Memo To:

From:

Date: 3rd August 2018.

Subject: Fostering Amazon Expansion In West Africa

I propose that improving infrastructures like Electricity and Internet Connection is critical for Amazon

Company to attract new customers, retain them, and increase its sales, mainly in West African Countries

such as Nigeria. One of the underlying issue, especially when we consider online trading, is inadequate or

lack of infrastructure various regions of West Africa, such as Nigeria. We should understand that

Infrastructure is an organizational system of resources that are necessary for any business to operate in a

particular region. Most scholars display African Countries having a significant infrastructure shortfall,

having the World Bank estimates that Africa Continent needs to invest about US$93 Billion every year for

the next one decade so that the countries are capable of addressing the deficit.

Amazon Web Service (AWS) recently expanded to the African market. This clearly suggests that the

Amazon Company can be entering an aggressive phase, mainly in its overall push for the cloud services

adoption in Africa. Also, AWS announced a strategic plan to open another office in Johannesburg, South

Africa, where the company will hire more than “250 highly skilled engineers, network specialists, account

managers and other technologists." However, the Amazon Web Service (AWS) recent move in African has

a high probability to portend an aggressive infrastructure (Internet and Electricity Power) push, which are

the messenger for Amazon creating up a Data Center in West Africa.

The primary challenges remain to be the power grid reliability, which has been shaky in the African’s

largest market in Nigeria. Lack of reliable power grid is one of the critical element that is challenging the

purported viability of Tier 3 Data Center. Therefore, it is crystal clear that connectivity obstacle lingers a
severe hurdle to the development of Amazon Web Service Model. In West Africa, the underlying network

is another critical element to the cloud value proposition, having the disproportionate weight on the pricing

of the services, an antithesis to the Amazon Web Service Model, which is designed around having a reliable

and robust network that is mostly out of the way.

Electric Power Coverage in Nigeria

According to the 2014 Statistics of World Bank, Nigeria has an approximate population of 178M

people. In fact, when compared to South Africa, which has an overall population of about 53.6 Million and

has the installed generating capacity of approximately 44, 000 MW of electricity, the scale of the problem

facing Nigeria starts to come to the force (Muoh, 2016). When we consider the importance of electric

power in the modern life and business, it can be understood that Nigerian citizens from all walks of life and

business, poor and rich, young and old generation are really frustrated with the user experience (Muoh,

2016).

Currently, in 2018, the Minister for Power, Works and Housing, Mr. Babatunde Raji Fashola (SAN),

has announced that the half of the global population, mainly those people who live without electricity live

in Africa. The Minister added that approximately 1.5 Billion people do not have access to electricity supply

all over the world, “out of which 90 Million live in Africa’s most populous nation, Nigeria (Sharareporters,

2018). Mr. Fahola, who was represented by the Acting Director in Renewable and Rural Power Access

Development, Federal Ministry of Power, Works and Housing, Mr. Faruk Yabo, during the annual

International Conference of the Centre for Petroleum, University of Ibadan (UI), Energy Economics and

Law, said that “despite the huge deposits of both renewable and non-renewable energy in Africa, the

continent still lack electricity.” (Sharareporter, 2018). He said, “Africans have trillions Standard Cubic Feet

(SCF) of natural gas reserves, billions of barrels of crude oil reserves and billions of tons of coal; but Africa

has an even greater abundance of renewable energy resources. Unfortunately, of the nearly 1.5 billion
people estimated to lack electricity supply the world over, half live-in Africa. Nigeria alone is estimated to

have over 90 million people living without electricity supply according to the world bank”. (Editorial

Board, 2018).

It should be understood that 90 Million people typically represent more than 50% of the Nigerian

population. Therefore, more than half of the Nigerian population live without access to electricity. But

without having real research on this or any reliable national database, estimating how many people who do

not have access to electricity may only be guesswork. However, the truth is that many people in Nigeria

lack power compared to how government imagines. Most people suffer in silence, without complaining

about the issue.

The Consumer Protection Council (CPC) in Nigeria, which has the responsibility to address the

problem and protect the citizens is not known to most people, which creates a hardly any sensitization to

that effect (Editorial Board, 2018). It is also crystal clear that the Minister’s submission corroborates the

explanation provided by the Head of Service of the Federation (HoS), Mrs. Winnifred Oyo Ita, who said

that Nigeria still suffers “epileptic power supply because the power distributing companies (DISCOs) have

no capacity for effective distribution of electricity by the generation companies.” (Editorial Board, 2018).

