Nigeria software industry:
An industry in search of a present and a future
The Nigerian government is inking the final roadmap for the
development of one of the country’s most ignored but excessively
acknowledged industry to leapfrog the economy: the local software
and applications industry. Through the country’s IT guardian, the
National Information Technology Development Agency (NITDA),
government is seeking to put in place a National Software Policy
“that can stand the test of time and adequately position software
made in Nigeria in the forefront of global ICT market” as emphasized
by the Director General of NITDA Prof. Cleopas O. Angaye, himself a
software developer with many patents and a professor of Computer.
Nigeria is looking to the Indian example to justify its need for a
forward looking official thrust at encouraging explosive growth in
the local software industry where more than a hundred companies
jostle for existence and opportunities to grow beyond ‘verandah
companies.’ Some of the biggest earners in the budding industry
include Computer Warehouse Group (ExpertEdge Limited), SystemSpecs,
Programos Software Group, CSA, Precise Financial Systems (PFS)
Limited, Signal Alliance Group and Infosoft among several others in
the top earning league in excess of $80 million (about N120
million).
But that is as far as the local companies could go in an industry heavily dominated by foreign software companies particularly of Indian origin who mop up the billion dollars in terms of monetary gains and brand acceptance. Market has remained a perilous ground for the local companies in the absence of clear-cut government support and a mix of factors that tend to erode sustainability and brand acceptability including unwillingness of corporate Nigeria to pay huge sum for locally made bespoke software.
India offers a classic example of how a country could rework its
economic fortune in the new world order. The authors of Nigeria’s
new national software policy are clearly looking at the strong
points. Last year, India made some $20 billion (about three trillion
naira and in excess of Nigeria’s entire national budget) from
software export to consolidate on its position as one of the biggest
earner in global software and applications market. In the last half
a decade, the $20 billion figure has become an annual gain-point
that Indian software companies and the Indian government have sought
to consolidate and expand on as part of the India’s economic growth
indices.
From 2007, the Indian software with auxiliary industry alone
employed more than two million people and contributed about 4.8% of
India GDP. In the last 10 years, India software export impact on
nearly 95 countries to prove reach and acceptability. In contrast,
and according to the National Office for Technology Acquisition and
Promotion (NOTAP), Nigeria losses about $1 billion (about N150
billion) annually to software importation majorly to India where
Indian software applications virtually run the banking sector. With
a potential market potential of $6 billion (about N900 billion),
many experts think the Nigerian software industry lies in limbo
because government has failed to see economic potential beyond the
oil industry.
Perhaps, the new drive under NITDA at providing a national software
policy offers the most convincing attempt in official circle to
support a most ignored sector for well over a decade, where
practitioners have ceaselessly called for clearly defined support
for the indigenous software industry. In the last 10 years,
government has approached oiling the local industry with woozy
statements and hazy actions including the establishment of a
national software park, National Software Development Initiative,
National Software Development Taskforce and the national IT policy,
and un-patterned public-sector patronage often leaving the local
practitioners confused and vulnerable to manipulation by public
establishments. For instance, a leading software company which got a
World Bank aided deal to run locally made software application that
would manage the country’s civil service got the deal terminated in
its second phase by a government ministry in favour of a foreign
company for reasons the World Bank considered objectionable. The
local company would rather sulk than fight its case because there is
no official policy thrust it could rely on to push its case on
merit.
“Despite these efforts, we have not been able to adequately explore
the full potentials of the industry in a way to make software
Nigeria a major player in the global software industry,” admitted
Prof Angaye who looks hopefully for a brighter horizon founded on a
new policy thrust as has existed for the computer hardware industry.
In the hardware sub-sector, practitioners such as Zinox Computers
and Omatek Computers Plc have been able to push for a clear-cut
policy that encourages the patronage of local computer companies
first before their foreign counterparts. But the Nigerian local
software companies have never been able to muster sufficient public
consciousness to pressure government to adopt policy that will
affect its growth in spite of the existence of an umbrella body: ihe
Institute of Software Practitioners of Nigeria (ISPON). While
companies like Zinox, Omatek and even smaller players such as Beta
Systems and XXXXXX have been able to be primal gainers in
government’s multibillion naira spending on computer hardware in the
last eight years, the software market has gone to the Indians and
other foreign companies lament the Director General of NOTAP, Dr
Umar Bindir.
In their 2004 survey report titled: A Profile of Nigeria's Software
Industry, Abimbola Soriyan and Richard Heeks observed that
“Nigeria's software industry is an industry that has been
disappointingly neglected to date in work on software in developing
countries, despite Nigeria's size and both economic and political
importance. The survey found there are more than 100 firms active in
the industry, principally clustered around the South-West of the
country and virtually all private-owned. Most firms are small
enterprises (11-50 staff) and most professional staff have at least
a first degree. Customers are drawn almost exclusively from the
private sector and from the domestic market: software exports are
few and far between.
“The majority of work focuses on providing services – such as
installation, customisation and training – related to imported
packages, and there are signs of decline in development of
locally-written software. Strategic analysis of the industry
according to Heeks' quadrant model shows that Nigeria needs to
bolster such local development work. For this to happen, firms must
target market segments with some degree of protection from imports.
They must also strengthen their software development practices,
something that will be partly dependent on improvements in the
provision of software education by local universities.”
Much of that observation has not changed almost eight years later as
policymakers make to chart a new course for the industry. Angaye is
convinced that with the new thrust, positive change is in the
offing. His words: “I strongly believe that we shall come out with a
credible National Software Policy that can stand the test of time
and adequately position software Nigeria in the forefront of global
ICT market.” But his optimism is depended on government’s change of
attitude as one stakeholder puts it: “Government, who controls bulk
of the economic activity in this country, has to be ready to spend
the right amount of time, energy and money into software
development.”
This conviction is shared by the CEO PFS Limited, Mr. Yele Okeremi.
“Only government has the key to open the floodgate of opportunities
in this industry,” Okeremi tells IT Edge News in his office in Lagos
from where PFS has serviced a growing number of clients in the
financial sector. But he thinks the competition could get fierier
and more rewarding to local players against foreign players if
government has a policy that kits the margin in favour of the local
players from the start line.
On a final note, Soriyan and Heeks believe the potential of the
industry lies in its ability to develop beyond providing supportive
services to foreign software applications which largely depends on
theor local usage on the ability of the local partners to offshore
vendors to twitch the application to meet the local needs. “The
Nigerian software market is dominated by imported packages. However,
this has not meant the Nigerian firms are simply retail outlets for
those packages. Instead, the imported packages form the base for
further software services to be offered by those 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 (Avgerou 1996). Perhaps in larger part,
though, locally-provided services derive from the fact that many
packages – products such as Microsoft Access – are "shells" or
"skeletons" that must at least be populated with user-specific data
and, at most, can be programmed with user-specific interfaces and
processes.”
So where does the future lie with government support? Quality
production of software, graded and tested by a body certified to do
so which invariably offers market confidence to the products and
ultimately encourages patronage for the local brands." Development
of these strategic positions can only be properly achieved if
software project processes and methods are of sufficient quality.
Without that quality, there will be shortcomings in locally-produced
software, which will turn customers off, and push the industry
further towards a basis on foreign products: a vicious circle. On
the other hand, if that quality can be built, then locally-produced
software will be more effective than imports in meeting customer
requirements. In that case, a virtuous circle can be created in
which local software enjoys a growing market and feedback loops of
learning and improvement that take it from strength to strength,"
write Soriyan and Heeks in their 2004 survey report.
