Lanre Kolade, CSquared: "The private sector needs to understand exactly what the government requires to find common ground during negotiations”

Lanre Kolade, CSquared: The private sector needs to understand exactly what the government requires to find common ground during negotiations

Lanre Kolade is the Group Chief Executive Officer for CSquared, a technology company making commercially driven investments into broadband-enabling infrastructure throughout Africa.

Lanre has over 21 years of experience in the telecommunications industry spanning both Francophone and Anglophone Africa. Before joining CSquared, he was Managing Director of Vodacom Business in Nigeria. He also previously served as Managing Director of Vodacom Business for the West, East, Central, & South-East regions in Africa.

This interview is also available in French.

How does CSquared, as a private actor, partner with African governments to develop digital infrastructure projects?

Our vision is of a digitally connected Africa, and we are achieving it by making impactful investments into open access broadband enabling infrastructure throughout Africa.

Historically, this kind of infrastructure has been built and operated by governments. Even in the UK, British Telecom laid significant telecommunications and fibre optics infrastructure as a government entity. The government later decided they needed to unbundle the fibre infrastructure, making it open access for the utilisation by other operators. Government finance was used to fund those assets. CSquared is aiming to replicate the same thing in African countries using private funding. We need governments because they are big players in most of these markets. The only way to acquire the right-of-way, and to access legacy assets like optical ground wire (OPGW) on power infrastructure is through working with the government. The choice of who to work with is not up to us. It is about which government is more open to collaboration.

CSquared's positioning—and particularly one thing that we found for example with Togo—is that for us to actualise our mandate, we cannot do it on a commercial basis alone. There must be a developmental impact component to it. This is what we have demonstrated in our Public-Private Partnership (PPP) with the Togo Government. Governments in a lot of markets tend to adhere to an ownership approach and view about utilities infrastructure that could be leveraged for use as telecommunications infrastructure. However, we are bringing private capital to allow the governments to accomplish what they are trying to do. We would prefer and choose to work with governments that we believe are transparent and with those that we believe are ready to adopt the open access model which often challenges the posture, mindset, and perception of many governments.

Take Niger for instance, where the government owns and operates the national telecommunications operating body - Niger Telecom. There, the national telecommunications operator plays at every level of the telecommunications market. The speed of advancing the fixed infrastructure would be accelerated via an open access model. In this context, our interest could be misconstrued as wanting to compete with Niger Telecom. The only way we can do it in a place like Niger is if we strike a partnership with Niger Telecom. The government then builds the regulatory framework to switch from their assets being closed to being open access. So, in Niger, to build out fibre networks you would need to use Niger Telecom's infrastructure.

In Togo, the government has taken a different approach. They decided to set up a wholesale framework. Through our discussions with the digital transformation minister, the open access rule in Togo was established. The Togolese government knew they needed an open access framework. The government thus felt that they needed to liberalise the country’s telecommunications system and licensed CSquared as an open access wholesale provider.

Our choice of whom to engage with also depends on alignment with transparency that our shareholders including the International Finance Corporation (IFC, a member of The World Bank Group), Google, Mitsui, and Converge Partners, demand. We need to make sure that everything we are doing is transparent and that the laws in the country we operate will facilitate that. We often help the governments with recommendations with regards to these laws in question.

Many countries have already built infrastructure, sometimes with a loan from the Chinese government. We find that they would like to use it for open access, however, they have not commercialised it effectively. CSquared comes in to advise them and give them a more holistic view, projections and understanding of the financial aspects of effective commercialisation. We make it clear to the partnering government that we are not coming into the market to take away their mandate. We are only coming into the market to facilitate their mandate and to help them better monetise their assets while maintaining a stake in the entity. Ultimately, this is a symbiotic relationship with optimum efficiency.

What are the most difficult points to tackle with regard to working with governments to deliver digital projects? What strategies have been useful to deal with limiting factors you have found?

I would say the most difficult one from my experience, following two years of negotiations with the Government of Togo: for example, is showcasing the benefits of shared assets to the government. Letting the government realise and understand the opportunities an open asset model could provide. Knowledge is power and is necessary for them to be aware that the private sector is not necessarily anti-government. That said, the private sector needs to be aware of and understand exactly what the government requires. If you understand what they are trying to achieve, you can find common ground during negotiations.

In summary, the biggest issue is that governments naturally tend to be very protective of their sovereign assets. They often do not trust the intentions of the private sector, but it is important to allay their fears that “some private sector partners are only there to extract money out of their country”. Rather, we are bringing in foreign direct investment into their country, not the other way around. However, any investments must be profitable to attract us to start business there.

Governments need to create the enabling environment for private businesses to be established and satisfied. One thing that I mentioned to the Togolese minister of digital transformation is that there is nobody that will come into Togo that can swindle the government because they withhold considerable authority and veto power. While the power of veto is important, governments should know how and when to use it. They should also understand that rule of law must prevail and that these powers must be used very carefully.

From your experience, what differences/similarities exist with regard to negotiations in francophone vs anglophone Africa?

I am Nigerian, I am anglophone. However, I lived in Benin for two years and in Cameroon for eight years. So, I know the nuances of both worlds.

Partners from French-speaking countries tend to spend a long time in deliberation without necessarily reaching a compromise. Negotiating changes in a single line of a contract can take a lot of back and forth. There is a lot more deliberation before they get to where they want to go. On the other hand, English-speaking African partner countries tend to be more direct—what the law says is exactly that. Negotiating contracts is easier because the partners tend to go straight to the point. This might be a legacy of the differences between English versus French legal culture.

