How a new ICT hub fits into broader plans to develop Nigeria’s tech sector

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A new tech hub is poised to give a significant boost to Nigeria’s ICT sector, attracting engineering talent, developing local education and prompting continued investment in infrastructure.

On May 13 global tech giant Microsoft announced the launch of its first African Development Centre (ADC), housed between facilities in Lagos and Nairobi, with the aim of creating a regional centre for ICT engineering.

The Lagos centre will focus on a number of areas, including financial technology (fintech), agri-tech and off-grid energy.

The ADC represents a $100m investment in African tech innovation, spread between the two cities.

According to Phil Spencer, executive vice-president at Microsoft and executive sponsor of the ADC, the centre will allow the tech firm to reach regional markets and beyond.

“The ADC will be unlike any other existing investment on the continent,” Spencer said in an official statement. “It is an opportunity to engage more with local partners, academia, governments and developers – driving impact and innovation in sectors important to Africa.”

Initial recruitment of local engineers has already begun; Microsoft reports that the two hubs will have 100 engineers in place by the end of this year and 500 by 2023.

See also: The Report – Nigeria 2019

Positive knock-on for education

The centre will also provide incentives for the education sector to focus on the development of ICT skills as new local career avenues open up.

In particular, this should see universities offer more courses in subjects related to the focus areas of fintech, agri-tech and off-grid energy, fostering a steadier flow of local, qualified human resources.

Microsoft has already begun talks with Nigerian universities and has said it is looking to develop links with institutions to tap into the existing talent pool.

Fighting brain drain

In the past, wages and opportunities abroad have often proved more attractive to young Nigerian professionals than those offered locally. While no concrete figures are available, brain drain is a particularly prominent issue in the tech sector, with South Africa a favoured destination for many.  

In addition to the launch of the ADC, other initiatives, such as plans by the Nigerian Communications Commission (NCC) to promote research in tech development, may help the sector retain its skilled professionals.

Improved remuneration, greater opportunities and more professional challenges at home could go a long way to preventing Nigerian software engineers from moving to other countries to advance their careers.

More ambitious government targets

Development of the ICT sector is also being supported by the rollout of broadband capacity and rising demand for products and services, though further investment in infrastructure will be needed to maximise the potential of initiatives such as the ADC.

The pace of broadband take-up is accelerating. The NCC reported last month that more than 20m new subscribers were added in the 12 months to April 2019, taking the total to 64.3m.

This surge has pushed Nigeria’s broadband penetration rate to 33.7%, up from 23.1% in April 2018 and 8.5% in 2015. This is well ahead of the objective laid out in the Nigerian National Broadband Plan 2013-18 of 30% by the end of 2018.

Mobile internet subscriptions are also posting strong growth, with 119.5m subscribers registered with the country’s five service providers as of April 30. This represents a year-on-year gain of 18.3m.

This expansion in internet usage has helped make the telecoms sector the fourth-largest contributor to the economy. The industry accounted for 10.1% of GDP in the first quarter of this year.

The success in increasing subscriber numbers has also prompted the government to revise its medium-term projections; it is now seeking to more than double the broadband penetration rate within five years, to 70% coverage.

It has been estimated that at least $30bn in medium-term investment is needed to bridge access gaps and create blanket coverage, including to rural communities.

If new infrastructure support and upgrades are maintained, and capacity moves beyond 2G and 3G platforms and towards 5G rollout by the early part of the coming decade, this target may well be within reach.

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