How EWIA Infrastructure uses funds – and earns money

How exactly does EWIA's subsidiary EWIA Infrastructure earn money, who do we build for, and who pays for it? We heard questions like these and similar ones frequently during our roadshow last year. That's why we want to take a closer look at the business models and operational processes of the individual divisions of the company in a series of blog posts.

In contrast to our C&I (commercial and industrial) and minigrid business, EWIA Infrastructure operates in a completely different way, as the company is solely responsible for erecting mobile phone masts and not liable for their maintenance.

First, EWIA agrees in advance with the clients, i.e., mobile network operators such as Afriwave, Reime Ghana Ltd., or Rainbow Mobile Networks (more on this here and here), on the costs for erecting mobile phone masts. The components, technical equipment, steel construction, IT, etc. are specified 1:1 by the client. This is practical because it means we don't have to spend a lot of time sourcing the components and we don't assume any liability for the planning. And it's good for us and the environment: in most cases, a PV system (approx. 6 kWp) is also included in the construction.

Local value creation While the components are settled, EWIA has to calculate the complete civil works etc. itself. In particular, the costs for site preparation, concrete and groundwork (veneer iron), and in some cases also for fencing, personnel costs, travel expenses, logistics, transport, etc. Many of these items can only be sourced locally, such as cement, sand, local day laborers, etc. And that is how it should be, because this keeps the entire value chain local and creates what Africa urgently needs: employment and know-how. In this way, we are fulfilling several UN Sustainable Development Goals (SDGs) at once.

In addition, training and qualification measures are implemented on an ongoing basis – EWIA Infrastructure has all the necessary licenses. Employees have been trained in health, safety, and the environment, particularly by mobile phone mast operators and the respective providers, and have received all the necessary safety instructions and corresponding certificates.

All of this is organized locally, and daily wages, on-site materials, accommodation, and the like are always paid in cash.

Money was mobile in Africa even before the iPhone

Speaking of money: we operate in Africa, which means that payments are also made in the African way. And here, the supposedly modern West could learn a thing or two from Africa's talent for improvisation. Because many Africans were considered “unbankable” and had never had a bank account, the resourceful founders of M-PESA (a service initiated by Safaricom and Vodafone) came up with the idea of using mobile phones for money transfers in Kenya at the end of 2005. By March 2007 – four months before the iPhone went on sale in the US – money could be transferred via text message in many African countries, giving the continent a massive boost in innovation. In the age of smartphones, things look very different. While we usually pay locally in cash, our services are paid for electronically via mobile money.

How we turn the working capital 3 to 4 times

A total cost budget (BOQ) is created from all these components, and the client issues us with a purchase order (PO). This includes the costs and a margin that we have determined in advance.

We pay the costs in advance, whereby a deposit (mobilization fee) of 30% is usually due when the purchase order is placed. The total duration, including acceptance and payment, should ideally be 90 to 120 days. Payment steps are individual, but after 90 to 120 days, the entire investment plus a margin should have been repaid to us.

Accordingly, working capital could ideally be turned over 3 to 4 times a year.

To illustrate this: Just in time for the turn of the year, 198 investors invested €380,000 in infrastructure as part of the “EWIA Infrastructure Batch 1” (see here). Of this amount, €300,000 is used as working capital, which means that, if everything goes optimally, we could pre-finance around €1 million in investments per year. In the business plan, we have conservatively assumed that the capital can only be turned over twice.

EWIA Infrastructure is bound to grow

It takes about 30 days to build a tower. We currently have up to seven teams of five workers under contract, so theoretically we could build seven towers per month. We plan to increase this to ten teams in the future. Why? Because due to the rising costs of grid electricity and diesel, more than 6,600 transmission masts (predominantly) with solar solutions are to be built or converted in Ghana alone over the next three to five years.

Considering that EWIA Infrastructure, founded in Accra in 2021, was only intended as a side business, the potential is enormous. With the loan funds recently made available, approximately 350 to 400 projects are to be implemented over the next few years.

Do you have any questions about EWIA Infrastructure? Then feel free to send us an email at info@EWIAinvestments.com.