$15m ICT Venture Capital Fund Underway – Johnson

The Minister of Communication Technology, Mrs Mobolaji Johnson, said on Tuesday in Abuja that the Federal Government would soon launch a $15 million ICT venture capital fund.

Johnson disclosed this to newsmen after presenting the budget performance of her ministry to President Goodluck Jonathan.

She said that the fund, which would be substantially private-driven, would be used to finance commercially viable projects, ideas and initiatives in the ICT sector.

The minister said that the Nigeria Information Technology Development Agency (NITDA) would anchor the fund and contribute about $3.6 million to it.

She said the balance of $11.4 million would be sourced from local and international investors, and that the fund would be managed by independent managers, who would work with the ICT incubation team.

Johnson said the managers would identify projects or initiative that “we believe are great ideas that will be commercially successful’’.

“We will use the initial capital development fund of 15 million dollars to fund the development of those ideas until they become commercially viable.”

“Basically, the reward is when they get a commercial viability and you sell them off or you do an Initial Public Offer (IPO) like they do with Facebook and all those companies where the returns go to the investors”.

“As we become more successful we will raise additional money.’’

The minister said that the country had yet to record the expected success in the telecommunication sector because of lack of necessary facilities.

According to her, the perceived success recorded with the increase in the number of telephone lines from 400,000 to 101 million was not enough when compared to other African countries.

She said that inadequate infrastructure was also responsible for the poor quality of service being rendered by service providers to the subscribers.

“When you look at the mobile penetration in Nigeria, we are about 60 per cent which is actually one of the lowest in Africa.

“What is the reason for the poor quality of service? It is the first part that I mentioned, poor infrastructure,’’ she said.

Johnson said that the United Kingdom with a population of about 67 million and less land mass, had over three million sq. km of fibre optic and 60,000 base station.

She said that Nigeria with about 167 million people had one million sq km of fibre optic and 20,000 base stations.

“The industry has grown very quickly and we are not building up infrastructure as quickly as we need to.

“And so what we need to do is to actually build infrastructure, and that is why we are working with the network operators to build infrastructure.”

The minister identified policies, the state governments and destructive tendency of Nigerians as part of the challenges facing the development of ICT infrastructure.

For instance, she said that the procedure for acquiring the right of way for the fibre optic in the states was “protracted, cumbersome and expensive.”

According to her, the Federal Government time limit for approval for right of way is 21 days with a cost of N145,000 per km, while some states charged between N1 million to N2 million per km to rollout the fibre in their domain.

The minister said that there were also reports of willful damage to telecom infrastructure by saboteurs.

She said that 9.8 per cent of the ministry’s N9.2 billion capital budget had been released, while only 16.5 per cent of the amount released had been used.