Nigeria’s last cybercafés grimly hang on
BUSINESS| June 24, 2012, 8:22 a.m.
By Kokumo Goodie, Lagos, Nigeria
The looming end of the cybercafé era is threatening the livelihoods of numerous entrepreneurs. We spoke to some of them.
Bristling with energy and a determination to succeed, Akinbo Kayode, about 41, left the university ten years ago with high hopes of a fulfilling future. After the completion of the mandatory National Youth Service Corps, NYSC, programme, he returned to Lagos and began the search for the Golden Fleece.
He searched all the nooks and crannies of the city for a white collar job, which failed to come. Six months into the search, an idea struck him one day. “Go and open a tutorial centre,” a voice from within told him. He obeyed the voice and set up, with funds from family and friends, what is today known as Dolphin Kay Tutorial Centre in Dopemu, a sprawling low income residential area on the outskirts of metropolitan Lagos.
When the tutorial centre stabilised a little, Kayode used proceeds from it to diversify into what he felt was “the lucrative” business of cybercafé.
In one fell swoop, he committed about N1.5 million to the business.
When it started, he was making some money but a combination of factors colluded to stop the drum beat of celebration. Today, he is a disappointed man as his expectations are so very far from being met.
Chukwuma Aguomuo is another Lagos-based cyber café operator. When he started the business in the early 90s, it was a high-yielding venture, as an hour’s air time cost between N150 and N200. He combined the business with internet calls and made brisk business whenever it was time for the American Diversity Lottery programme.
He opened about eight branches across the city and employed staff to work for him.
Today, Aguomuo has not only closed all the branches, his major headache now is how and where he will get the one year rent he will pay his landlord in a month’s time for the warehouse that presently serves as his operational base.
“It is very sad that things have changed so rapidly for the worse. It is incredible that I don’t know where the rent for this place will come from when it is due in about two months time,” he lamented.
Deserted training centre
A mighty structure houses DS Cybercafé and Computer Training Centre in Egbeda, another Lagos suburb. Two years ago, this building was a beehive of activities as men, women, both old and young, thronged the place to browse and get computer education.
Today, the story has changed. It is virtually a deserted place with less than twenty functional computers. “Patronage has gone down tremendously. Time is about 2.00 pm, I have made less than N2000. So, the challenges are enormous as we barely manage to remain in business,” a young man who said he was not competent to speak for management explained to Biztechafrica.com some time ago. The shop has since closed down completely.
Six years ago, research showed that there were fewer than three computers per 1,000 people in the country while just one out of 1,500 people had access to the internet. Going by this, the cybercafés remain the veritable platform for bridging the digital divide and allowing more Nigerians to be part of the global village.
Sadly, however, this is not the case as the cyber business has virtually gone into extinction in the country. Research shows that in 2003, the country had over 15,000 cyber cafes, with over 10,000 of them concentrated in Lagos State alone. At the twilight of 2007, this figure paled into insignificance to just about 1,002. Today, it is estimated that there are less than 700 flourishing cybercafés across the country.
Temitpoe Akindele, CEO, Green Star Limited, a firm of licensed customs clearing and forwarding agents, decried the high mortality rate of cybercafés in recent times which he blamed on the economy and proliferation of smart phones.
“I am appalled by the rate at which the business has gone down in the country. it was a means of livelihood for many people in the country There used to be five in my neighbourhood but now, you have to go far to get one,” he said.
Layi Omotola of the Association of Cyber cafe and Telecentre Operators of Nigeria, ACTON, says in 2003, the country had over 15,000 cyber cafes, with over 10,000 of them in Lagos State. ”As at the end 2007, the number had dropped to 1,002, and with a recent statistics taken by us, functional cybercafés are now below 600,” he had lamented.
But how did this once flourishing business come to this sorry state?
Stakeholders in the telecoms sector blame the high cost of setting up and running a cybercafé as reason for the reversal of fortune in the sector, especially the cost of acquiring bandwidth.
Research shows that for one to set up a cybercafé, one would require an average of N2.5 million for internet connectivity, N150,000 monthly subscription fee aside payment for rent, computers and other infrastructural facilities that would make the place congenial for business transaction.
An average cybercafé would need between 40 and 50 computers and other accompaniments like printers, scanners and generators. Because the bandwidth is sourced from Asia, America and Europe, it is very expensive.
