Yaba Manifesto: Infrastructure

Yaba Manifesto
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###Synopsis

Infrastructure plays a significant role in fostering business growth and development. The availability and deliberate deployment of the right infrastructure that reflects modern business needs will naturally attract the best talents, provide enabling environment for businesses to grow and thus accelerate the growth of ‘the cluster’- Yaba.

Hard infrastructure such as dynamic workspaces, seamless property acquisition, affordable accommodation, stress-free parking and good road network makes it easier for businesses to focus on growth and expansion.

Always on, high speed connectivity is the new normal. While most infrastructure investment should be funded by the private sector, there is a role for the government in ensuring that the national infrastructure keeps up with demand – setting standards, ensuring sufficient competition, and using public funds to deliver infrastructure where the market will not.

Grand Aim: Create Hard and Soft Infrastructure that startups can leverage for growth.

Key objectives

  1. Planning Permission and Regulation
  2. Infrastructure Development Fund by The Nigeria Sovereign Investment Authority
  3. Developing Yaba Public-Private Partnerships (Yaba-PPP)

@olufunbi.falayi is the leader and moderator of this conversation. The live document of the infrastructure article for the Yaba Manifesto is available to view here.

Use this thread to leave your comments, suggestions and concerns. Don’t forget to observe the rules. If you happened to stumble on this, an overview of the Yaba Manifesto is here for you to gain context. Thanks!

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@olufunbi.falayi I can chip in here on Broadband, as I manage an ISP. There’s a gap in making reliable connectivity affordable. I don’t have the answer just yet. Just throwing it out here, and working with the mindset Internet is a utility.

Possible solutions?? - tax incentives to local ISPs, partnership with/in clusters = businesses pooling together to purchase this essential utility.

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Aside from tax incentives, what other incentives do you think would motivate ISPs? Since there is fibre in Yaba, can we think through ways in which businesses can have access to affordable and fast last-mile internet connectivity? I know you said you do not have the answer but we can brainstorm possibilities.

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Last mile fibre delivery to every dick and harry in Yaba is unrealistic. Unnecessary taxes will also chase enterprises away. The hard truth is that fibre and data is not free and someone will always have to pay the bill. So the question now is who will foot the bill? You can throw in these ideas in the pot as they may be of help

Firstly, UK Universities found themselves in a similar position as Yaba in 1993 and their solution was JANET in which the UK government intially bank rolled. However, we can assume that in this case that Nigerian or Yaba “government” are yet to show any interest. So some big Maga with deep wallets and seriously committed to the Yaba vision will have to foot the initial bill before the underlying company supporting the initiative becomes profitatble.

Secondly, the current stakeholders of the “Yaba Idea” can start up a new company (practice what you preach) that spins up high speed data clusters around Yaba through partnerships with existing businesses. For example Mama Ronke’s Ogunfe joint is provided high speed internet via dark fibre in return for hosting programmes that advocates the “Yaba Spirit” while serving free beer and alcohol. Entrepreneurs can always hang out at the joint because of either the Ogunfe, high speed internet or the new meeting rooms with HD Video conferencing capabilities. Most importantly, the startup will have to be profitable at some point to that it can continually sell and advocate the Yaba brand objectively…

My two cents…

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Tola has a point - first off we don’t have enough fiber in Yaba or anywhere else in Nigeria, secondly if we had - it will be darn too expensive as a last-mile solution. To expand tax incentives/ gov’t deregulation would mean reasonable right of way fees, lower duties on imports on equipment, infrastructure/spectrum sharing etc.Its a start - still won’t be enough. Ok, will fall back on building a community and purchasing bandwidth capacity as a unit. I could describe at a later time on bandwidth capacity vs infrastructure assets.

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What is the current situation on office space in Yaba ?
Is there enough space for :

  • Startups (1-10)
  • Growth Stage companies (10-30)
  • Larger companies (>30)

if the answer is yes, then great. If it is No, then what are the possible solutions?

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To chip in a suggestion here, I’ll like to add that there should be some form of effort to promote the creation and use of local internet exchanges.

An internet exchange provides infrastructure for switching internet traffic, originating and terminating within the same geographic area (say within a town, state or even country). There are a number of services and communication protocols that benefit from this kind of improved access (due to low latency of data communication): video conferencing, Voice over IP, internet gaming, cloud-based applications, local websites and almost virtually any service that is created for local consumption.

