Ugwuanyi explained the importance of understanding Internet Exchange Points (IXPs) to appreciate the role that these infrastructures play in the tech space.

He stated: “Before we look at the role of IXPN to the ecosystem, I think it’s prudent for us to very briefly look at what an Internet Exchange Point is. Let’s imagine a region, say Lagos, and in this particular region, there’s just one service provider.”

This background, he explained, is essential for understanding the nuances of network communications.

The Function of IXPs in the DNS Industry

Still speaking at the Tech Convergence 1.0, Ugwuanyi delved into the technical details of how IXPs work, noting how they impact the efficiency of DNS operations.

The Internet Exchange Point of Nigeria, for example, connects over 128 networks, and its average traffic reaches over 800 Gbps. 

IXPN operates in all major data centres across Nigeria, including ICNL, Digital Realty, Rack Centre, MDXi, Cloud Exchange, ADC, and OADC. Added to this, IXPN has points of presence in Abuja, Kano, Port Harcourt, Enugu, and Delta.

“The Internet Exchange Point of Nigeria, before we delve into the roles it plays, connects over 128 networks, with average traffic exceeding 800 Gbps. We are present in all of the major data centres in Lagos, including ICNL Digital, formerly medallion, Rack Centre, MDXI, Cloud Exchange, ADC, and OADC. We also have other points of presence in Abuja, Kano, Enugu, and Delta.”

Ugwuanyi explained the important role that IXPs play in reducing latency in network communications, which is essential for the efficient functioning of the DNS infrastructure. He illustrated this by comparing the latency between networks connected to IXPN and those that rely on submarine cables.

“For connection to IXPN, all these networks can reach each other at less than one millisecond. The average time to reach these DNS servers is less than one millisecond, as opposed to going through submarine cables, which takes no less than 90 to 100 milliseconds.”

This improvement in speed ascertains the effectiveness of IXPs in reducing latency, which is essential for faster, more reliable internet access, especially for DNS resolutions.

The Economic Benefits of IXPs

Ugwuanyi also emphasised the economic advantages of using IXPs. He explained that on average, most ISPs exchange 50-60% of their traffic at IXPN. This has a significant impact on cost savings for service providers.

“On average, most of the members exchange 50 to 60% of their traffic at IXPN. What this means is that 50-60% of a typical ISP’s traffic goes through the exchange point.”

He used Lagos as an example to highlight the difference in cost between using IXPN for local traffic versus using international transit. 

For instance, a one Gbps connection at IXPN costs around N200,000, while the cost for a similar connection using international transit is much higher, often around N1.2 million after negotiation. The cost difference is obvious, and it shows the economic benefits of localising traffic.

“If you look at the cost of a one Gbps transit, you’re looking at N1.2 million if you negotiate very well. The cost of the same one Mbps connection to IXPN is N200,000, which is a significant saving for providers.”

Outside Lagos, the cost of international transit increases drastically, which further stresses the economic advantage of using IXPs.

“One of our members in Ibadan told me that one Gbps transit connection costs almost N4 million there. So you can see how the reduction in cost of operation is quite significant.”

Enhancing Security and Compliance

Another key aspect of IXPs is their role in enhancing the security and compliance of internet traffic. By localising internet traffic, IXPs reduce the number of intermediaries involved in data transmission, thereby decreasing the exposure to potential attacks. Ugwuanyi explained:

“If the traffic is local, there are fewer players who can intercept and attack the traffic. It also reduces the exposure to attacks like Distributed Denial of Service (DDoS), which is a significant threat when traffic passes through multiple providers and hubs.”

He also discussed how IXPs help with data localisation and compliance with regional regulations. In Nigeria, some laws prevent operators from storing user data outside the country, and IXPs help ensure compliance with such data localisation laws.

“Nigeria has some data localisation laws and policies. For example, operators are prevented from keeping their user data outside Nigeria. An IXP would facilitate and make it possible for players to comply with these regulations.”

Ugwuanyi stressed the importance of IXPs in the tech space, in terms of improving network performance and also reducing costs and enhancing security.

He noted that IXPs help in improving the efficiency, affordability, and security of internet services, making them an essential part of the technological infrastructure in Nigeria and beyond.

“The reduction in cost of operation and improved network performance provided by IXPs is precise. In Lagos, for example, the difference between using IXPN and international transit is very noticeable. The role of IXPs in improving connectivity and reducing costs is undeniable.”

This was the emphasis of the Africa Tech Alliance Forum (AfriTECH 4.0), held recently in Lagos, where industry experts, policymakers, and SMEs discussed innovative strategies for leveraging technology to leapfrog into the digital future.

