The software arena has become an essential strategic resource for intellectual capital, investment opportunities and value creation in any given economy. With Nigeria pointlessly spending over N25 billion in the past decade on importation of foreign software solutions, repositioning the nation’s software industry is key, writes Ben Uzor
Undoubtedly, the global economy has moved from agricultural, industrial to post-industrialism where information asset is currently perceived as a key driver for economic development, competitiveness and business improvement. Interestingly, the range of ICT-related concerns facing policy makers has increased dramatically in recent years: communications infrastructure, procurement for government automation and electronic government (e-government) programs, intellectual property, government-sponsored research programs, incubators and technology parks, engineering education, foreign investment and, of course, the potential for export revenue.
However, it is usually in this last area that the potential for dramatic economic growth like India or Ireland, which initially brought software to the forefront as a separate issue within ICT. To this end, the software arena has indisputably become an essential strategic resource for intellectual capital, investment opportunities and value creation in any given economy. Software is a relatively low-investment, environmentally friendly, high-growth global industry – a good target growth industry for many countries. But it has also become the most critical and expensive element of the government and business systems that every nation must build for itself.
Currently, the software industry in the United States of America (USA) is considered the third largest business after automobile and electronics. Moreover, software exports has major share in India’s total exports. Available statistics from the United Nations Conference on Trade and Development (UNCTAD) reveal that as 2004/2005, both software and services revenue grew by 32 percent to $22 billion and $28.5 billion in 2005/2006. As Stanford Professor, Edward Feigenbaum put it while serving as chief scientist for the United States Air Force; “we now live in a “software-first world.” The growth of the global demand that makes software exports a growth industry is driven by the continued consumption of software by other countries and business enterprises.
Every software-exporting country has evolved a unique industry, shaped by its own resources and situation and by the particular global opportunities presented at the time. For example, Japan exports mostly software games; India exports primarily software services to large software development shops while Ireland exports software products (created by MNCs located in-country as well as by a growing number of indigenous companies. In addition, Israel mostly exports software technology which is subsequently productized by firms in the US and Europe. There is no gain saying that the global software industry has continued to evolve, as countries now look to develop their software exports face a different global situation. Furthermore, they are likely to evolve fundamentally different software industries. In the light of this, current shape and dynamics of the software industry should therefore inform ICT planning and policy, no matter the country’s stage of economic development.
Nigeria’s software market
The country’s software market is dominated by imported packages. While this do not mean that Nigerian firms are simply retail outlets for those packages, the imported packages form the base for further software services to be offered by these firms. In part, this servicing derives from contextual differences: the fact that software packages developed in and for industrialised country markets are not exactly applicable in developing countries without some adjustment. While other nations continue to earn significant revenue from software exports, Nigeria is still groping in the dark, making pointless expenditure of over N25 billion in the past decade on importation of foreign software solutions.
This figure however represent only companies that registered their technology transfer agreements with the National Office for Technology Acquisition and Promotion (NOTAP). Stakeholders in the Information Communication Technology (ICT) industry revealed that Nigeria’s dormant software industry could spring up to become the much anticipated alternative to crude oil with respect to wealth creation and revenue generation, if only the Federal Government can increase its level of participation by way of formulating effective policies, creating the enabling environment and providing appropriate infrastructures to aid software development.
They further blame the industry’s snail speed development majorly on government’s refusal to increase tariffs on imported software to discourage imports. According to them, the Federal Government should increase investment in the area of establishing more national IT parks and clusters with appropriate policies on infrastructure, human resources, incentives and business plan. Chris Uwaje, president, Institute of Software Practitioners of Nigeria (ISPON) projected that the country’s software technology, if well retooled and strategically positioned for global competitiveness could earn about $10 billion annually from foreign software exchange.
He further challenged the present administration to become proactive and create the needed enabling environment for local capacity. The key benefit of a vibrant software, he added was in producing more knowledgeable and better skilled human capital for nation building. “Software has become and will remain one of the fastest growing industries with power to enrich, and sustain national economies. With youth population of about 43.2 percent, Nigeria possesses an immense advantage and capacity to encourage the emerging knowledge information society and succeed best practices and quality standards are established as strategic imperatives to match global competitiveness,” Uwaje posited.
In the same vein, Jimson Olufuye, past president, Information Technology Association of Nigeria (ITAN) called for the need to lay emphasis on training to produce an army of highly skilled Information Technology (IT) professional in terms of tertiary and non-tertiary and non-tertiary IT training at various levels. According to Olufuye, “Software is a product of profound human capacity. We need to develop our human capacity and channel their mind set on software design and architecture on various technology platform. “As regards policy formulation, the IT policy has given priority to software development but it seems that the political will is absent to pull it through.
“In addition, we need to establish more IT parks with appropriate policies on infrastructure, human resources, incentives and business plan.” Moreover, issues such as the absence of software quality assurance, poor investment in software development, poor product standard, scalability, lack of proper documentation which creates a gap in business continuity because the knowledge resides in one person, have all dogged the growth and development of Nigeria’s software industry. To this end, Nigerian firms spend huge foreign exchange on importation, repatriation of royalties and all manner of fees to foreign companies that most local players represent in the country even where the local firms have developed expertise to earn and keep their earnings in the country.
Indigenous software developers
With regards to the state of the industry, indigenous software entrepreneurs opine that the industry is characterized by fragmented players with little or no governing structure. According to them, there are a lot of skilled programmers with minimal or no business acumen. But more importantly, the regulatory framework remains weak and offers minimal support and protection for intellectual property rights and privileges. They however observed that the nation’s educational system and curriculum continues to be a problem, not focusing on the right learning and skills. Commenting on the present state of country’s software industry, Wahab Sarumi, chief executive officer, Wadof Software Consulting urged the government to come up with policies that would ensure that locally-developed software are being used by organisations in Nigeria.
