Support for software development increases amid 9.7% growth projection

Supporting local software development in a conscious attempt to jumpstart the indigenous market, forecast to post a Compound Annual Growth Rate (CAGR) of 9.7 percent through 2017, has become a priority for both public and private sector. Nigeria, Africa’s most populous country, is earnestly seeking to diversify its economy from oil. Industry analysts are of the view that the development of the local software market could have transformative impact on the economy. The Federal Ministry of Communications Technology (FMCT), recently declared that Information Communications Technology (ICT) contributed 8.3 percent of Nigeria’s Gross Domestic Product (GDP) by the second quarter (Q2) of 2013. In 2012, however, ICT-related economic activity contributed 6 percent of GDP, up from 5.6 percent in 2011.

“There is an over-dependence on foreign importation of both software and hardware, and this has led to diminished opportunities for domestic economic empowerment and contributed to limited capacity building”, said Omobola Johnson, minister of communications technology at a recent industry forum.

Industry analysts told BusinessDay, yesterday that the interest in software development is beginning to gather serious  momentum. Some of the fallouts of this awakening, according to the industry analysts, are the emergence of software incubation centres, technology accelerators, and growing participation of foreign Venture Capitalists (VCs), private equity players as well as angel investors in Nigeria’s fledging technology start-up scene. But foreign software still dominates the country’s software market.

Nigeria has lost approximately $1 billion to foreign software imports and maintenance contracts on an annual basis over the past few years, according to the National Office for Technology Acquisition and Promotions (NOTAP). Large-scale buyers of foreign software include firms in most of Nigeria’s major industries, including banking, manufacturing, oil and gas, telecoms, and ministries. They all rely almost entirely on foreign operating systems. “We are all consumers when it comes to the local software. Everything is imported”, said Emmanuel  Iwegbu, managing director of ICT Convergence, a local solutions company.The FMCT has launched several initiatives in partnership with private sector, including the iDEA and TechLaunchPad programme, which both aim to identify and support Nigerian ICT entrepreneurs.

In August 2012, the FMCT announced the establishment of a $15 million venture capital fund to finance local ICT projects. The fund, which is under the oversight of an independent fund manager, was launched in April 2013 with an initial investment of $3.6 million from NITDA. The balance is expected to come from local and international investors. A wave of accelerators has also erupted in Lagos – another development that further reinforces the growing participation of local investors in Nigeria’s technology start-up scene. Three launched in March alone. LeadPath Nigeria, one of the latest technology start-up accelerator to begin operations in Nigeria, launched a $1.5 million fund in Lagos. “The local content market is fledging now, but it will eventually become huge”, said Chuks Ulu Udensi, Dell’s country manager in Nigeria.

Local developers are now focusing on the mobile applications market, which has grown considerably over the past decade, in line with the rapid rise in mobile data subscription over the same period. “In Nigeria, mobile apps not only complement websites but compete with them”, said Johnson Dunmoye, chief executive of Websoft. The iDEA centres will focus on software development, and particularly mobile applications, enterprise solution and software related to linguistics, education and business intelligence. Individuals admitted to the iDEA programme will be given better access to capital, training, mentorship programmes, business advisory services, shared tools, facilities and, if necessary, work space. iDEA, which is providing incubation and accelerator centres, will collaborate with other innovation and pre-incubation centres such as Co-Creation Hub and Wennovation to provide support.

Ben Uzor Jr