By Chima Onyekwere
Founder/CEO,
Linkserve Limited

Let me start by thanking the organizers of this event, Skylark Communications, publishers of Technology Times for the opportunity and privilege to be part of this very important ICT forum Technology Times Outlook 2008, a business summit that will appraise ICT developments that will shape and define the Nigerian economy in 2008 and beyond.

There is no gainsaying the fact that ICT is a major catalyst for national economic development. Events in the US and India lend credence to this fact. In the US today, software development industry is considered the third largest business after automobile and electronics fuelled by deep PC penetration. This is the product of a strong and robust R&D policy initiative of the 1960s. Software development is a major income earner for the US, which presently dominates global software and ICT– Microsoft.

India formulated an ICT Policy in 1986 and today software is the fastest growing sector of the Indian economy earning significant export revenue in the range of US$20 billion annually.

Deriving from the theme of the forum therefore, I will like to approach the subject matter from the following perspectives; first I will examine the current levels of indigenous participation in the ICT industry, the pioneers and the key players in the various segments, their roles in championing trends in commerce and education against the background of existing government policy framework on ICT.

This will be followed by examining the impact of the present policy framework in terms of opportunities for indigenous participation, the challenges and constraints faced by indigenous participants.

The presentation will be rounded off by an attempt to proffer suggestions for overcoming the challenges and constraints thereby enhancing and facilitating the exploitation of identified opportunities. I like to emphasize at this stage that all references to indigenous players and participation will be to fully Nigerian initiatives that are still in operation.

In using the expression ICT in this presentation, I will use the classification made by Jide Awe in his 2007 ICT4D Annual Review to encompass Information Technology (computers), Telecommunication Technologies (telephony) and Networking Technologies (internet).

Current indigenous participation in ICT
Whilst they are yet to gain commanding dominance, the Nigerian ICT space is today represented by a number of successful indigenous players in the different segments. Most of these successful companies have evolved from small software and hardware distribution companies to local computer manufacture as well as integrated ICT solutions providers having spun off specialized divisions, subsidiaries and associated companies. Some are now at the threshold of listing on the floor of the Nigeria Stock Exchange.

Pioneers in the software that come to mind include Data Sciences, Computer Solutions Associates (CSA) City Business Computers (CBC) and JKK prior to the emergence of Resourcery, InfoSoft, Progenics. System Specs and Chams have respectively established acclaim in HR software and evolution of plastic cards which is redefining commerce and payment systems in Nigeria today.

Financial Application Systems Limited (FASYL) and Computer Warehouse Group (CWG) are the leading indigenous players in the provision of banking applications in a field of three, the third being an Indian company.

In the hardware field we had DPMS, a reincarnation of IBM following indigenization as well as the likes of Saap Tech, Dataflex, and Micro Products among others as early players. Notable dominant players today in this field include, Task Systems/Technology Distribution, Dealers Warehouse as well as Omatek, Zinox and Beta Computers who are now full fledged local computer manufacturers.

It is instructive to note that apart from the manufacturers, the rest are in purely distributive trade reselling products of top global manufacturers.

I will at this stage to acknowledge the presence of the various Nigerian traders at the Otigba Computer village in Ikeja. Though mainly a distribution market, it has come to be recognised as a dominant factor in the Nigerian ICT space despite its largely unstructured nature. According to Jide Awe, Otigba Computer village generates trade in excess of US$50m annually.

Dominant local players delivering integrated ICT solutions include the Telnet Group, Progenics, Chams, and the Computer Warehouse Group.

In the telecom segment, we have a number of indigenous telcos who have taken advantage of the deregulation and liberalization policy to enter the market. The clear leader in this respect is Globacom which is the second largest GSM operator in the country today despite its relatively late entry.

Others are players in the PTO/CDMA segment and include 21st Century, Intercellular, Prestel, Startech, OduaTel, Reltel and Visafone (incorporating old Cellcom, ITN and Bourdex) Monarch Communications (Monacom) and Imperial Telecommunications. There are many others on the drawing board.

Similarly it is noteworthy to recognise the numerous indigenous telecom services and downstream players providing ancillary services to the telecom segment such as building and erection of towers and cell sites and distribution of recharge cards and handsets.

The internet and broadband segment of the ICT industry parades indigenous names like Linkserve, IPNX, Swift Technologies, Backbone Connectivity Network (BCN) and Infoweb.

The last few years has seen the emergence of successful Nigerian companies in the field of e-commerce and e-payment systems. These include E-Tranzact, Card Technologies and Card Centre, Secure ID, Interswitch, which provides the major platform for transaction switching and ATMC which provides common ownership of ATMS thereby driving the growth and availability of ATMs in the country today.