It takes a special kind of mindset to deal with challenges. However, our Paris-based law firm understands the cultural subtleties from both contexts. Importantly though, understanding the nuances of each of the countries and what they are trying to achieve gets you to a point efficiently.

With regard to the outcomes of African government negotiations with local and international partners on large-scale digital infrastructure projects, what are African governments doing right and what is not working in your opinion?

I think that the government coming to the realisation that they need a partner is the first thing that is working. They know that they cannot do it alone.

So, a lot of them are opening their markets to deal with this. But there is a low level of transparency in the way many African governments choose partners. At CSquared, we only want to strike clean and transparent deals. On the one hand, in some countries, the first thing they see from our credentials and integrity is that there will be no room for kickbacks or corruption by working with us. On the other hand, for others, having the IFC (of The World Bank) as backers of CSquared signals access to funding which can be reassuring.

A lot of governments still believe in full ownership of key assets by the government. However, in some markets, there have been strides made by the government to encourage collaboration with the private sector.

Considering the geopolitical rivalry in the digital space and issues related to cybersecurity, what is your analysis on how the interplay between these topics have an impact on Africa's digital transformation, both in terms of opportunities and challenges?

It is a very convoluted question that requires careful analysis. African countries need to understand exactly what money they are collecting and how they are collecting it.

I am going to be very partial here because the source of your funding determines what you are aligned to. He who pays the piper dictates the tone. If your funding comes from the West, you tend to align to the West.

My shareholders encourage the use of western equipment. So, on our entire network, we have western equipment. When we buy assets that do not have western equipment, we usually incorporate an equipment swap programme in order to replace those assets within a given period. This is where a lot of African countries have found themselves too.

Is this a balanced context? The reality is that we do not have the technology ourselves in Africa. We would not have had phones in Africa without the Chinese. The Chinese have democratised the ability to own a mobile phone in Africa. It was prohibitively expensive when Ericsson, Alcatel-Lucent and others were doing it. The Chinese offered cheaper alternatives and now we have it. It is a balancing act and difficult to navigate for a lot of governments. This affects the influx of donor funding.

How do you see the position of subregional multilateral actors (eg Smart Africa, AfCFTA, ECOWAS, WAEMU) in the delivery of cross-border digital projects (eg cross-border roaming, terrestrial regional fibre optic) solutions? What are the major barriers to negotiating these partnerships and some recommendations on how they can be addressed?

Smart Africa, the Africa Continental Free Trade Area (AfCFTA), the African Development Bank, are enablers to these conversations. A lot of African countries are members of Smart Africa, for example, when you go and sell an idea to them, you can have a multi-country impact. ECOWAS makes it easier to travel across West Africa which facilitates commerce. The challenge that arises though stems from the fact that these multilateral entities already have their own agenda making it difficult to sell an idea to them. I understand that this is not necessarily because they do not want to be flexible, but because of the need for them to satisfy different interests which requires extensive negotiations and significant compromise.

At CSquared, we are currently in talks with the West African Power Pool, a partnership between West African countries who have pooled their power grids together. From Nigeria all the way to Guinea and Senegal, you have power lines that have fibre capability. If you can deal with the West African Power Pool, you are practically connecting 14 countries at a go. Now for you to solve that challenge, it might take you two years or even five years, but once you solve it, you would have connected a whopping 14 countries. The disadvantage is that it will take a longer time to come to an agreement because you need to attain the consent of all 14 member states. Invariably, the fact that they are together does not mean that they don't have their own local nuances and their own sovereign interests to deal with.

Africa Development Bank provides good funding and favourable low-interest rate loans which are beneficial for us because our investments need what I call "patient capital". Also, having the backing of the major blocs like ECOWAS and Smart Africa, boosts our credibility making it easier to get into conversation on partnerships and projects. So, for me, there are more positives than negatives when it comes to working with multilateral entities.

In what ways can governments improve their engagements and involvement of African private actors in the governance of the digital sector and cybersecurity?

There are several of them including clear rules of engagement before you start, fiscal discipline and respect of the rule of law. The regulator should be transparent and working along clearly laid guidelines for example on acquiring licences etc. Clear rules and regulations are important because they make it easy for companies to deal with the government. The other thing governments need to do better is to make sure that once you have a partnership with them like PPP, for example, there is no risk of arbitrary nationalisation of the entity.

Moving on to the second part of your question, the framework for cybersecurity is essential. Every country talks about what they call data sovereignty. It is important that those rules are also clear. Governments need to be bringing the right skills to study this within their unique market and understand exactly how, for example, data centres are going to be operating in the market, what kind of data stays in the country and the cybersecurity initiatives at the national level.

While private organisations will have their own cybersecurity rules, the government laying out the right framework for that to happen is critical. This is because the private sector works within the contours of rules or policies they set. So, the government should take the lead on that. However, they must take guidance from the private sector who have more expertise in the technical aspects than they do.

This interview is part of the Negotiating Africa’s digital partnerships: interview series led by Dr Folashade Soule with African senior policymakers, ministers, private and civic actors to shed a light on how African actors build, negotiate and manage strategic partnerships in the digital sector in a context of geopolitical rivalry. The series is part of the Negotiating Africa’s digital partnerships policy research project hosted at the Global Economic Governance programme (University of Oxford) and supported by the Centre for International Governance Innovation (CIGI).