

Alternative channels for retail and commercial payments (retail outlets, petrol stations, shops, lock out shops , taxis/public transportation, parking etc.)

Increase utilization of electronic payment channels

Accelerate POS density in commercial locations

2015 target for major commercial cities

486

1,063

2,0912,247

2,091

1,063

592

67338453

13

Nigeria Namibia Chile Mexico Brazil India South

Africa

Malaysia Uganda Portugal Singapore

*POS Density Per 100,000 people

10

THE BANKING INDUSTRY IS COMMITTED TO CREATING AN ENABLING ENVIRONMENT TO ACHIEVE A SHIFT IN BEHAVIOUR TO ALTERNATIVE PAYMENT CHANNELS

Banks

CBN

CASHLESS LAGOS

NIBSS

Merchants/ Consumers

POS Manufacturers

Telecom Providers

Switches/ Processors

Lagos State Govt.

GOALS:

• Implement new cash

policy and demonstrate Feasibility/Benefits

• Significantly increase POS

penetration and usage

• Significantly push awareness and usage of other electronic channels (e.g. Direct Debit, Electronic Funds Transfer, Mobile payments, ATMs etc)

Pilot went live in January 2012

“ CASH – LESS LAGOS PILOT “ IS THE CROSS- INDUSTRY COLLABORATIVE EFFORT EXECUTING THE PAYMENTS TRANSFORMATION PLAN

“ WHY LAGOS? – THE NEW EKO ATLANTIC CITY, DESTINATION FOR GLOBAL INVESTMENT

Our Vision The new city of Eko Atlantic is reportedly the most impressive urban land reclamation development project in Africa.

The Opportunity of Eko Atlantic Building a new city that will become the financial centre of Nigeria, if not West Africa, is a major undertaking. The scale of the Eko Atlantic project is immense and progress is being achieved through a team effort between investors, planners, engineers and contractors. The development brings together private individuals and companies who have the knowledge and expertise to transform land lost to the power of the sea into an ocean front city that will be one of the wonders of the 21st century.

13

ICT PENETRATION IN NIGERIA’S FINANCIAL SERVICES MARKET

THE NIGERIAN DIGITAL ECONOMY STATISTICS AS AT 2010 VS PROJECTED 2015

Contribution of ICT Industry

to GDP

3.5 % Broadband Penetration 6.1%

Mobile Penetration ( per 100

people )

58.50 % PC Penetration ( No of PCs per

100 People )

4.7 %

Fixed Penetration

( Per 100 people )

o.70 % Computer Assembled in Nigeria Less than 500,000

Internet Penetration ( per

100 people )

21.1 Number of registered ICT

Companies

350

Internet Users 33,576 ICT Professionals NA

Contribution of ICT Industry

to GDP

5% Broadband Penetration 12%

Mobile Penetration ( per 100

people )

80% PC Penetration ( No of PCs per

100 People )

12%

Fixed Penetration

( Per 100 people )

2.0% Computer Assembled in Nigeria More than 1M

Internet Penetration

( per 100 people )

34.0 Number of registered ICT

Companies

350

Internet Users 70,000 ICT Professionals 260,000

STATISTICS AS AT 2012

PROJECTED STATISTICS FOR 2015

Federal Ministry of communications / Technology

15

Mobile Network

Operators

Satellite Operators

Fixed Wireless

Operators

Fixed Wire-line

Operators

Internet Service

Providers

Device Maintenance & Repairs

Device Assembly

Infrastructure Services

Training & Education

Transaction

Services

Equipment Maintenance

& Repairs

Equipment

Sales &

Distribution

Equipment Assembly

Call Center Operations Research & Development

Support Services

Software Development

Access Provision

Business Process

Outsourcing

Converged Services (Data, voice & media)

Annual Maintenance & Support (servers & storage)

Software Maintenance &

Support

Software Installation & Customization

Software Sales &

Distribution

Value

Added

Services

Infrastructure Service Providers

Device Sales & Distribution

IT Consulting Services

ICT VENDOR PENETRATION IN NIGERIA’S FINANCIAL SERVICES MARKETS IS STILL DEVELOPING

• New Horizon

• karROX

• HIIT Institute

• NIIT

• ExpertEdge

• APTECH

• Global InfoSwift

• Global InfoSwift

• Accenture PriceWater House

• KPMG

• Akintola Williams Delloite

• Ernst and Young

• Taviatech

• BCX

• SystemSpecs

• Accenture

• ExpertEdge (CWG

• Subsidiary)

• WestCon

• Expert Edge (CWG Sub)

• Taviatech

• G4V

• Global InfoSwift Ltd

Software Sales, Maintenance & Support

System Integrators & Software Development

Training & Education

R & D and IT Consulting Services

VENDOR LANDSCAPE

Expertise in the following areas:

» Programme Management

» Business Transformation

» Business Process Re-engineering

» Operational Excellence

» Information Security Management Systems

» Business Continuity Management

» Governance Risk & IT

» Knowledge Management. Etc.