Mrs. Ita said this while commissioning a 60 MVA, 132/33 Power Transformer in Calabar.

Network and Internet Access Coverage In Nigeria

Electric power goes hand to hand with the reliability of Network and Internet Access. In such a

scenario, since most people in Nigeria lacks electricity connectivity, access to the Internet is also limited.

According to Internet Usage and Telecommunications Reports, the Internet Industry has been hindered by

the nation’s unreliable fixed-line and under-developed infrastructure. However, the country is trying as

much as possible to change the situation, mainly because of the intensified competition and advanced
technologies, which are capable of delivering wireless broadband access to the Internet (Internet World

Statistics, 2018).

Approximately 46% of the population in Nigeria use the Internet, which has increased by about 5% for

the last ten years (Crg_Tizeti, 2017). It is costly to access the Internet in various area than people can

expect. According to the research study conducted back in the year 2013, at sometimes, Fixed Broadband

plan can cost up to 39% of an average Nigerian’s monthly earnings, and the mobile plan costs around 13%

(Crg_Tizeti, 2017). However, the Internet access has been traditionally expensive, which tends to limit

various streaming services. Here are some quick stats of Nigeria’s Net Freedom:

Source: Freedom House. From: < https://freedomhouse.org/report/freedom-net/2017/nigeria >

The positive side of reliable access to the Internet and Networking comes under the Nigeria Mobile

Market, although it requires some improvements, with the critical purpose of expanding the market. The

transformation of Telecommunications Landscape of Nigeria, mainly from the time Government licensed

three GSM networks back in the year 2001, as well as the fourth one in 2002, has been nothing short of

astounding (Internet World Statistics, 2018). The nation continues to be one of the fastest developing
Markets in Africa, having the triple-digit rate of growth in every year from 2001. In fact, the Nigerian

Market passed the Morocco and Egypt Market back in 2004, which made it be the second largest Mobile

Market after South Africa. However, it is only reached approximately a quarter of its expected ultimate

Market potential, which is suitable for expansion (Internet World Statistics, 2018). Also, the declining

ARPU levels are weighing heavy on that industry, mainly because of the new unified licensing regime for

Telecommunication Landscape, which was introduced in 2006, and will be responsible for increasing the

competition between the Mobile and Fixed Network Operators, to lower the costs of Internet (Internet

World Statistics, 2018). The following table shows Internet Usage and Population Growth in Nigeria:

Source: Internet World Statistics, From: < https://www.internetworldstats.com/af/ng.htm >

How Big is Entertainment Sector in Nigeria?

Well, one of the globally recognized entertainment sector in Nigeria is the Film Industry (Nollywood).

In fact, Nollywood has been ranked as the second largest Film Producers all over the world. The sector is a

substantial portion of the Entertainment, Art, and Recreation Industry, which contributed approximately

2.3% of the Nigerian Gross Domestic Product (GDP) back in the year 2016. The Nigerian Film Industry is

one of the priority sectors that have been identified in the Economic Recovery and Growth plan of the

Federal Government of Nigeria, with the anticipated $1 Billion in Export Revenue by the year 2020 (PWC,

2017). However, the existing challenges as explained need to be addressed to take Nollywood to the next

level.
 According to PWC’s Global Entertainment & Media Outlook 20017-2021, it provides in-depth

knowledge and actionable insights on the overall trends that shape the entire entertainment and media

industry in Nigeria. When we consider the total E&M Revenue, PWC(2017) stated that Nigeria is one of

the fastest-growing nations in Outlook, but warned that the figure must be treated with caution, since a

significant proportion of that development comes from the Internet Access Revenue alone, mainly the

Mobile Internet Access Revenue. It worth to note that out of the $2.8 Billion that Nigeria Market is

expected to add between the year 2016 and 2021, all but $452 Million will be generated from the Internet

Access Revenue (PWC, 2017). By the year 2019, the Industry or Film Market is expected to grow more

than twice as big, with the anticipated total revenue of $8.1 Billion (Statista, 2018). Similar to South Africa,

the Internet in Nigeria will be one of the critical drivers for the growth of this industry.