Themed “Leapfrogging Digital Transformation for Future of Africa’s Economy,” AfriTECH 4.0 accentuated the indispensable role of SMEs, which form the backbone of Africa’s economy. 

According to the International Finance Corporation (IFC), SMEs contribute approximately 90% of businesses and 50% of employment across the continent.

Yet, many face challenges in accessing the tools and opportunities necessary for growth. 

The lessons from AfriTECH 4.0 provide a guide for SMEs to build resilience and promote innovation while staying competitive globally.

Financial Inclusion: Empowering SMEs Through Technology

Mr. Biram Fall, regional general manager, QNET sub-Saharan Africa, highlighted the massive possibility of financial inclusion in Africa, noting that “with over 350 million unbanked adults, there is a significant potential for financial inclusion and digital solutions for Africa.” 

He stressed the transformative power of fintech in providing essential financial tools like savings accounts, credit, and insurance, all of which are important for SMEs seeking economic independence.

The demand for financial inclusion aligns with projections of a $75 billion e-commerce market in Africa by 2025, driven by internet access and smartphone adoption. However, Fall cautioned against infrastructural and cultural obstacles: “Limited banking infrastructure and high cash dependency hinder digital engagement.” 

SMEs can benefit by embracing mobile wallet solutions, which simplify transactions and boost consumer trust, thereby opening access to a wider e-commerce market.

With over 60% of Africans under 25, young entrepreneurs are leading digital growth by building scalable tech solutions, as emphasized by Jude Ozinegbe, founder/convener at Cyberchain. 

Similarly, women-focused programmes and local initiatives supporting female entrepreneurs ensure inclusivity. In empowering these demographics, SMEs can benefit from diverse perspectives and creative solutions, boosting innovation and long-term growth. 

These will go beyond bridging gender gaps to also stimulating a culture of innovation that strengthens local economies.

Blockchain and AI: Redefining SME Operations

In his keynote, Kashifu Inuwa Abdullahi, director-general of the National Information Technology Development Agency (NITDA), emphasized the disruptive capability of blockchain and artificial intelligence (AI). 

He stated, “Blockchain and artificial intelligence are powerful technologies that offer Africa unprecedented opportunities. By strategically integrating these technologies, we can propel Africa forward as a dynamic leader in the global digital economy.”

For SMEs, blockchain presents avenues to secure transactions, ensure transparency, and reduce operational inefficiencies. 

Abdullahi projected that blockchain could contribute $300 billion to Africa’s GDP by 2025, especially through financial inclusion and governance applications. 

Meanwhile, AI-powered tools offer SMEs the ability to optimize resources, automate operations, and drive productivity, particularly in sectors like agriculture, healthcare, and education.

Challenges SMEs Face in Adopting Emerging Technologies

While the prospects of digital transformation are evident, SMEs often encounter limitations:

• Digital Literacy: Many SME owners lack the skills needed to effectively use advanced technologies.
• Cost of Technology: Financial restrictions limit access to tools like AI and blockchain.
• Resistance to Change: Traditional businesses often hesitate to digitise operations.
• Infrastructure Gaps: Limited connectivity in rural areas affects adoption rates.

Addressing these issues requires collaboration between governments, the private sector, and educational institutions. Through training, subsidies, and partnerships, these challenges can be mitigated to enable SMEs to unlock their potential.

Cybersecurity: Safeguarding the Digital Future of SMEs

Dr. Obadare Peter Adewale, chief visionary officer of Digital Encode Limited, addressed the increasing risks accompanying digital transformation. 

He noted, “The rapid pace of technological advancements has introduced new cybersecurity threats and challenges.” For SMEs, which often operate with limited resources, powerful cybersecurity frameworks are essential to protect against cyberattacks and fraud.

Obadare highlighted that “Healthcare, financial services, and cloud providers remain prime targets, with attacks on critical infrastructure and IoT expected to intensify.” 

The takeaway for SMEs? Adopting a security-first culture, supported by partnerships between governments and private sectors, is essential to ensuring resilience in a digitally interconnected economy.

Useful Tips for SMEs

SMEs looking to make maximum use of technology can follow these steps:

1. Start Small: Begin with low-cost digital tools like WhatsApp Business or mobile payment systems.
2. Leverage Training Opportunities: Join government or private sector training programmes focused on digital literacy and entrepreneurship.
3. Collaborate with Fintechs: Partner with startups that can provide tailored solutions for SME needs.
4. Explore Funding Options: Tap into grants and microfinance opportunities aimed at promoting tech adoption.