Our objective

» To deliver the highest quality of Service to our customers –

Achieved

ADOPTION OF BEST PRACTICE :-GLOBAL INFOSWIFT IS THE FIRST ORGANISATION TO CERTIFY FIRST BANK OF NIGERIA TO ISO 27001 & BS 25999 STANDARD AND CURRENTLY

DOING SAME FOR CENTRAL BANK OF NIGERIA

• Computer Warehouse Ltd

• Allied Computers

• WECO Systems

• Channel IT

• Dimension Data

• Redington

• Westcon

• Global InfoSwift

• Accenture PriceWater House

• KPMG

• Akintola Williams Delloite

• Ernst and Young

• Swift Network

• Mobitel

• DCC

• Telnet

•MTN Main One

•GLO IPNX

•Airtel Mobitel

•Etisalat

•Visafone

•Multilinks Telkom

•Starcomms

Mobile Network operators / ISP’s

Fixed wireless operators / Satellite operators

Infrastructure Equipments / Sales & Support ( Servers, Storage & peripherals )

R & D and IT Consulting Services

VENDOR LANDSCAPE

19

Software Installation and Customization

Research and Development

Business Process Outsourcing

Equipment Maintenance and Repairs

IT Consulting Services

Equipment/Device Assembly

Infrastructure Services

Fixed Wireless Operators

Satellite Operators

Legend High growth

Medium growth

Low growth

Transaction Services

Training and Education

ARRAYS OF BUSINESS OPPORTUNITIES AND GROWTH AREAS IN THE SHORT AND MEDIUM TERM

• MTN is a Pan-African operator, which initially started in South Africa in 1994. In 2004, it serves 9.5 millions subscribers in 6 different countries of Sub-Saharan Africa (South Africa, Nigeria, Cameroon, Uganda, Rwanda and Swaziland).

• Strategy: MTN positioned itself as an African group. Its mission statement claims that its wants to “become the leading provider of communication services on the African Continent, linking nations by providing an affordable, accessible and quality service that is a catalyst for economic development

• Hence, at the end of 1999, the Nigerian government announced their decision to offer 3 GSM licenses for a fixed price of 250 Millions US$ each . In 2001, the 3 licenses were granted to MTN (South Africa), Econet (Zimbabwe) and the Nigerian incumbent operator Nitel.

• There were 4 millions mobile subscribers in 2004 (to be compared with the 400 000 fixed lines installed in the country in 1999) shared between 4 operators : the three initial ones (MTN, Econet, Nitel) and a new entrant at the end of 2003, Globacom.

• The least that could be said is that the results of MTN have been impressive. MTN Nigeria had 1.96 Million subscribers (representing a total market share of 48%), and is the most recognized brand in the country (a survey indicated a 71% rate of brand awareness).

• More surprising are the financial results. Not only MTN experienced an explosive growth of the number of subscribers, but those subscribers also proved to be heavy spenders. The average revenue per user (ARPU) was 51$ / month, second only to Japan. As a result, MTN Nigeria posted a net profit of 364 M$ for the financial year 2004, which represent a net margin of 34%. This led MTN being the most profitable operator in the world in 2003 (Most European operators such as Vodafone and Orange were at the same time posting net losses).

FDI IN TELECOMS : THE SUCCESS STORY OF MTN IN NIGERIA

SUCCESS STORY OF CR2 ( Dublin based company ) IN NIGERIA

• Local representation • Nigeria is a highly competitive market, thus efficient local representation is vital in

determining the way in which a particular commodity or service is marketed in the country. • Exporters seeking agents are advised to do so through their local office in the Regions.

Alternatively, arrangements for representation in Nigeria can be made through the Irish Embassy

• Before establishing formal agreements, it is important that exporters enquire about the sales

strategy of their potential representative. It is normal, but not obligatory to give sole representative rights for the whole country to one agent.

• It is advised that exporters visit the market regularly. Such visits are invaluable to the

exporter to gain an appreciation of local market conditions. While in the market, it is advisable to call on the local Embassy for advice.

• Finally, it is strongly recommended that companies seek legal advice when drawing up

contracts with agents. The Irish Embassy in Nigeria can supply a list of lawyers.

PREPARATION TO EXPORT TO NIGERIA ( NEXT STEPS )

• Methods of Conducting Business

All businesses must be registered with the Registrar-General of the Corporate Affairs Commission (Registrar of Companies). A foreign investor wishing to set up a business operation in Nigeria should take all steps necessary to obtain local incorporation of the Nigerian branch or subsidiary. Business activities may be undertaken in Nigeria as follows:

• Private or public limited liability company; • Unlimited liability company • Company limited by guarantee • Foreign Company (branch or subsidiary company) • Partnership/Firm • Sole Proprietorship • Incorporated trustees • Representative office

HOW TO DO BUSINESS IN NIGERIA

• There is no question that doing business in West Africa is not simple. Attention is often diverted to political and social conflicts, national infighting and security risks. One can look at the recent events in Mali and even the attacks in Kano, Nigeria and feel justified in rushing to a conclusion that investment in West Africa is a roll of the dice too far.

• However, to divert attention away from such an ample opportunity at this inflection point would be costly, as one will not only miss an opportunity to dynamically amplify their business offering, but also the chance to serve as bold actors in the transformation of a region, indeed a continent. West Africa is not a dream, but a reality worth pursuing.

CONCLUSION