Episode Transcript
[00:00:00] Speaker A: Hello, everyone. Welcome to the Techpoint Africa podcast. On today's podcast, we'll be discussing stories that stood out for us this week. One is Etana and AFC's plan to create a Silicon Valley in Nigeria with Nigeria's first economic zone. First digital economic zone. The second is about Starlink doubling their prices. Let's start with Etana and AFC. Let's see what's going on there. Decided want to create a digital economic zone. Timgo Zoom. What exactly does that mean for our viewers that do not really understand?
[00:00:36] Speaker B: So a digital economic zone is if you're familiar with an economic free zone, then you just translate the idea into the digital space. Economic free zones are just fiscal regions for the most part, where governments. The idea is you're trying to stimulate economic activity in the region. And so you designate a particular area. People could set up factories, set up certain businesses in those areas, and as a result of, as a result of the, of setting up in those areas, they get access to specific, let's call them allowances, OPEC. So it could be tax incentives, probably you don't have to spend a, as much on taxes or maybe some taxes are waived or you get priority on certain infrastructure. So I mean, the idea generally is how do I stimulate, how does the government stimulate economic activity in a certain region? And then you do that by creating physical spaces where this happens. So bringing it to the digital space, of course, you're probably wondering how is it going to work? Yeah, there's usually a, there's still a physical component to it. Um, so, yes, so for example, with it now there's a, there's, there's a physical location where businesses, and I think we'll probably talk about it. Um, it would be setting up like fiscal structures, a workspace that should take about 3000 people and. Yeah, so it's usually a physical space, but I usually targeted at digital businesses. We have a few across the world. I think we have one in Singapore, we have I think one in Malaysia, but yeah, we have a few. Most of them are in Southeast Asia, interestingly.
Yeah, I think, yeah, we have one other one in Dubai. So we have a few of them. They are kind of novel concepts, probably the oldest ones under maybe 1520 years, but it's still a novel concept. But for eternal, what they are doing is primarily targeted at digital businesses. So a startup is like the obvious choice or the obvious fit for that, but you may not, you don't necessarily have to be a startup. You could be offering, say consulting. You don't necessarily need to set up physical locations in order to offer your service and so you could set up as a registered business in internal. In a nutshell that is basically what a digital economic zone looks like.
[00:03:12] Speaker A: Okay, so I want to now know how because it's in the digital. How do I say it now? I mean you said there's still a physical components to it, but as a business, how do I know I'm a part of the digital economic zone or digital free trade zone? Is it based on who has a space in that physical space, space that they've created or how exactly would I know that I'm there and I can make.
[00:03:47] Speaker B: The only way you know you are a part of it is by registering. So I see that's the simple answer to that. You register and when you register you get.
The moment you register you get Bex. That businesses that in that are in that region, you get. So for example, if I registered a business in Nigeria, I automatically will get. I automatically am bound by the responsibilities that businesses in Nigeria are expected to have. And I'm also bound, I'm also an automatic recipient of NePEx that businesses in Nigeria are supposed to have. So if I launched a business that is in the sector where I'm expected to get maybe tax relief or tax breaks for a couple of years, I automatically get it. I may not always. So just like in regular incorporation where you may not always have to put up a fiscal structure in order for you to say, okay, I am incorporated in Nigeria. The moment you have, the moment you're incorporated in the tana in which Etana you automatically get access to any pegs, any benefits that you're supposed to get.
[00:05:05] Speaker A: Okay, so I just realized some, some people might not really know, might not be familiar with Etana and AFC. So if you could just do a brief on what exactly is it, who is it Anna or who are they? What do they do?
[00:05:20] Speaker B: Yeah, Itana is building a digital economic zone. So that's like the example or the short explanation for what Etana is. They are just a company that, I don't call them a startup, but they are company doing that for the AFC. AFC is a financial institution that, I mean the Africa Finance Corporation if you follow like large infrastructure financing projects in Nigeria, you would have definitely come across them. So they invest in, well they do a lot of infrastructure investment but they do a lot of investments across Africa. So basically they are. I don't know if I'll call them the IMF of Africa or the World bank. I'm not sure which one it is. I think AfDB will be the World Bank. I don't know, maybe they are the IMF anyway, but, yeah, they are. They're one of the largest financial institutions in Africa, and they basically lend to governments, businesses and the likes or. Yeah, basically, that's it.
[00:06:18] Speaker A: Okay. So I think my final question for this story would be. So they said the first phase of this project is valued at $100 million and it's already in the works. Is this going to be geared towards the physical aspect of this digital free trade zone?
[00:06:36] Speaker B: So Diana was founded about three years ago, and they've raised.
They've raised some money in the past, I think about $2 million in the past, and part of that money went towards acquiring the land where the digital economic zone will sit.
