Experts renew energy on stemming Nigeria’s 95% foreign software influx
By Omobayo Azeez
The yet to abate influx of foreign software into the Nigerian market has sparked renewed concerns among stakeholders in the country as they call for reevaluation of measures to reverse the trend.
This is not unconnected to the disturbing data recently revealed by the National Office for Technology Acquisition and Promotion (NOTAP), an agency of the federal government of Nigeria, that till date, 95 per cent of software solutions used in Nigeria are of foreign origins.
This is responsible for huge capital flights estimated to surpass N120 billion in 2020 alone, even as this further put pressure on the scarce foreign exchange in the country, to the disadvantage of the local currency, naira.
It will be recalled that NOTAP, in collaboration with some other agencies of the federal government and institutes, has put certain measures in place to encourage patronage of local software solutions in the country to curb the capital flight and encourage development of local capacity in the area.
Reacting to the issue however, Yele Okeremi, national president of the Institute of Software Practitioners of Nigeria (ISPON) said the fact the software market is still dominated by foreign solutions calls for new approaches to solving the problem.
He lamented that more than 10 years in the process, local software developer still control a megre percentage of the market share as their foreign counterparts smile all the way to the bank.
Okeremi told business A.M that even the local vendor policy introduced by NOTAP many years ago to involve local software practitioners in every technology transfer in the country has not yielded laudable results, and that it may, in fact, be deleterious to the system.
Okeremi said: “See, there are ways that we can look at these policies and feel that it is the right thing. The structure of the vendor policy in NOTAP is to try to insist that suppliers of foreign software must have a local partner that must also benefit certain percentage from the deal. While it sounds okay, the implementation is challenging.
“Since all these years, how much of technology has been transferred or acquired locally? That would be the way I would rate the policy. For example, Nigeria has been paying so much for foreign banking solutions, and yes, we say they must have a local partner.
“To what end can you have the local partners? My expectation is such that it should be that within a period of say three to six years, we must be able to produce and implement the solution locally.
“So, if all you are doing is to say that foreign developers must pay the local vendor a certain percentage, what you are inadvertently doing is that you are only increasing the cost of doing business.”
He further stated that the owners of the technology solutions know how much they must collect. “So, what they would do is just factor in ‘the gift’ that they want to give the local partner and increase the price.
“Whereas, the success story should be how many solutions came in as foreign solutions but that we are no longer importing as they are now available locally.
“That is the way we should be looking at it, not by merely awarding some percentage to local companies.”
Asked how much the various Executive Orders issued to promote local contents by President Muahammadu Buhari have been faring, regarding the domestic software patronage, the ISPON President impact of the orders are limited.
According to him, “Executive orders are good and they probably have some impacts but the impacts are limited. First of all, with an executive order, the best that you can get as guarantee is the lifespan of the government that brought it. The next government is not duty-bound to follow the executive orders.
“Also, executive orders are also limited in the fact that as long as they are not a statute, people can still find ways around them. I would say the executive orders are good steps that the government has taken but the limitations of executive order still make it very challenging to see the changes you and I want to see to be significant.”
Meanwhile, Muhammed Rudman, said the industry is lack collaborations and cooperation, with small players littering the space.
He told our Correspondent on Friday that software majorly involves a lot of resources, time and energy, adding that considering the dearth of funds in Nigeria and high interest rates at banks, people are finding it difficult to invest in it.
“However, the idea should be that all these small companies around should come together and work together so that they possibly can transform into much bigger companies to come up with powerful software because some of these software is complicated.
“You can imagine it; companies like Microsoft have maybe 50,000 or 100,000 programmers. This is not a small number of people but unfortunately in Nigeria, it is not like this. And this is not the case with just the software industry as similar things obtain even in other sectors.
“If you look at the hardware segment, you have Omatek, Zinox and others. Had it been that they all can come together, they can scale up. Economy of scale can take place and they can make huge impact. But they are not ready to collaborate. Each one operator operates in its own silo and so, the impact is not felt that much. So, they basically end up being just an assembly plant,” he explained.
He said the coming together of various IT firms to form a big corporation would have given an edge to compete favourably against their foreign counterparts and even attracts some other in value chain to set up in Nigeria.
“Our problem is Nigeria, honestly, is lack of collaboration. Sometimes, people do not want to come together for the common good of all. And I think that is part of what is affecting the software industry. There are small software companies here and there and therefore, they cannot deploy big solutions,” he reiterated.
Rudman also added that skill gap is another challenge facing local contents in Nigeria, noting that a lot of those who have the right skills are leaving the country.
“The technology industry is booming globally but competent people have continued to leave this country. Even about seven members of my own staff have moved out of Nigeria to Canada and Australia. The reality is that we do not enabling environment for those people to thrive in Nigeria. So, they all go out to seek greener pasture.
“This is where the government and the private sector need to come together to build that capacity. We need extremely good schools, where people can go to learn serious topics and subject. A lot of people go to India, Dubai, and abroad to get trainings. We need such big schools and it is only government that can create such initiatives.
“For instance, the Nigerian Communications Commission (NCC) has the Digital Bridge Institute (DBI). The DBI should be there to ensure that we have regular graduate of all the various ICT fields.
“Unfortunately, that is not happening with the latest and cutting edge technologies. Nigeria does not do that. It is only after things might have moved forward that we are always trying to play catch up,” Rudman lamented.
Meanwhile, Dan-Azumi Ibrahim, director general of NOTAP, had lamented that the quantum of money that goes out of Nigeria as licencing fee for technology transfers is too high and should be of concern to all patriotic Nigerians.
He blamed the development on poor funding of research and development in the country, a situation which he said had made it difficult to generate technology locally.
He warned that Nigeria faces a bleak future if the situation was not reversed, he warned.
This may, in fact, begin to manifest in no distance future giving the current fall in the FoREX reserves of the country which may multiply the projected N120 billion capital flights on software importation projected for 2020.
“So long as we continue to use our scarce foreign reserves to import goods and services, we can’t develop as a nation,” Ibrahim added.
He said the situation could change if Nigerians patronised made-in-Nigeria products and services, in line with the Federal Government’s local content policy.
However, he observed that, despite poor funding of research and development, Nigerian researchers were making efforts to generate technological innovations.
“If you look at the number of publications in both national and international journals, we are among the highest in Africa, but this does not translate to economic development,” he noted.