The slow growth seen in Nigeria’s Information Technology (IT) market, is posing serious challenge to the West African IT ecosystem expansion.
This challenge, which has been linked to some emerging issues in the country, including oil price volatility in the global market and current political tension in Nigeria are said to be affecting investors’ plans for the regional market. Besides, the government’s non-diversification move especially towards ICT is projected to have also had negative impact on the region’s growth, as such diverting investors’ focus from the market.
Giving more insight on the issue in an interview with The Guardian, the Group Vice President and Regional Managing Director, International Data Corporation (IDC), Jyoti Lalchandani, said the slow growth may persist owning to the too much dependence on oil and insufficient diversification plans, saying the oil and gas sector, which is currently unstable is putting so much pressure on the lean revenue.
He said the election coming next year, which is seen as very close among the leading contenders too has impacted decisions of investors. He explained that when there is political instability and the economy has not diversified, “any impact on the oil price would have a direct impact on overall ICT spending.”
Lalchandani, who claimed to have spent the last four years in Nigeria, said on the IT side, IDC saw significant slowdown in the areas of consumer devices and SMEs business spending. He said Personal Computer, tablet, mobile phone markets have gone down significantly in the last one-year owing to economic pressures and volatility.
According to him, large enterprises are also feeling the impact, there has been an increased pressure, especially in the currency exchange rate, which was at a time N250 to $1, but increased to about N500 to $1 but gradually coming down, now around N350 to $1, all these affects IT departments and organisation. “They don’t want unpredictability in prices. Information technology is still seen as a cost factor, it is still seen as a Capital Expenditure (CAPEX) investments in Nigeria and this is putting pressure on their lean revenues.”
The other issue seen in Nigeria, according to the IDC chief, was that IT is also seen as an Operating Expenses (OPEX) expenses in terms of power infrastructure, cooling expenses and the rest. He said IT organisations are worried about how they will build efficiency and remain stable in the Nigerian economy. However, he said there are some sectors of the economy (banking, telecoms) that are investing in technology to save more, which is another emerging frontier in Nigeria.
According to him, these volatilities have greatly impacted the West African economy because of the largeness of the Nigerian market, which serves them. “It is the centre of trade for the region. So, countries like Ghana, Cote d’Ivoire, Togo, Cameroun and the rest, even to some part of Central Africa rely greatly on the market. This obviously means that any slowness in the Nigerian market, which is what we are seeing now, will definitely affect the entire region.
Moreover, he pointed out that most Nigerian IT firms also play regionally, operating beyond the shores of the country, so, any slowness of the Nigerian market, definitely there will be impact on the rest of the other markets that literarily feed on it.”
In terms of IT spending, Lalchandani, said IDC sees a decline from $3.27 billion spent in 2018 to $3.16 billion by next year owing to challenges in the public sector, especially because of the forth coming general elections. “Any election year in Nigeria, the public sector stops spending, slowness comes up and that affects the entire IT ecosystem. In 2017, it was almost same as 2018, it was flat. But that won’t be same for next year.’’
According to him, Nigeria must develop the technology ecosystem because it can help in many ways, stressing that public private partnership would do the magic. He called for more infrastructure upgrades in the country. To the Vice President, Emerging Africa, DellEMC, Habib Mahakian, Nigeria remains a great investment destination but challenged by so many issues.
Mahakian, who also admitted that the electioneering processes in the country have slowed down many things, especially in investments, stressed the need for more collaboration between the public and the private sector, saying: “this is critical to the country’s next phase of development.”
Meanwhile, the Director-General of the National Information Technology Development Agency (NITDA), Dr Isa Pantami, has assured that Nigeria was keen on its digital transformation agenda. Pantami noted that part of the process would be to get more investments into the Nigerian IT sector.
As such, in far away, Dubai, United Arab Emirate at the 2018 Gulf Information Technology Exhibition (GITEX), Pantami, who spoke to investors about the potentials in the Nigerian market, noted that some discussions that were started last year with investors from various countries of the world would be concluded this year while fresh discussions would be opened with many other investors that are interested in investing in Nigeria.
On why Nigeria needs foreign investors, Pantami noted that a country cannot develop its ICTs alone, adding that the developed countries also wooed foreign investors to grow their ICTs. “ICT is something that cannot be developed in silos, each and every country must interact with other nations, particularly, the developed ones and see how you can come up with policies and strategies to implement IT like government digital services and the rest.”