So that's. That's one. And it's. I mean, when you hear of something like this, you automatically assume it's going to be a major project and it's going to be really capital intensive. So the $100 million will go towards building out the, like, the fiscal structures. That's basically what the, the $100 million will be going towards. So they are going to be building, like, workspaces, residential apartments for the businesses that choose to set up in that region. So that's. That's basically what the 100 million would be going towards. Of course, this is just the first phase of the. Of the project. They will definitely need, like, there are definitely more phases, but, yeah, this, this funding will be going towards developing the fiscal infrastructure.
[00:07:44] Speaker A: Okay, so I know I said that was my last question, but I'm curious about something. What's in it for Etana? Right. The company, they are trying to build a digital free trade zone. Kind of feels like a non profit.
[00:07:58] Speaker B: It's not a non profit. You're not incorporating for free or starters.
So first, you will not be incorporating for free, just the way cacuperating your business at the CAC for free. You will be paying taxes. The taxes could be going. Or it could be. So, yes, I missed this out, but it's located in Nigeria, and you will be splitting. So one possible revenue source is that you could be splitting taxes with the nigerian government as a possible revenue source. So, yeah, basically it's not a nonprofit. The idea is you stimulate, you stimulate business activities in the region. And I mean, CSU makes, I don't know exactly how much they make, but they make really good money, so. And that's not just it. There's a, there's an internal app where you can make all of these payments. And I'm assuming that they will build business banking infrastructure on or within that app. And if you do that, then that's, you will automatically be maybe the first business banking option that the businesses who register, they have. There's also the potential for a personal finance integration where, because it's not just businesses, they're also trying to build a community of business owners. So those business owners could be people you target or people you say, oh, I have x number of business owners on my, on Etana or in Itana. Would you like to do business with these people? And so I think there are a number of revenue avenues or revenue sources that they could chase down in the future. I think right now, the major one is that business registration.
[00:09:44] Speaker A: So your resources giving me follow up questions. So is this something that could morph into, like, this Delaware thing we have in the US? You know, where those specs are good enough that we'll probably see businesses from other countries, maybe other parts of Africa, for example, coming to, like, incorporate here through it.
[00:10:03] Speaker B: So that's, I think ultimately that's the goal. The Delaware example you give the state of Delaware makes a ridiculous amount of money just from the companies that register there. And all you have to do is set it up, make the processes very seamless, and businesses will come. The issue you probably have is, can you deliver on the promise?
Because ultimately you need to be working hand in hand with the government. And not being able to deliver on the promise that you have made could discourage more people from joining. But if you facilitate. Okay, so I think one reason why this is important is we occasionally see that our startups in Africa have to leave and go to the US in order to.
In order for them to sort of gain some kind of acceptability or acceptance on the global scene. That's something we've seen a lot. So could you redirect that traffic that goes out and bring it back in? That's one potential for businesses who need to launch in Africa or who want to launch in Africa. Can you be that guy that helps them with the process? And you basically open the doors of Africa to this or the doors of Nigeria, whichever the case is to these businesses. So if you can do that, of course you will morph into something like that.
[00:11:30] Speaker A: All right, so before we spend so much time on internal, let's go to the next story, which is about Starlink. Starlink is doing something I really did not think they were going to do. They are doubling prices, which is odd because it has been one of their major key selling points. Right. So, but now, in Nigeria, they are doubling prices. Which brings me to my first question. Why exactly? Because they said they're increasing prices because of inflation.
Why exactly is Starlink increasing prices because of inflation? I asked because I.
Are they offering their services through. Because what exactly is there. Do they have any operational cost in Nigeria that inflation has affected that is causing them to increase prices? I don't, I don't get.
[00:12:26] Speaker B: Are you asking me?
[00:12:27] Speaker A: Yeah, I'm asking.
[00:12:28] Speaker B: I mean, you might as well go.
See you.
[00:12:31] Speaker A: Okay, so. Because the interesting. I tried to check. Right? So for example, the only fiscal office styling cars in Nigeria, I mean, in Africa is in Kenya.
The only other cost, maybe there's. I mean, obviously, there's probably something. I'm not saying licenses, for example, their licenses are not due for another ten years.
[00:12:52] Speaker B: The licenses are not impacted by inflation. Please.
[00:12:54] Speaker A: I mean, sec. Increased licenses recently.
[00:12:59] Speaker B: They tell us exactly when they're increasing. They don't tell you it's inflation.
[00:13:02] Speaker A: That true.
[00:13:03] Speaker B: I was responsible.
[00:13:04] Speaker A: Yeah. So I don't really see why they're increasing it. But I think the major thing here is this is one of their biggest selling points, right?
[00:13:15] Speaker B: Is it really one of their biggest selling points?