Traditionally, Internet Service Providers have always relied on their internet transit providers to provide all connectivity to the Internet for their customers. This leads to situations where an internet user who is trying to communicate using his ISP (Swift Communications for instance) to another internet user whose own internet subscription is with another ISP (MTN for instance); all within the same country, gets their traffic routed all the way through the international gateway (London for instance). Not only does this end up costing ISPs more money since all traffic ends up going through international data pipelines (which are limited in capacity and expensive) but it also creates a poor internet experience for users due to the inefficient routing of traffic. This poor experience is as a result of high latency for internet traffic and low throughput.

Fortunately, there are, in fact, internet exchanges in Nigeria; however, they are highly underutilized (in my opinion) - I don’t know why, but it kind of makes sense that if there’s an exchange, that it should be used, to lower the traffic burden on international transit channels. It is also possible that there’s little awareness or some other problem I’m not aware of.

It would be in the interest of all stakeholders to promote the utilization and (if needed) creation of even more localized internet exchanges. This would also lead to a boom in the local hosting of internet infrastructure like servers within the country.

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One of the solutions to the Space problem in Yaba is to design a program in collaboration with Yaba’s Local Government/LCDA which we can tentatively call 500 Towers: Yaba LCDA’s Early Beginnings Office Ownership Program. This program will build 500 Towers with 10 office floors per tower at the rate of 50 Towers per year over the next 10 years in Yaba and offer it for sale solely to Startups at a monthly payment rate equivalent to any competitive rent they currently pay anywhere in Lekki, Ikoyi, Ikeja etc. For an opportunity to own their own office property, many Startups currently paying high rental fees in Ikoyi & Lekki will gradually move into the Yaba Axis.

Since these Towers would be built at scale by approximately 3 - 5 developers, I expect the economies of large scale production to kick in and drive down costs; eventually, the average price a Startup will pay to own an office property (of approximately 40 sqm) under the Early Beginnings program will be between N200,000 - N250,000 per month for 10 years. The only companies aside local tech startups that would be allowed to own office spaces under the program will be (1.) local or international Venture Capital firms/Investors who intend to set up their headquarters in Yaba, (2.) global co-working space brands like LaunchPad(USA), Thunderbolt Collective (Germany), Central Working (UK) etc;

[Checks & Balance] No beneficiary will be allowed to own more than 3 floors per tower - and you can not own floors in multiple towers under the program. There will be a foreclosure clause when occupants default for more than 3months in a row. Beneficiaries are allowed to lease all or part of their property but are not allowed to sell off the property for profit before the expiration of the 10-years; this is to prevent Startups abusing the low-cost building scheme.

A similar model can be developed to help ease the housing burden on early career professionals, we can call that 100 Towers: Yaba LCDA’s Early Beginnings Home Ownership Program. This edition will build 100 Towers with 5 floors per tower at the rate of 20 Towers per year over the next 5 years in Yaba. Each floor will have 3 units of 2-bedroom flats; each flat will be offered for sale solely to early career professionals working in Startups at a monthly payment rate of approximately N80,000 per month to be paid for a period of 10 years.

Suggested Action Steps:

  1. Community amends/develops and potentially adopts solution
  2. Carry out baseline costing studies to determine 10-Year project cost, ROI & feasibility
  3. Design the program in partnership with Yaba LGA/LCDA & relevant advisors.
  4. Identify potential developers, advisors & facility managers
  5. Publicize the program to Local & foreign investors (including institutional investors, Pension Fund Administrators etc)
  6. Secure commitments from early investors
  7. Launch the two programs
  8. Carry out continuous Monitoring & Evaluation
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I’m curious about the traffic management system mentioned.

How is this going to be achieved?

Is it going to be like an Open Traffic / Open Street Map thing, where traffic data is collected and contributed to some open source database?

Major concern is on how the traffic data would be collected. And then the analysis.

Is it also possible that there’s a government organization e.g. LASTMA that already collects anonymous traffic data that can be analysed? Or like transportation companies are doing with Open Traffic (Contributing commercial anonymous traffic data to the set).