Existing policy framework
Since the mid 1980s, the Federal Government under SAP began several deregulation and liberalization initiatives aimed at opening up hitherto monopolistic and inaccessible sectors to private sector enterprise. These include the establishment of NCC in 1996 and the subsequent introduction of the National Telecom Policy in 2000, the National IT policy in 2001 and the Local Content Policy in 2004. We also have the related policy initiatives on Poverty Reduction and Micro-credit.

The NCC has among many successes delivered the telecom revolution in the country which saw the emergence of Glo and other PTO/CDMA players as well as the numerous indigenous service companies and downstream players in the telecom and internet/broadband segments.

The now outdated National IT policy which rightly recognised the private sector as the driving engine for IT sector had the vision of making Nigeria an IT capable country by 2005 as well using IT as an engine for sustainable development and global competitiveness. It is currently under review under the ICT4D Strategic Action Plan Committee. The mission of the policy is the use IT for education, wealth creation, poverty eradication, job creation and global competitiveness. It is however correct to state that various e-school/e-education and e-government initiatives championed by the federal government derived their impetus from this policy.

Similarly, Nigcomsat and Galaxy Backbone are testimony of government initiative towards bridging the digital divide and making telecom/internet services affordable in line with the IT Policy. They will no doubt provide opportunities for increased indigenous ICT participation in the country as a matter of deliberate policy, of governed by minimum standards.

There is no doubt that the emergence of the Nigerian built computers by Zinox, Omatek and Beta Computers is the result of active government support under the National Policy and related initiatives such as Computer for all Nigerians Initiative (CANI). There is also no doubt that the increasing trend of investment by government MDAs in promoting e-learning/e-education derive from the objectives of the IT Policy.

Although the local content policy has its origins in the Oil & Gas industry, the principles of the policy now constitute a major consideration criterion for allowing entry to indigenous ICT players to opportunities that were hitherto inaccessible in all other sectors of the economy.

Apart from the aforementioned policy initiatives, advances in technology, economic imperatives, entrepreneurial drive and commercial considerations have propelled the development of e-commerce/payments/banking which have also provided opportunities for indigenous ICT players to emerge and dominate their markets.

Related to these policies are the various wealth creation and poverty reduction programs such as the micro-credit schemes and SMEDAN through which small and medium size indigenous players can access capital to actualize their ideas, concepts and projects especially those that play downstream in the telecom and internet/broadband market. Awe described the growth recorded at Otigba as a testimony to growth of indigenous ICT industry and asserted that it was propelled by SMEIES funding.

Challenges and constraints of local ICT participants
Despite these opportunities and great strides achieved in recent years by local ICT participants, they are still constrained by a number of challenging factors. These include dearth of skills and capital as well as the "Nigerian Made Discrimination".

I do not readily have the statistics but it is a known fact that the nation's pool of software experts is significantly below national needs. It is at best static if not dwindling, for instance experts like Data Base Administrators are grossly inadequate for the needs of industry. The dearth of skills has slowed down the development of local software and applications and continues to feed the reliance on foreign software and applications.

Apart from System Specs that has a very robust and widely used locally developed HR software, we do not have many widely used banking and accounting packages developed locally, even though I recognise that quite a number of companies have developed robust in-house bespoke software solutions to drive aspects of their operations. It is also recognised that a few software companies have clients that use their locally developed software.

Lack of skills restricts growth and development of Nigerian software despite our innate potential to do so as evident in some very robust home grown application software that some of our IT experts have developed.

It also restricts access to the benefits of fast paced technological advancements and emerging practices. Where despite the dearth of skills we have local software solutions, such solutions never gain instant and wide acceptance due to the discrimination which is borne out of cynicism.

As a result of this, indigenous players end up entering into strategic alliances and collaborations often without inflow or commitment or engage the services of not necessarily qualified expatriates to enhance their success. I must say that I am not averse to value-adding combinations with leading global players where indigenous players have opportunity to leverage global resources, up-to-date skills and knowledge base, cutting edge technology for improved performance, skills transfer and capacity building.

The cost is usually heavy in terms of huge foreign exchange spent on importation and repatriation of royalties and all manner of fees to foreign companies that most local players represent in the country even where the local companies have developed skills and expertise to earn and keep their earnings in the country. Globalization tends to compound this challenge as more top foreign global players set up shop in the country and tend to perpetuate the dominance of the industry by foreigners.

The same issue of lack of adequate indigenous skills and discrimination borne out of cynicism pervades the telecom and internet segments. The major cause of this is the hesitation and reluctance of emerging PTO/CDMA players to use manpower resources from the then incumbent state operator NITEL. This stemmed from the dismal performance of the operator which did not inspire confidence despite the fact that there was a large pool of untapped resources in that organisation.