Digital Payments: A Game-Changer for SMEs

Mrs Ebehijie Momoh, CEO of AfriGoPay Financial Services Limited, stressed the growing importance of digital payments in facilitating financial inclusion. 

She noted that “Nigeria’s digital payments landscape is experiencing rapid expansion, with 2023 alone seeing an estimated $730 billion in transactions.” 

For SMEs, innovations like the AfriGo card, which processes transactions in local currency, reduce reliance on foreign exchange and enable faster capital turnover.

Momoh underlined the need for accessibility, affordability, and product diversity in digital payment solutions. She added that “fintech companies are critical in ensuring affordable and accessible services, supported by regulations and a robust digital infrastructure to enable responsible and sustainable financial growth.” 

SMEs that leverage these tools can simplify operations, reduce costs, and expand their market reach.

Policy and Accountability: Bridging the Gap for SMEs

Muhammed Rudman, CEO of the Internet Exchange Point of Nigeria (IXPN), critiqued the contrast between policies and their execution. He stated, “We have excellent policies, but when it comes to implementing those policies, we are really, really lagging behind.” 

Policy implementation is necessary for SMEs to access the infrastructure and services needed for digital transformation. Rudman called for tougher penalties for non-performance to ensure government accountability, a measure that could directly benefit SME growth.

Collaboration: The Key to Digital Transformation

A recurring theme at AfriTECH 4.0 was the importance of partnerships. From QNET’s financial literacy programmes that promote entrepreneurship to NITDA’s focus on digital literacy, collaboration between governments, private sectors, and SMEs was deemed essential. 

“True progress requires collaboration,” stated Mr. Biram Fall, emphasizing the role of cross-sector partnerships in building a digital economy that is inclusive and resilient.

The insights from AfriTECH 4.0 reiterates that SMEs are at the heart of Africa’s digital transformation and financial inclusion, leveraging emerging technologies like blockchain and AI, adopting strong cybersecurity measures, and utilizing innovative digital payment systems, will help SMEs drive economic growth and resilience.

However, the journey requires accountability, supportive policies, and strategic collaborations to reach Africa’s goal of a competitive digital economy. 

“Africa’s potential in the digital age is boundless… We are not just spectators in the digital revolution; we are pioneers. Let us seize this moment to place Africa at the forefront of global innovation.” – Kashifu Abdullahi.

He made this call at The Africa Tech Alliance Forum (AfriTECH 4.0) which took place yesterday, November 7, 2024, at Oriental Hotel, Lekki Road, Lagos. 

Centred around the theme: “Leapfrogging Digital Transformation for Future of Africa’s Economy,” the forum convened industry leaders, policymakers, and technology advocates to discuss Africa’s digital growth. 

Citing Nigeria as an example, Rudman stressed the disparity between the abundant digital policies and their lack of effective action, reflecting on former President Olusegun Obasanjo’s comment that “Nigeria is the graveyard for excellent policies.” 

He added that the lack of policy execution is particularly problematic in sectors essential to economic growth and national inclusivity.

While noting the strides made in other countries, Rudman pointed to India as an example, where significant investments have reached underserved areas. 

In Nigeria, he noted, the Federal Ministry of Communications and Digital Economy, led by the Minister, has invested approximately $2 billion into initiatives that extend over 90,000 kilometres of broadband infrastructure into rural areas to connect the unserved population. 

Added to this, Rudman mentioned the Central Bank of Nigeria’s financial inclusion initiatives and the Nigerian Communications Commission’s (NCC) Universal Service Provision Fund (USPF) aimed at ensuring access to digital and financial services across the country.

Despite these goal-driven projects, Rudman emphasised the gap between policy and practice. He said, “We have excellent policies to achieve that, but when it comes to implementing those policies, we are really, really lagging behind, and it’s the responsibility of the government to ensure that those policies are actually achieved.” 

He stressed the importance of government accountability in bridging this divide, calling it “a million-dollar question on how government can be achieving policies they have done.”

Rudman proposed implementing tougher penalties for non-performance as a potential solution, saying, “Unless there is going to be a high penalty for not delivering… then yes, maybe it can happen.” He argued that without tangible consequences, policies may continue to stagnate, hindering Nigeria’s potential in the digital economy.

Rudman’s address at AfriTECH 4.0 encompassed the fact that Nigeria has strong policies aimed at digital transformation, but it remains essential to ensure these plans are implemented with diligence and accountability.