The Economy of Local Content
Development in Nigeria:
Challenges and Prospects
Presentation at the 2013 eNigeria Conference
Tope S. Aladenusi
Partner & Head, Information & Technology Risk, Deloitte Nigeria
5 December 2013
Objective
At the end of this presentation you will:
• Understand the reality and the present challenges plaguing local content
development in Nigeria
• Appreciate how local software and hardware development have helped
improve the economy of other nations in the world
• Understand what we can do to overcome the current challenges facing
local content development
• Discuss the prospects we have despite the current challenges
2
Outline
3
Definitions
1
Where are we?
2
Where should we be?
3
Key Challenges of Local Content Development
4
Overcoming the Challenges
5
Local Content Development - Prospects
6
Concluding thoughts
7
Definitions
Local Content – An expression and communication of a
community’s locally generated, owned and adapted
knowledge and experience that is relevant to the community’s
situation.1
Local Development – The mobilisation of under-utilised
resources in targeted localities by local action, often in
partnership with regional and central government departments
and agencies, business, trade unions and local community
groups, which can enhance the value of people and place.2
Local Economic Development – offers government, the
private and not-for-profit sectors, and citizens the opportunity
to work together to improve the local economy.3
Source:
1. UNESCO and the World Summit on the Information Society
2. Northern Ireland Economic Council
3. World Bank
4
Where are we….
•
How many of us will be willing to use made in Nigeria
phones and drop our current Samsung Galaxy phones,
iphones blackberry phones and all other sophisticated
phones we carry about?
•
How many Banks in Nigeria use made in Nigeria software as
their core banking operations?
•
With the introduction of cashless society, how many made in
Nigeria POS do we have?
•
How many of the Oil & Gas or Telecom companies use
made in Nigeria software as their main business
application?
•
How many of the video games which our children play with
at home are designed locally?
•
How many times does the government signs big ticket ICT
contracts with local firms?
Where are we in comparison with others?
•
•
•
•
•
•
•
According to an online report by Tribune Newspaper on 1 March 2013,
about $1 billion is being lost annually to foreign software purchase by
government and private businesses in the country.
The country’s annual Information Communications Technology (ICT) import
equates 50 per cent of 2013 national budget of N2.4 trillion, an indication
that the country is in dire need of local content on ICT to stem the tide of
capital flight.
As per the Economic Survey 2011-2012, Software accounts for 41.7% of
the total services exports from India.
In 2011-12, Indian IT products earned an export revenue of around $1.5
billion , which rose to $1.6 billion in 2012-13
Approximately, Six (6) computer and/or video games were sold on
average every second of every day of 2012.
$5.9 billion was revenue generated by purchases of digital games, mobile
apps, subscriptions and social network gaming in 2012
The average salary for an entertainment software industry employee is
$90,000
Source:
http://www.tribune.com.ng/news2013/index.php/en/business-package/2012-10-29-11-36-27/industry/item/6312-nigeria-loses-over-7-billion-annually-to-foreign-ict.html
http://www.hindustantimes.com/business-news/sectorsinfotech/indian-it-expanding-from-software-services-to-apps/article1-1048213.aspx;
http://www.theesa.com/games-improving-what-matters/economy.asp; http://www.bsa.org/country/public%20policy/~/media/files/policy/security/general/sw_factsfigures.ashx
Where should we be?
Global Expression
Global content for
local application Influx of foreign
products
Global content
for global
application
We are here
Local
Application
Global
Application
We should
be here
Local content
for local
application
Local content
for global
application
Local Expression
7
Source: Adapted from “Collecting and Propagating Local Development Content” by Peter Ballantyne
Key Challenges of Local Content Development
Regulatory
System
• Nigeria did not have a ministry dedicated to ICT until July,
2011.
• Focus on rolling out new regulations over ensuring
adherence to existing regulations.
• Over reliance on foreign ICT products and vendors.
• Poor access to low interest financing or development
financing scheme. The CBN Development Finance
scheme mainly targets the agricultural sector, whereas
annual import of ICT equates half of our 2013 national
budget figure.
• High cost of production due to lack of enabling
infrastructure.