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Great concepts, but;

  1. Where’s the funds for the projects going to come from?

  2. " each flat will be offered for sale solely to early career professionals working in Startups at a monthly payment rate of approximately N80,000 per month " how much do startups in Yaba pay monthly on average to enable their young professionals afford 80k monthly payments?

  3. Why only global co-working spaces? What happened to buying Nigeria to grow Nigeria?

  4. What statistics suggests majority of startups will be able to pay 250,000 monthly? Doesn’t it seem a bit on the high side for Startups?

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Hi @Jaiye thanks for engaging. These are very interesting questions you put forward; I’d try to respond to them before break, or latest by morrow morning.

Generally, I’d like to mention that the figures quoted are actually for illustrative purposes; in the Suggested Action Steps section, I suggested that if the concept is good enough for exploration, a baseline study needs to be carried out to determine projects costs which would eventually determine final price points early professionals or startups will pay for houses or offices under the suggested PPP program and hence help the community make a decision on its feasibility/affordability.

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@Engr_Abel_Akeni We’re still waiting on your reply.

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Yaba really has an accommodation problem we need to fix?

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When you say accomodation problem, are you saying the houses are too costly or that they are not enough? People who say Yaba has an accomodation problem probably do not factor in the history of the area before saying that. I stayed at Alagomeji between 2001 - 2003 and as at then, our rent was over 300k (four bedroom apartment). Factor in inflation and imagine how much that rent would be today.

As at that time, the only good thing I could see about the place was its proximity to the Island and the good narrow roads. The houses were archaic; people did not have boreholes (we used to fetch drinking water from a public tap around the Peugeot showroom opposite the Nigerian Railway Corporation or went to Evans Sqaure not too far from Oyingbo). Rain used to cause flooding because of bad drainage and the houses used to wear faster because of the water level. In fact, behind our house was a well that looked like a drum; it had only 2 rings in it.

Most of my age mates who grew up in that neigbourhood were either in Pry 6 or JSS 1 (I was at least 3 classes their senior) and they went to Aje Comprehensive, Mobolaji Bank Anthony and the numerous public schools around.

I’m saying all this to paint a picture of the Yaba (Alagomeji, Sabo, Ebute Metta, Oyingbo) people who have never lived in that environment do not know. And when you look closely, you will still find remains of the Yaba I just described entrenched in the midst of the Tech Hub we all want Yaba to be.

My point: Yaba has deep infrastructural problems that have been there for a long time. If they are not solved, then it would never be the Tech Hub we want it to be. Herbert Macauley used to be the Lagos - Ibadan Expressway of Yaba back when it was constructed. Now, it is just another road that the government failed to plan on how its size was going to be increased if there was ever a population growth in the area.

To fix the accomodation problem, a developer with very deep pockets would have to buy those tattered looking houses at insane prices. Some of those houses have been passed down for over 3 generations and their rents are sometimes shared by extended families that span as much as 10 families. The developer would then need to demolish and rebuild modern houses. How much then would the developer rent out the houses or offices in order to make profit in the shortest possible time?

I think that a Public Private Partnership is the way to go; else, the accomodation problem in that place would not be solved any time soon.

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Hi, @jaiye, so here we go…

First, I envision that the 500 Towers Early Beginners Project (office & residential editions) will cost approximately N500bn over the next 10 years. Here are the 6 funding sources I envision the Yaba Cluster Initiative can explore to raise this amount for the project.

N150bn - 30% of total costs: The Yaba Cluster Initiative can work closely with a mortgage bank and a visionary developer to raise N150bn from the Nigerian Stock exchange. SEC requires companies raising funds via public offers to disclose purpose of each raise and I’m sure a viable infrastructure development project for onward sale to end users would pass the SEC test - all other things being equal.

N50bn - 10% of total costs: The National Housing Fund typically gives out housing loans to cooperatives for property development and the loan is payable over a period of 25years. If the Yaba Cluster Initiative can metamorphose into a membership organization/cooperative, up to N50bn from the NHF can be accessed by Yaba Cluster Members over a period of 10 years. NHF requires cooperative members to be contributors to the NHF scheme (I think N450 per month), and the NHF application form can be bundled with the Yaba Cluster Membership Package for techies.