Proposed Amazon’s Strategies to Solve the Problems and Expand the Market

So that Amazon Company can expand the market in West Africa, it needs to develop the infrastructure,

mainly to frustrate its competitors. First, the electric power issue will be solved by creating the Amazon

Power. Given the fact that the Nigerian population is above 183 Million and about 55% do not have access

to the grid-connected electricity, Amazon Company should start an initiative that will develop this

infrastructure, even in the rural areas. Amazon Company will establish solar energy plants in various states

of Nigeria, which will serve the Company’s warehouse and Data Center and the surrounding population.

Amazon Company will develop a plant that will handle approximately 160,000MW, to achieve the desired

electricity generation capacity. Improving accessibility to electricity using the Amazon Power Plan will

make the competitors step up the productivity, which will also help Amazon in providing better Telecom

Service at a competitive rate.

On the other hand, Amazon Company should improve the Network and Internet access in Nigeria.
Given the fact that the Internet Access in Nigeria has reached approximately a quarter of its expected

ultimate Market potential, which is suitable for expansion (Internet World Statistics, 2018), Amazon

Company is supposed to work towards improving the crucial infrastructure. By establishing the Amazon

Power to cater for electricity, it will be straightforward to provide better Telecom Services as a lower rate

compared to the competitors. AmazonComms, which is improved Internet access, will enhance productivity

and expand the sales in all states of Nigeria. The services provided by Amazon Company will trigger the

competitors offering Internet Services to provide better and affordable internet/Telcoms subscription, which

will make Amazon have more Prime Customers and Prime Membership Subscription every year, achieving

its critical goal and expanding the Market in West Africa. These improvements will make many Nigerian

Citizens to Stream Nollywood Film and perform other entertainment and sports activities through Amazon.

Summary

Africa, mainly West Africa countries like Nigeria, have a significant market for Amazon Company.

However, Nigeria suffers from a primary deficit in both the Electric and Internet/Network infrastructure but

has enormous potential for renewable energies. The positive side of reliable access to the Internet and

Networking comes under the Nigeria Mobile Market, although it requires some improvements, with the

critical purpose of expanding the market. Electric power goes hand to hand with the reliability of Network

and Internet Access. In such a scenario, since most people in Nigeria lacks electricity connectivity, access

to the Internet is also limited. It is costly to access the Internet in various area than people can expect.

According to this study, it is crystal clear that developing the Amazon Power Plant, which will serve both

the company and citizens of Nigeria is one of the most crucial approaches or strategies towards expanding

the Amazon Market in West Africa.

The critical goal of Amazon Company is to get more Prime Members Subscription, mainly by

triggering the competitors’ level of productivity and internet rates. Amazon will be capable of offering its
Internet services, through AmazonComms Initiative, which will force the competitors to reduce their rates,

expanding the overall market for subscriptions. After all, Amazon Communications mission is simple:

make the customer happy; by securely delivering quality voice, fax, conferencing, regardless of size, or

locations. Our mission has also allowed our customers to save thousands of dollars by offering a fully-

integrated suite of unified communications capabilities. Our platform delivers reliable carrier-grade

performance and support.

References
Crg_Tizeti. (August 18, 2017). Nigerian Wi-Fi Start-up raises $2.1M, cuts Internet Costs in Half. Retrieved
From: https://www.tizeti.com/nigerian-wi-fi-start-up-raises-2-1m-cuts-internet-costs-in-
half/
Editorial Board. (2018). Nigeria: As 90 Million Nigerians Lack Electricity. Retrieved From:
https://allafrica.com/stories/201805060003.html

Internet World Statistics. (2018). Nigeria: Internet Usage and Telecommunications Report. Retrieved
From: https://www.internetworldstats.com/af/ng.htm

Muoh, O. F. (July 14, 2016). When 95 Million Nigerians are living without electricity something needs to
change. Retrieved From: http://uk.businessinsider.com/95-million-nigerians-are-living-
without-electricity-and-something-needs-to-change-2016-7?IR=T

PWC. (July 2017). Spotlight: The Nigerian Film Industry. Retrieved From:
https://www.pwc.com/ng/en/assets/pdf/spolight-the-nigerian-film-industry.pdf

Statista. (2018). Entertainment and Media Revenue in Nigeria From 2012 to 2021 (In Billion U.S. Dollars.
Retrieved From: https://www.statista.com/statistics/614896/nigeria-entertainment-media-
spend/

Sharareporters. (March 06, 2018). 90 Million Nigerians without Electricity Supply, Says Fashola. Retrieved
From: http://saharareporters.com/2018/03/06/90-million-nigerians-without-electricity-
supply-says-fashola