8
Key Challenges of Local Content Development
School
System
• The IT related curriculum of some schools are not in
alignment with modern realities. Some lecturers are still
teaching COBOL, BASIC, PASCAL, etc.
• The emphasis on the school preparing students for a great
job over preparing them to solve problems or be great
entrepreneurs.
• ICT related courses are not yet fully integrated in all tiers of
education.
• IT security is not integrated in many ICT courses so we
are building functional applications that are not secure.
• There is poor government support on school infrastructure.
9
Key Challenges of Local Content Development
Societal
System
• The “get it quick” syndrome may not be conducive for
excellence in ICT. For instance, work started for Microsoft XP in
1995 but it was released in 2002. Today, many ICT
professionals rush to market with bad products or focus on
sales over development.
• Slave mentality that anything made overseas must be better
than the ones made in Nigeria.
• No role models in many sectors of ICT. Some of our current
role models have the key knowledge that drives the
business ONLY in their heads.
• Many philanthropists would rather give fish than teach
people how to fish. What is wrong with building R&D centers or
“software villages”?
• Many IT practitioners are competing on saturated areas and
neglecting white spaces e.g. computer games, entertainment
solutions, traders solutions etc. We should start thinking of
“hardware / software inclusion” to reach the “unreached” of our
society.
10
Key Challenges of Local Content Development
Security
System
• Many made in Nigeria software are not built using secure
coding practices or international standards like COBIT 5.
According to Deloitte’s Security Survey on eBusiness Platforms in
Nigeria, November 2013, results show that of the total platforms
sampled, online shops / retail markets had the highest number of
security flaws, followed by financial institutions. 28% of the eBusiness platforms reviewed transmitted user credentials in clear
text.
• Intellectual property rights are usually not protected due to
poor enforcement of the Copyright Act.
• Nigerians are unable to buy Apps in some stores abroad (e.g.
US, UK) using a debit / credit card issued by a Nigerian bank
let alone selling our Apps in such stores.
Colonialism
System
• Many of our IT professionals are still under colonisation – in
their minds. They are working hard to “catch up” with
Microsoft, Facebook, Twitter, Samsung, etc. If we always
think of catching up, we will never be ahead, and consumers
are transacting with those ahead. Create the future!
11
Overcoming the Challenges
In order to effectively overcome the challenges of local development, four key
components must be in place.
Committed
Leadership
Shared Vision
Sense of
Urgency
Addressing
root causes
of challenges
12
Local Content Development - Prospects
“I see a big jump”
Evolving ICT Landscape: eGoverment, Mobile, Social Media,
Broadband, Data growth, Cloud Computing, Outsourcing, etc.
Large Consumer Base: the demand for ICT products is increasing
in all sectors. For example, in telecom industry, we moved from
about 400,000 to over 90 million subscribers in 10 years.
Availability of local talent: Nigerians are still one of the smartest
people on earth. We have a large pool of resources to develop
affordtable products that address the peculairities of our
enviroment and the world at large.
Acceleration of the growth of the economy: If half of the 2013
budget represents total annual ICT spend on importation, then
imagine what will happen to our economy if 50% of that amount is
internally generated from ICT.
13
Local Content Development - Prospects
“I see a big jump”
An ICT Ministry that is working means better frameworks,
policies and the enforcement of these policies: This conference
is a sign that we are begining to adopt the right “thinking”.
The ICT Ministry, though young, should work hard to develop and
enforce more enabling policies and frameworks e.g.
India
US
•
Software Policy of 1986
•
National electronics policy (NEP) in 2012
•
Framework for Mobile Governance
•
The Digital Government Strategy
14
Concluding thoughts
“The local ICT industry is one where we see tremendous
potential for local content development despite the challenges.
We have the best brains, good people and an economy that is
gradually improving. With the advantages we face over foreign
software and with an enabling environment, policies and
government backing, it is only a matter of time before the ICT
industry becomes one of the biggest employer of labor, and
one of the largest contributors to the GDP of our great country
Nigeria.”
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Thank You
The views and opinions expressed in this presentation are those of the author and do not in any way represent the views of the author’s
employer. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation
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