N150bn - 30% of total costs: Can be raised from a consortium of (1.) Venture Capitalists experienced in real estate development - locally & globally; (2.) International Infrastructure development funds like IFC’s InfraVentures (funds max of $8m per project), IFC’s Global Infrastructure Fund (3.) Global Infrastructure Facility and the likes of Qatar Infrastructure Fund etc.

N50bn - 10% of total costs: I’m thinking that with high-level lobbying, a portion of this project can be funded by the Lagos State Government to the tune of about N5bn per year through LASG’s annual budget document for 10years; this will be a housing loan to the cluster not a free lunch - so the government is incentivized because the money eventually comes back to the Lagos State Government as soon as monthly repayments start.

N100bn - 20% of total costs: This would come from a consortium of commercial banks and Regional Development Banks like; ADB, China’s Development Bank etc. Again, a plan this ambitious rises and falls largely on the quality of our Board of Trustees and quality of our execution strategy.

These sources should raise up to N500bn.

I think for early professionals (especially if unmarried), once you own the 2bedroom flat under the scheme and are unable to afford the full monthly payment, you can sublet one of the self-contained rooms for say 40k and pay the balance 40k. Hopefully, as a professional grows, so should his earning power in the industry and thus his disposable income to afford his/her house.

I think local co-working space companies could fall under ‘local tech startups’ category and as such will still benefit from the project; the emphasis on global co-working brands made in my initial post was to to give global exposure to the entire Yaba cluster as most of these global co-working space brands have developed extensive contacts in the media and investment communities over the years; a helpful add-on for the cluster.

For Startups who get CofO for an office floor and are unable to make the repayment amount, they can sublet their office space with other companies and meet up with the costs, but they’d still own the C/O.

Again, I should point out again that most of the costs used in the initial posts are just for illustration, this entire project will need a feasibility study to determine appropriate price points for monthly purchase (which may be higher or lower than the ones I’ve quoted for the monthly payments).

@Jaiye and everyone else, sorry for the delay in responding…

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Well Said Sir. But one more problem, where’s the land gonna come from? Because Yaba was full 10 years ago, now it’s literally busting at the seams. Are properties going to be bought and demolished? And is the cost for them in the 500bn?

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I work in Yaba, but don’t see what’s so special about the place except the startups, so I’m wondering why the cluster must be in Yaba!

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It is less risky going along with the tech movement in Yaba, than having a cluster built from scratch in another location. The cluster could end up as the next TINAPA, having a lot of potential but very low on adoption by the key stakeholders. Also, geographically Yaba is centralized, and it is surrounded by a lot of academic and other important public institutions which would support the tech cluster.

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@dareplus @Jaiye Like discussions about the subject matter have highlighted, it is not a zero sum game or a competition between locations. It is a bout making an intentional effort to build a center of excellence in Yaba that can be continually replicated and modified in other clusters.

One thing we can agree on is that the ecosystem is yet to reach its full potential, and this is our chance to jointly build a support system that can churn out successful startups in Yaba and beyond.

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Greetings to everyone,

It has been an absolute thrill reading the comments and contributions made to the Infrastructure pillar of the manifesto. It goes to show our depth of thought and our yearning for progress.

The great ideas proposed, if properly implemented, can truly grow our tech ecosystem and greatly increase the quality of products.

What are the next steps?

Over the next week (Aug 7th - Aug 18th), the volunteer committees for each team, coordinated by pillar leads would collate all the suggestions made here and across social media. They would refine it and make the additions to the existing draft.

We are using this opportunity as well, to ask people who are interested in being volunteers for each pillar to do so by dropping their email addresses. You would be contacted by the pillar leads.

After the collation of all elements of the manifesto, the committees would create a sample implementation plan for executing the ideas we have proposed during this process.

Simultaneously, Dele Bakare and his team would create the website that would house the manifesto.

Further information about the progress of the manifesto would be provided as time goes by.

Shoutouts to everyone who contributed to this thread; @Mex @Tola @takinbo @Engr_Abel_Akeni @Ope_O @Jaiye @segebee1 @darepius @olufunbi.falayi @nke_ise , if possible I would advise we indicate interest to be a volunteer and take a part in seeing these ideas to fruition!!

Cheers,

Francis Sani. (Manifesto clerk)