While Nigeria has some way to go when it comes to developing local content and fostering start-ups in the information and communications technology (ICT) industry, the government has shown a commitment to the sector through its far-reaching National Broadband Plan (NBP).
The road ahead will be long. Demand for data, internet and networking services is growing rapidly, but Nigeria’s ranking in the 2013 Network Readiness Index (NRI), published by the World Economic Forum (WEF) in late July, fell by one spot in 2012, to 113th out of 144 countries. While the country showed a small improvement in its overall NRI score, achieving 3.3 points out of a total possible of seven, compared to 3.2 points the prior year, Nigeria placed behind a number of African countries, including Cape Verde (81st), Ghana (95th), Liberia (97th) and Gambia (98th).
According to the WEF report, one of the weakest areas for Nigeria is infrastructure, including electricity production (125th), mobile network coverage (101st), international internet bandwidth (139th) and the availability of secure internet servers (115th). Individual usage is also low – around 5% of households have internet access and less than 1% of the population has a broadband internet subscription, the WEF said.
Improving access to high-speed internet is a major goal for the government, which in June approved the five-year NBP. While Nigeria is connected to several submarine cables, much of this capacity is centred around Lagos. Extending terrestrial networks to other states is the next step, but the steep cost of laying fibre-optic cable has slowed progress. Right-of-way issues, security threats and sabotage are all factors inhibiting extension as well.
As Ejovi Aror, the group managing director at ipNX, an internet service provider, told OBG, “All submarine cables land at Lagos, leaving the challenge of getting that capacity to other parts of the country. At the moment it is more expensive to connect Lagos to Abuja than it is to connect Lagos to London. This makes it important to resolve soft infrastructure issues like right-of-way and double taxation across different levels of government.”
The authorities seem well-aware of these challenges, addressing each of them in the NBP. Reducing the time and cost of securing right-of-way clearance is one of the first steps identified on the NBP’s roadmap for development, with the federal government aiming to secure fee waivers from the states by the end of 2013.
Advancements in the ICT sector are crucial for Nigeria to attract new businesses, create jobs and diversify the oil-dependent economy. The Nigeria Computer Society has been a vocal proponent of ICT development, with the group’s former president Demola Aladekomo announcing at a June conference that more than 250,000 jobs have been created through the Central Bank of Nigeria’s cashless initiative, which seeks to encourage point-of-sale and other electronic transactions, and predicting that an additional 1m jobs could be created in the IT sector over the next five years.
The Institute of Software Practitioners of Nigeria predicted even greater returns on ICT investments in June this year, when its president, Chris Uwaje, told local press that developing a robust business process outsourcing industry could create up to 10m jobs.
“ICT outsourcing remains one of the effective ways to tackle the hydra-headed monster of unemployment in the country because it touches all aspects of life,” Uwaje stated.
However, convincing foreign firms to invest in the sector may not be easy, for the aforementioned reasons – working in Nigeria means contending with limited broadband infrastructure and a shortage of qualified labour, as well as more general infrastructure issues such as frequent electric outages.
Nonetheless, some have made the move, including Microsoft, which earlier this year launched its 4Afrika Initiative across several African countries. As part of this programme, a low-cost smartphone, priced around $150 and developed in collaboration with Huawei, is being released. The initiative will also focus on helping small and medium-sized enterprises come online, as well as assist 100,000 recent graduates develop skills for employability.
Investments such as this underscore the fact that, while Nigeria may present challenges when it comes to the ICT sector, it is nonetheless a sizeable and largely untapped market. With the government on board and seemingly aware of the concerns of the private sector, expansion is likely to pick up pace in the near future.
Read More from OBG