An independent internet group in Britain made a startling revelation in its research. According to the research, internet service providers, ISPs, in Africa lose over $400 million annually for pairing of local traffic in exchange and international bandwidth provision. This colossal loss is incurred because most African countries do not have internet exchange point, IXP, where ISPs can interconnect and share local traffic.
Kayode said he paid N450,000 to DPC to acquire its modem alone and another N30,000 monthly subscription fee. “How much you pay as subscription is a function of the number of computers you intend to use. I use only 10 computers and paid N450,000 and N30,000 monthly subscription fee,” he had said.
He says the virtual collapse of public power supply from the Power Holding Company of Nigeria, PHCN, constant harassment and extortion from security men, emergence of globall service for mobile communication, GSM, and private telephone operators, PTOs, offering internet service in their respective bouquets have considerably contributed to the near-moribund state the business is in the country.
While the cost of air time has gone down drastically from between N150 and N200 per hour to N100 and N80 per hour, administrative cost continued to maintain a steady rise.
Rent is reviewed annually while the pump price of petrol underwent iniquitous tinkling for more than a dozen times in the last eight years of former President Olusegun Obasanjo administration.
Today, automotive gas oil, AGO, or diesel goes for N150 per litre and above in the Lagos area while petrol has moved from N70 per litre to N97 courtesy of President Jonathan Goodluck’s New Year gift to Nigerians that voted him massively in anticipation of change.
Of all the challenges faced by operators of cybercafés, that of fake and substandard generators pose a daunting one. Since the beginning of this year, management of DS Cybercafe said PHCN has not supplied power for an hour.
Yet bills must come in at the end of the month. So, the firm, like others, makes do with generators. For his 40 kva generator, which runs on diesel, he spends N9,000 while the other two that use petrol would accommodate about 15 litres costing N1,800 which will last for only six hours before a refill. The problem now is that the generators pack up no sooner had they been purchased. “I bought that generator for N80,000, used it for only one month and it packed up,” he lamented. Kayode has about five condemned generators which he said he bought and used for only three months.
Even when the generators work, there are always fluctuations in the signal of ISPs. Thus, for one week, the signal strength may be as low as 25%. When this happens as it so often does, it is double jeopardy as they could neither make money nor recoup the lost down time.
Dr Jacob Nwachukwu, executive chairman, Corporate Medicals, physician and stress consultant, took the issue of downtime with no compensation up with regulator of the telecoms sector, the Nigerian Communications Commission, NCC. He complained bitterly about the pains he had to go through, regularly changing ISPs who do not care a hoot about down time.
Ernest Ndukwe, former executive vice chairman of the NCC, affirmed that indeed, subscribers are entitled to compensation for down time, adding that such issues should regularly be brought to the attention of the NCC. But how many of the operators know this and will take the pains to fight the battle? Many of them claimed they are ignorant about their right to compensation.
The sudden surge in cyber crime in the country has not helped matters. Kayode Afolalu, managing director of Brand Definitions, a brands and communication outfit located at the famous Computer Village, Ikeja, says the level of cyber crime in the country has made the law enforcement agents to see anybody browsing in a cyber café as a fraudster.
And contrary to the legal dictum of being presumed innocent until proven otherwise by a regular and competent court of law, you are presumed guilty and subjected to all manners of humiliation by barely literate but perpetually inebriated policemen. This, he says, is evident in the manner the cafes were constantly being raided by police, and patrons arrested, notwithstanding their innocence.
This embarrassing situation as well as other forms of disturbances encountered in cyber cafés, he said, are enough to discourage people from patronising them, and in turn make provisions for alternative. “If you are unlucky to be arrested at a cybercafé or attacked by armed gangs who may not only dispossess you of your cash and valuables, but your dear life, would you take the gamble of going there again? Afolalu asks. “So, people just buy the dongle, stay at home with their desk top or laptop to do whatever they wanted to do.”
The situation has even been made easy with original equipment manufacturers, OEMs, giving away free bandwidth of about 200 MB to sell their products. So also are GSM operators, who in an attempt to outdo one another, offer 100 per cent data in return for data purchased.
But it is also an incontrovertible fact that some cybercafés were real haven for young cyber criminals. By special arrangements, these criminals used to pay their way to have overnight access to the cafes where they send scam mails.
