Investment for physical infrastructure: Modular approaches as pathway, By Kolade, Hanien, Dairo & Beinisch


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Practically any conversation about business opportunities in Nigeria revert to the same theme: digital technology is the future but infrastructure to support it is poor.

Unfortunately, we cannot talk about the digital revolution as if we have already all become avatars in a world devoid of physical objects. Bricks and mortar are still the foundations of the modern economy, even if we imagine the future as digital. There is no way of getting around the fact that, even as we migrate from the physical to the digital world, we need electricity to power our homes and equipment, roads to transport goods and schools to train youths to navigate and exploit the digital future. The physical and digital must work in dynamic synergy, not in mutual isolation. The potentials are huge, but can only be fully realised if we can bridge the digital divide.

The lack of access to affordable energy, straight-forward logistics, and a deep skills-pool, not only limits how digital technology can be deployed but also makes Nigeria less competitive in deploying it. The digital divide, the phenomenon of the wealthy disproportionately accessing the benefits of digital technology, is well documented and understood to be growing. According to an assessment by

UNCTAD in 2021

, citizens of developing countries are at risk of  becoming providers of raw data to global digital platforms, while having to pay for the intelligence obtained from the data they have generated.

Conversations about closing the digital divide often focus on steps that can be taken to protect data, develop digital skills and improve broadband access. However, the relationship between the digital and the physical worlds receives less attention. This is a missed opportunity because Nigeria also needs investment in physical infrastructure for its citizens to fully access the benefits of digital technology. In other words, digital inclusion has to be a key priority of Nigerian governments at all levels. The ideal of digital inclusion, underpinned by the three key principles of access, adoption and application, encompasses activities through which disadvantaged groups have access and use ICTs to enable them to fully participate in society and enjoy benefits and opportunities like other citizens. There is, therefore, a need for significant investment in infrastructure, but how do you go about this in a vast and diverse country like Nigeria?

Unfortunately, it is unlikely these solutions are going to come from large-scale infrastructure projects in the short to medium term. State budgets in Nigeria and elsewhere are over-extended and  infrastructure investment in Nigeria comes with risks that very few investors have the appetite to take.

We do not advocate against efforts to mobilise investment in large scale infrastructure. Investment at a massive scale is needed; however, we argue that because there are such high barriers to implementation, it is urgent to explore alternative models to building physical infrastructure that will make Nigeria more globally competitive.

A modular approach, where infrastructure-related challenges are identified and ideas are generated, explored and tested at a community or organisational level, are one way to do this. By focusing problem definition from the bottom up, rather than the top down, it can be easier to anticipate and responsive to project bottlenecks that might delay or change their scope. This type of approach can also be more effective at building local capacity and designing solutions that are more consistent with local business practices. For example, GIVO, a Nigeria-based recycling company, and its Portugal-based partner, Precious Plastics, have developed the prototype of a manufacturing unit that produces bricks using low-value plastic and solar power and it is affordable enough that it can be used by road-side brick manufacturers, who represent a high percentage of brick producers in Nigeria. Furthermore, because the system is designed to be modular, independent manufacturers are free to work independently and also have the choice to coordinate to meet higher demands.

At Innov8, it is believed that prototypes like GIVO’s should be nurtured. In 2020 Innov8 established a facility in Abuja to support indigenous hardware innovation after identifying that start-up funding was disproportionately targeted at software innovation. This in spite of the fact that Nigeria imports most finished products and that design and manufacturing capabilities within the country are still fragile. Innov8’s work to support research and development in hardware innovation, which is combined with business model development, has yielded positive results. For example, the work with Quadloop, a manufacturer of solar lamps that are produced from e-waste, led to a 70% reduction in production costs and a higher proportion of locally sourced materials. This example is being repeated through Innov8’s work, not only with entrepreneurs but also with university researchers.

When more attention is paid to local hardware innovation, this can lower the costs of goods to consumers, improve productivity and ultimately Nigeria’s competitiveness. A drawback of the modular approach to supporting local innovation is that, particularly at the early stages, the potential impact is infinitesimal relative to Nigeria’s structural needs. In the GIVO example, one manufacturing unit is estimated to produce only 300 bricks per day. Quadloop is likewise not yet at a stage that it is producing or marketing solar lanterns in the volumes that are needed to make a dent on the nation’s electricity deficit.

We believe that this limitation should not discourage investment in modular approaches to mobilising local hardware innovation. Modular approaches are flexible: they are designed to adapt to different needs and circumstances. This makes it less risky to experiment and easier to ramp up production when business models are proven.

Modular approaches to supporting local hardware innovation can also be combined with larger scale investments in infrastructure and digital technology. For example, through the development of manufacturing hubs, Nigeria’s emerging entrepreneurs could access equipment that would otherwise be unaffordable. This is especially compelling when considering how technologies such as 3D printing enable much more dynamic manufacturing processes. The creation of digital platforms that incorporate technologies, such as blockchain, can also provide smaller businesses the foundations to trade, manage inventories and accounts, and to coordinate with clients and suppliers in ways that may otherwise be unobtainable. Having established linkages to financing, aggregation and logistics capacity, digital applications such as Pakam, a waste management platform, offer a us a window into how digital tools interact with and support investment in physical infrastructure.

We should be excited about the potential of digital technology to drive Nigeria’s economic development. For Nigerians to derive the most benefit from the digital world, it is paramount that there is more investment in physical infrastructure. The urgency of Nigeria’s infrastructure needs cannot be overstated, as such it is necessary to pave new pathways to mobilise investment. Modular approaches driven by indigenous innovation is one promising avenue because they are more responsive to local business needs. Advances in digital technology make it more affordable and feasible to support the development of local hardware innovation. Furthermore, with lessons to draw from the Nigerian start-up community, we have the tools to plot a creative new course towards competitiveness.








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