It’s tough operating Pay-TV business in Nigeria — Nwafor

 
Wed Nov 7th, 2018 - Abia
 

Anambra state born, US-trained Dr. Ifeanyi Nwafor is founder of Metro Digital Cable TV, a pay-TV operator based in Port Harcourt, Rivers State. He is also Managing Director of Denna Rossi Ltd among other business interests.

Nwafor

He tells Vanguard in this conversation that investing in Nigeria means surmounting challenges, which can be very discouraging, but peculiarly profiting to those who persevere. Excerpts:

By Egufe Yafugborhi

Why leave the advanced US environment to invest in Nigeria?

There is no place like home. When I left to study in the US, my plan from beginning was when I am done with studies, I would return to Nigeria to participate in nation building. After obtaining my PhD from Brown University, I worked for several companies in the US including Andersen Consulting.

When I felt I had acquired reasonable experience, I set up my own company, Trycox Incorporated, a software development firm. I ran Trycox with my co-founder till 1999 when we sold it to Skywire Software. I was with Skywire till 2004 when I decided it was time to come back home to Nigeria.

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Why invest in cable television?

My PhD was in an area of Mechanical Engineering called Computational Field Dynamics, a combination of Mechanical Engineering and Computer Science. So I am kind of caught in both areas. I can work in mechanicals and computers.

When we sold our company in the US, I asked myself what business I could do in Nigeria. Weighing options, I settled for cable television. During previous engagements as a consultant, I did some work with a satellite TV company and that exposed me to some of the things they do. So when I returned to Nigeria looking at investment options, Cable TV came fast to mind.

What challenges did you encounter?

Before I came back I did a feasibility study on how much it was going to cost me to start. I prepared myself for that, but when I came in I found out that with the different environment, everything cost much more than what we thought we needed. I had to go extra mile in putting everything together.

More challenging was the fact that when we approached the banks for support capital, no one was willing to give. Even when the cable TV was already working, the station on air and we needed money to get decoders, we went to many banks and couldn’t secure a dime. We had to task our creative minds to come up alternative funding solutions.

How were you able to secure market share?

We had to do a lot of hard work. One thing with cable TV is that you need constant power supply and every capable expertise to get your stations up 24/7. Consumers don’t accept any downtime. They want to see someting anywhere they turn on their TV.

To achieve that satisfactorily in the competitive cable market, we had to work extra hard to ensure all equipment are well maintained. That required a lot of staff training to overcome whatever challenges that come along. That’s how we’ve been able to maintain our standards from 2004 till date.

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Any special reason you chose to operate from Port Harcourt?

Licenses to run cable TV were issued state-based when we started. We were licensed to service Abia, Anambra, Enugu and Rivers state. We weighed Rivers as the biggest of these markets and that informed establishing Port Harcourt as operational base.

Through partnership we have been able to expand to other areas including Abuja, Lagos, Kano and farther. We are now able to reach eight to nine states of the federation. The return on investment is good. The environment is harsh as I noted, but there are opportunities embedded. Invest and persevere, the benefits will surely manifest.

Apart from our direct staff, we have been able to create significant indirect employment through engagement of a network of dealers across the places. We take those dealers as partners, so they share ownership in the business indirectly. Each of these dealers has their own staff they are paying.

Mind you, the business we do is different from that of direct to home. In direct to home, distribution is not manpower intensive. You can from a single location cover the entire country. In the terrestrial broadcast we are doing, you need presence in every location you serve. That means you have to have engineers, marketers and other routine staff on ground, so we’ve been able to create a lot of jobs.

Apart from funding, what other challenges did you encounter?

Procurement is very challenging because you have to buy most of the equipment overseas. That means you have to deal with issues of customs and wharfs. Sometimes it takes so long to get documentation done to clear the goods from the wharf. Many times, just to convey your goods from the wharf through Lagos to your location, you pay through your nose because the roads are so deplorable. Truck drivers say they take up to two weeks to get through, and they jack up fares.

Also, import duties and charges are choking. My experience in the United States where I lived for many years before coming back to invest in Nigeria, things are much more streamlined and less problematic. There you come, pay for your goods, in one or two days, you take your goods and leave.

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Now after installing equipment, getting a competent maintenance crew, I mean locally, becomes another challenge. We had to end up hiring some expatriates to help with installations and maintenance. We have difficulties with finding people at home with right technical skills to manage those machineries. So we end up spending a lot of money to fly in experts to do the job.

Other challenges include power. You are setting up anything; you have to pretty much provide your own power, diesel issues, deal with fluctuations and all of those things that impact on machineries. Infrastructure is a problem. Sometimes, where your facilities are located, you have to do the road yourself and maintain it when it goes bad.

There is also the challenge of multiple taxation. Even before you make a dime from anything you are setting up, different agencies are already coming, asking for business premises fees, environmental fees, and a whole lot more. The totality of all these make the environment very challenging because you have to spend a lot on these even while you are yet to get your machines rolling.

Diversification curve

Three or four years ago, during one of my trips back to the US, I had gone to a supermarket to buy a few things. Then I appreciated the way they arranged all kinds of drink, soft, juice and others. I felt back home, Coca Cola, Pepsi, a few juice and other soft drinks are what you can find. I noticed a lot was lacking in Nigeria. Vitamin water and all that we don’t have. I saw it as an opportunity, so I decided to set up a factory.

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We then started with Polar Water two years ago and started adding fruit juices. The reason we have not taken Polar far to other parts of the country is that we don’t have the capacity currently to distribute all over the country, but we have finished installing extra capacity in our operational base enough to satisfactorily reach the South-South, South-East and we in the processing of finishing the Lagos factory to service the West.

Three to six months, you would be seeing the product in all parts of the country. Quality is one thing that stands out Polar Water in the competition. We noticed Nigerians are attracted to quality when they recognize one. We ensured that Polar meets the highest international standards, so when you take it anywhere in the world, it will be so ascertain as being of international standard. We don’t compromise the quality.

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source: Vanguard