But an operator denied this and said those with criminal intentions now do it within the confines of their bedrooms. While this brings more money to operators, it brings international opprobrium to the nation.
E-commerce transactions have remained low in Africa because of internet fraud. Nigeria, sadly, is a giant in this regard as she is ranked the “riskiest” for e-commerce by on-line merchants across the globe because the country accounts for about 4.81% of global internet fraud.
In 2005 alone, the Federal Bureau of Investigation, FBI, a US security outfit and the Economic and Financial Crimes Commission, EFCC, carried out a joint operation that led to the seizure of goods worth N319 million in the Lagos area alone while the EFCC made seizure of over USD1 billion in laundered money.
One operator, who spoke on condition of anonymity, said the migration to electronic platforms by examination bodies like the Joint Admission and Matriculation Board, JAMB, the body that conducts University Matriculation Examination, UME, the West African School Certificate Examination, WASCE, the General Certificate of Education, GCE, NECO and recruitment into the armed forces and other places of employment, operators make seasonal gains.
“We see business during registration for examinations because even if they can do the registration with their handsets, they cannot print. So we make money from printing and registering them online for examination,” he said.
Even with this avalanche of challenges, all hope is not lost as stakeholders called on government to do the right things by fixing the comatose power sector and domesticating satellite so that signals would no longer be routed from Europe and other Asian countries.
MORE BUSINESS NEWS
Riverbed to be acquired by Thoma Bravo in $3.6bn dealRiverbed Technology has entered into a definitive agreement to be acquired by leading private equity investment firm Thoma Bravo, LLC and Teachers’ Private Capital, the private investor department of Ontario Teachers’ Pension Plan. Read More
Egyptian revival spurs MEA PC market growthThe PC market in the Middle East and Africa (MEA) region grew 2.1 per cent year-on-year in the third quarter of 2014, according to the International Data Corporation (IDC), spurred by the revival of the Egyptian market and two significant education deals in Pakistan. Read More
ICT set to shape Africa's economic landscape in 2015With public cloud in emerging African countries set to grow at a compound annual growth rate of up to 84% over the coming five years, the year 2015 heralds the beginning of a new era for ICT adoption across the continent, says IDC. Read More
88mph and Microsoft Ventures partner to support startups in NigeriaMicrosoft, in partnership with 88mph, has announced the expansion of the Microsoft Ventures program into Nigeria. Read More
Riverbed names new senior VP of Sales in EMEARiverbed Technology has announced that Kristian Thyregod has been promoted to Senior Vice President Sales, in Europe, the Middle East and Africa (EMEA). Read More
M&A, infrastructure sharing, liberalisation to reshape telecoms in AfricaMergers, acquisitions, infrastructure sharing and market liberalisation will reshape Africa’s telecommunications markets by 2018, according to market analysts Frost & Sullivan. Read More
Dell, Intel study uncovers truth behind technology and the workforceDell and Intel have unveiled findings from its second Global Evolving Workforce Study, which identifies, and explores current and future trends pertaining to the workplace and workforce, and the role that technology has played in their evolution. Read More
PWC: Optimism abounds but a bumpy journey ahead for somePwC’s ‘Capital Projects & infrastructure in East Africa, Southern Africa and West Africa,’ report says infrastructure spend in the region is projected to reach $180bn per annum by 2025. Read More
Why govt listed Glo, others as top firmsNigeria’s national carrier, Globacom and 99 other top notch firms have been listed as top 100 Firms in Nigeria for the 2014 fiscal year. The top 100 companies list is based on international benchmark set by the International Integrated Reporting Council. Read More
Women can lead 21st century ICT industry, says Zinox chiefWith the right mix of innovation, business focus, accountability and ambition, women entrepreneurs can spearhead the evolution of the ICT industry in the 21st century, says the Chairman, Zinox Group. Read More
FEATURED STORYPWC: Optimism abounds but a bumpy journey ahead for some
PwC’s ‘Capital Projects & infrastructure in East Africa, Southern Africa and West Africa,’ report says infrastructure spend in the region is projected to reach $180bn per annum by 2025.
BEST READ NEWS
IN DEPTHAfrica lags on digital migration
Only three African countries have so far completed the digital migration process, and serious issues are hampering the migration in other nations.