The result is the massive influx of expatriates by the most operators with the attendant negative impact on operating costs, foreign exchange outflows and their tendency to perpetuate their stay and reluctance to build local capacity and transfer skills to Nigerians. It costs up to five times more to retain an expatriate staff than a Nigerian with equivalent qualifications and experience. This extends to even discriminatory pay packages for similarly qualified Nigerians including Nigerian repatriates. As a result of this, the development of indigenous skills continues to lag behind.

The challenge of dearth of capital is more manifest in the telecom and internet/broadband segments where indigenous players invariably set up with very limited equity capital and plan to rely mainly on bank borrowing to succeed in a highly capital intensive segment. This has proved very costly for virtually all the players as the low equity capital compels sub-optimal funding which is not conducive to growth and economic scope of operations. These companies invariably end up in a debt-trap and as experience has shown, many went out of business on account of bankruptcy.

Another manifestation of dearth of capital is in the area of funding for development of indigenous ICT initiatives. Our banks often describe such initiatives as not bankable, a euphemism for not being eligible for funding consideration. To worsen the predicament of indigenous ICT, the banks often do not proffer suggestions on how such initiatives can become bankable.

Happily, the opportunities provided under the SMEDAN framework and the micro-finance schemes of the government can redress these funding challenges and lack of access to capital as evident in the Otigba story.

Overcoming the challenges and constraints
The first suggestion in this regard is to advocate quick conclusion of the IT Policy by ICT4D Action Plan Committee giving NITDA the necessary impetus to implement the policy.

It is advocated that the revised policy will expressly incorporation of the Nigerian content policy incorporating specified minimum local ICT participation in projects across all sectors. Of course the new ICT policy must specify target standards consistent with international benchmarks to guide the implementation of the local content clause if real growth and development will be achieved. For instance only indigenous ICT players should be used for the various e-education initiatives across the country provided they really meet the set criteria. The Association of Telecoms Operators in Nigeria (ATCON) has suggested target of 75 percent (75%) local content in the ICT sector of the nations' economy.

It is also expected that the new policy will address far reaching issues in ICT education curriculum as it relates to the development of sustainable pool of indigenous ICT skills deliberately guided to develop and specialize along diverse areas. Products of our educational system must be sound and adequate to feed the development of ICT skills.

Still on the issue of skills and capacity building, the time has come for a review and more rigorous implementation of the expatriate quota system with the aim of enforcing limits of numbers and limiting the time frame for effective skills transfer and mandatory repatriation of expired quota users. I recognise that this will need active and constructive engagement of the sponsoring companies to ensure success.

Related to this is the imperative to build on the success of Otigba Computer Village and shift the focus from a merely distribution market of all makes and types of ICT tools and equipment towards forming the core of an emerging ICT Park that is focused on local manufacture and software development appropriate incentives and supportive policies on infrastructure, human resources, incentives and business policies. This will also involve encouraging IT professionals to join in the Park as well as encouraging those in Diaspora to come back and strengthen government initiatives.

On capital adequacy, I will like the NCC to review and impose minimum capital requirements in a manner that will ensure that companies have capital commensurate with the licenses they hold. This will encourage spread in ownership base and help empower indigenous telcos and ISPs to borrow more efficiently and thus eliminate the era of struggling under-capitalized telcos and ISPs.

With good capital base, such indigenous ICT players will also be able to train green ICT personnel as well as attract and retain skilled indigenous ICT personnel including Diaspora repatriates.

I believe the positive impact of the micro-credit schemes and the SMEDAN framework will continue to drive growth in the telecoms service and downstream players and needs to be sustained. This way, more indigenous applications relevant to local needs can see the light of day and come into the market.

Conclusion
Indigenous participation in Nigeria ICT is growing and every effort is required to make this a dominant feature of the ICT space in Nigeria including the national Policy and other related policies. There is therefore the need for policy consistency and coordination.

This is desirable for developing a world class indigenous ICT population empowered to take on global competition at home and abroad.

The expected thrust of revised policy objectives should be in the area of skills development and capacity building for more local production in the IT segment and generate resource pool to drive the telecoms and networking technologies segments.

Finally need for adequate capital calls for introduction license driven classification of minimum capitalization while access to micro-credit and poverty reduction initiatives will help drive and sustain the development of ancillary service and downstream indigenous participation.

• Founder/CEO, Linkserve Limited, Chima Onyekwere (OON), represented by COO, Linkserve Limited, Victor Emodi Linkserve Limited at made this presentation at Technology Times Outlook 2008 held February 27, 2008 in Lagos.