He added: “Indigenous software developers are an endangered species, abandoned by the government, neglected by its own people and bullied by the poachers from India, to whom Nigerian businesses rush to buy software applications to solve local business problems.” Giving a different view of the problems of Nigeria’s software industry, James Agada, managing director, ExpertEdge Limited noted that the problem with the country’s software industry was not a question of foreign software over local software solutions. The MD said “If you have better software, people will buy and they do not care where it is coming from. If you want to sell software, the buyer does not buy the software alone, he buys the software, buys capacity to support the software, buys your capacity to improve on the software, he buys what he assumes is your mastery of the domain the software is meant for because the software must be able to compete favourably with its competitors.”
Ray of hope
A joint committee of the private and public sector are currently working to develop a fit for purpose framework for the establishment of incubation centres across the country that will foster the development of software industry, Omobola Johnson, minister of communications technology has disclosed. This framework, according to the minister “will include minimum IT infrastructure requirements, the creation of a technology innovation venture capital fund, avenues for the commissioning of bespoke software by the business community, institutional support for incubates in the form of business services and a strong mentoring framework by successful business entrepreneurs and a transparent and credible process to select incubates. We are committed to the establishment of four IT Incubation centres by the end of the third quarter of this year.”
Interestingly, National Information Technology Development Agency (NITDA) one of our implementing agencies recently signed a Memorandum of Understanding (MoU) with the Cross Rivers state government to leverage the infrastructure of Tinapa Business and Leisure resort in Calabar to build a knowledge city/IT park. It is expected that one of our incubation centres will be located in Tinapa.
Software incubation centre
Indigenous software developers in Nigeria’s burgeoning Information Communication Technology (ICT) landscape will soon be able to tap into the multi-million dollar global applications development market as progressive steps are already underway. The federal government disclosed plans to establish four software incubation centres in the country by the end of the third quarter of 2012. Johnson made this disclosure in Lagos recently while declaring open a Youth Empowerment and ICT Foundation programme sponsored by Jim Ovia Foundation. Johnson disclosed that the federal government is to invest about N1 billion to establish an ICT Incubation Centre.
“About N750 million to N1 billion will be needed to establish the incubation centre. This plan will ensure that private sectors invest their money in this IT innovation fund, in order to fund our local software entrepreneurs. We are investing in them because this local entrepreneur may not have collaterals to pay up their loans,” she said. The foundation in partnership with technology giants, Google, Microsoft, IBM, QT recently trained 350 African youths in the area of software development.
Commenting on the rationale behind setting up the ICT foundation and training programme, Jim Ovia, chairman of the foundation said if Nigerian youths are fully equipped with the appropriate training and capacity building, they will not only create software applications to be reckoned with globally but also establish IT business that can thrive and make a significant difference in terms of wealth creation and revenue generation.
The theme of the conference was ‘Developing Nigeria’s Next Generation of ICT Entrepreneurs” and would hold for five days. “Look, Google has a market capitalisation of N200 billion. “Nigeria’s foreign reserves is only N30 billion. Apple at one time made a profit of $1 billion in a week. Technology brands like Microsoft, Google, and IBM are more recognizable than the national flags of some countries that have been in existence for centuries. “This is why we need to empower our youths in the area of ICT. These firms were founded by young men in their twenties at the time. This is why we targeting our youths. There is need for us to inspire, train and engage our youths in the area of technology. We can replicate these success stories”, he added.
Johnson further noted that the training programme was in line with the ministry objective of developing relevant and up-to-date software development skills – including solution architecting and testing. These software incubation centres, according to the ICT minister will go a long way in accelerating the development of a commercial software industry by ensuring that appropriate support and funding is available to software and other IT entrepreneurs. Alluding to the establishment of a professionally managed IT innovation venture capital fund that will have the initial seed capital provided by government with contributions from private sector, Johnson also disclosed that a joint committee of the private and public sector has been instituted to swiftly develop a fit for purpose framework for the establishment of incubation centres across the country.
The launch of this fund, according to her will coincide with the rollout of incubation centres in the 3 – 4 initial pilots across the country. “This framework will include minimum IT infrastructure requirements, the creation of a technology innovation venture capital fund, avenues for the commissioning of bespoke software by the business community, institutional support for incubates in the form of business services and a strong mentoring framework by successful business entrepreneurs and a transparent and credible process to select incubates,” she opined.
The minister maintained that the move will foster the development of software industry, bearing in mind that Nigeria has lost about N18.9bn in the last five years as capital flight from importation of foreign software, according to the National Office for Technology Acquisition and Promotion (NOTAP). According to her, the draft ICT policy makes a strong case for software development.
Way forward
With regards to industry collaboration and the role of government in the development of the industry, software developers had complained that government had at no time been supportive enough either through technology biased policies like tax-breaks, tariffs/levies concession, or providing the enabling infrastructure and environment for innovation to blossom. Software practitioners have also complained about the absence of funding bodies focused essentially on technology. According to them, venture capitalist shy away from funding startups, more so technology ideas that seems complicated. There is need for strong partnership and collaboration between government and the private sector. Business entrepreneurs, state governments, unilateral bodies and even like-minded groups of youths must adopt federal government’s framework and help to establish Information Technology (IT) incubation centres in parts of the country that meet the defined criteria.
Published on BusinessDay Media, Monday 13 February, 2012.
No comments:
Post a Comment