Because Starlink is still more expensive than any other Internet service provider out there. So I don't see how it is, how that is the biggest selling point. So I'm more interested in something completely different. Starlink, you'll be increasing prices. From the 31 October we've had nigerian telcos angle for an increase in their charges for I think three years now. NCC has consistently stopped, pushed back on that and said, no, you can't do it. How does this change the dynamic for that industry? So if I'm empty and I'm thinking, okay, wanted to change my tariffs for a couple of years, the regulator says no, but Starlink is going to do it. Yes, Starlink may not be incorporated in Nigeria, but this is about time. This might be something that gets them in trouble with the regulator for real. Where the regulator says, okay, we haven't, or, I mean, the private sector says or MTN and the likes say we've not been allowed to increase prices. Starlink will be increasing prices. What are you going to do about it? If you do not stop Starlink from increasing their prices, then we have to do the same. So does this open up a kind of worms where telcos just have to. Because if anybody can make the argument for inflation, then I believe the local telcos have more than enough grounds for that. On the other hand, it could also raise up and this is not a, this is a conversation that can be very tricky. But it also raises up the question of how do you sort of regulate the activities of companies, tech companies that are not exactly nigerian or local? We've had a lot of issues with this where, I mean, in south, last week we were talking about South Africa where Starlink was like, I mean, yes, it's still not official, like, to use Starlink in South Africa. And we're talking about whether they could be a change. And now you're seeing them increase prices. First of all, I don't know, maybe other african countries. You guys can expect to see that. Kenya, for starters. Although I would like to see how that plays out in Kenya where they have like serious competition or other telcos are like going after them. I would like to see whether they respond with that. But still, it's a, it's a curious move for me. One, because you're raising prices. Are you betting on the fact, like, I think they're raising prices by nearly 100%.
[00:15:57] Speaker A: Yes.
[00:15:57] Speaker B: So are you, are you betting, are you betting on the fact that you are so indispensable to these users that they would, I mean, they just pay. I don't know. Would. Is that what you're betting on or are you. Because I saw some of the emails that were sent to customers and it felt like there was no consolidation. It was basically, hey, we're increasing our prices. If you don't like it, get out. So I don't know if that. I don't know how they're thinking about it because this is a nearly 100% increase on the cost. If you increase it, are you betting on Nigerians not.
Or Nigerians not like thinking twice about it and then just going ahead, we do not have the leverage or the. So first of all, the Starlink, the Starlink device is very expensive for you to get. Interestingly, you're talking about increasing prices due to inflation. I'm actually surprised they are not increasing the prices of the.
Yeah, because, I mean, if you're going to increase any other thing, I would assume it would be that. Not the price of the, of accessing the Internet. Yes. So I don't know. I'm not, I don't know why that is. What is, is getting an increase and not the fiscal kids, which could also suggest that they do their business completely different. It could be that, like you said, they have zero business operations in Nigeria and it is independent merchants who have to, or who order for Starlink. Or maybe they are basically B, two C and they do not need a presence which will. Which is still interesting, because if that's the case, why are you increasing prices? Because of inflation. Whose inflation are you increasing these prices?
[00:17:50] Speaker A: Us inflation or Nigeria?
[00:17:52] Speaker B: So, I don't know. Um, we've seen them basically rise up the ranks in the. Not like in terms of customer numbers. They see a slowdown. I'm almost certain that they will see a slowdown. I'm willing to bet 1% of my salary that they will see a slowdown in customer growth. If it doesn't even, like, not just a slowdown, it's probably going to. Going to flatline for the next couple of months because I'm not about to pay 100,000 naira for. I'd rather just suffer with one of the guys that's.
[00:18:22] Speaker A: Well, I mean, you're not betting a serious amount, so I don't understand. 1%. 1% is just small.
However, um, speaking about the tone of their price increase feels like something that.
[00:18:35] Speaker B: Elon Musk and then to that, which.
[00:18:38] Speaker A: Is funny, because honestly, if you. I've not used Starlink before, but I've spoken to some people that have used it before. I've seen comments by some people that have used it before. And the truth of. Of it is that most people. Right, most people who probably do a lot of heavy Internet work say you are a youtuber. You need to upload videos, high definition videos and things like that.
Starlink isn't really the best option for them, for people like that. Right?
[00:19:06] Speaker B: Who are the ones who use instalink? So here's. Here's the issue, too. I mean, apart from individuals, I think we need to do headcount here. All the people who are using Starlink. So the people who need really ridiculous Internet speeds are saying it's not the best option for them. So if they are not the best option, who exactly is buying this thing? So people make our job difficult when we're trying to tell the government that we are suffering because Starlink is not giving you the best if you're a youtuber, but people are buying it. So can you guys sort of identify yourself? So let's know.
[00:19:42] Speaker A: I think what people enjoy installing, there's a level of stability that it gives you. But as somebody that needs very low latency, somebody that is doing a lot of uploading is not really the best option. Right.
And, like, it's always getting me surprised. Getting me, because, I mean, the fastest.
[00:20:05] Speaker B: So that stability. I mean, so the problem now, that stability, I mean, unfortunately, you can get.
[00:20:13] Speaker A: It with cheaper options to that stability.
[00:20:15] Speaker B: Yes, that's the thing.
[00:20:16] Speaker A: That's the word.
[00:20:17] Speaker B: The only problem now is that that stability comes at the cost of your peace of mind. That's the issue, because some companies whose names will not be named, people know yourself, is that time of the year when you start doing your things. But, like, some companies are practically useless to Internet users like you are suffering. Some of them give you stability for a long time, and then one day they come after your life. I guess it's a trade off. Do I want to never have, and I actually want to know, for the people who use Starlink and maybe have had issues, what was the customer experience like?
[00:20:51] Speaker A: Okay, so I've only heard that, I think I've only seen tweets about Starlink customer.
[00:21:00] Speaker B: Service.
[00:21:00] Speaker A: Yeah, their customer service. I've only seen about a couple of tweets. And all of them were like, it's not good.
[00:21:06] Speaker B: It's not good.
Well, I won't, I won't be saying the other thing in my mouth, but I mean, there's precedent, which is why.
[00:21:15] Speaker A: I can bet 10% of my own salary that they will see slow down in.
[00:21:21] Speaker B: So that's the problem. You can, you can't really bet 10% of your salary on it because the growth they've experienced has been a bit interesting. You're probably the most expensive Internet service provider in the country. And you launched just about when we were entering into the worst economic time in nearly 20 years.
[00:21:45] Speaker A: Yeah.
[00:21:46] Speaker B: And you still grew really fast. So. Except they are doing then I don't know exactly why and how they grew. Like, it's actually very interesting. Maybe we should go and look for more Starlink users and get them to, like, tell us the truth. What happened.
[00:22:06] Speaker A: Yeah.
What I'm interested in is the percentage of people that bought it and continued and are still using it.
[00:22:13] Speaker B: If I buy your kit for 450 kb, how much are they selling before? 350?
[00:22:19] Speaker A: Yeah, you know, it was four. Four something.
[00:22:22] Speaker B: Okay. If I buy your kit for 400k, even 350k safe, you best believe that I'm going to be 440. Okay. Just indeed choice. Anyway. If I buy a kit for 440k, best believe I'll be using that until it roasts.
[00:22:40] Speaker A: No. So the thing is, there was a lot of hype people bought if, because, for example, people like, what do you.
[00:22:48] Speaker B: Think this thing is? Do you think this is what.
[00:22:52] Speaker A: I mean, it's like the.
[00:22:53] Speaker B: You think this.
How many Nigerians have gone to buy it without the hype?
[00:22:59] Speaker A: No, I'm. Okay. I'm not gonna say Nigerians. Now the foreigners are bought like 90%, $500 on that.
[00:23:06] Speaker B: Sorry. Where are they from? Okay, let's know. But I think you make a very.
Isn't a point you made, but it's something that might be, that might be key here. We have a small expert community in Nigeria. They said people made up that word to escape being called foreigners anyway. But we have migrants. We have a small migrant community in Nigeria. Could they be the ones powering all of this?
[00:23:35] Speaker A: Maybe.
[00:23:36] Speaker B: Could they be the ones. Anyway, if you use Starlink and you would like to share your experience.
[00:23:44] Speaker A: Yeah, please, just, if you have seen this video, just put in a while.
[00:23:48] Speaker B: You're listening to the audio.
[00:23:49] Speaker A: Yeah. Put a comment, send a message to us.
[00:23:53] Speaker B: I know one person.
[00:23:55] Speaker A: Today's insight of the week is about Starlink. So with 12,690 new subscribers in Q 420 23, Starlink became Nigeria's third largest Internet service provider. This insight of the week on brought to you by Intelpoint Co. If you find it interesting, you can find other interesting ones on Intelpoint Co. The link to this particular one will be in the description. So on that note, we'll be ending today's episode of the Techpoint Africa podcast.
You can check other stories on the Techpoint Africa website. Simply go to Techpoint Africa to see all the stories from this week. You can also stay on top of everything happening in tech through our newsletters. The first is the Tech Point Digest, which gives you a five minute run through of everything that happened in african tech the day before. You can also subscribe to Tim Gozrem's equity merchants. If you are curious or interested in investment, venture capital and the entire startup ecosystem. If you are more about work and what's going on in the african workspace, how are employees and employers treating each other? Subscribe to Oluwanifemi's modern workplace Africa newsletter. But if you are more of a geek and you're interested in different kinds of technology and how they work, subscribe to my newsletter, which is how cool tech Works newsletter. That is it from us. We'll see you in the next one.
