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December 3, 2013 Background to Nigerian Content Development The Case for Nigerian ContentObjectives of the GuidelinesReview of the Guidelines DocumentConclusion.

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Presentation on theme: "December 3, 2013 Background to Nigerian Content Development The Case for Nigerian ContentObjectives of the GuidelinesReview of the Guidelines DocumentConclusion."— Presentation transcript:

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2 December 3, 2013

3 Background to Nigerian Content Development The Case for Nigerian ContentObjectives of the GuidelinesReview of the Guidelines DocumentConclusion and Recommendations 2 CONTENTS

4 Background Nigerian ICT Landscape Past Efforts Processes Adopted for Current Effort 3 CONTENTS

5 The Nigerian ICT landscape is plagued by a paradoxical economic deficit and a negative balance of trade as the economic value generated locally with the imported technologies used by Nigerians is far below optimal. Nevertheless, stakeholders in the sector have worked hard on several fronts to grow the ICT sector. The presence of major multinational hardware and software companies in Nigeria and the entry of technology service companies into the Nigerian market are growing. There has been reasonable participation of an increasing number of local companies in various aspects of ICT including OEM manufacturing, internet services provision, backhaul networking provision, submarine and terrestrial communications cabling and so on. In spite of all of these achievements, there is the belief that the participation and contribution of predominantly local companies and Nigerian professionals in the value chain for the provision of most ICT services is not significant. It is with this background in mind that NITDA aims to put forth this policy document for the sector. BACKGROUND 4

6 5 Segments of the ICT Industry Anatomy of Nigeria IT Industry COMMUNICATION EQUIPMENT MOBILE PHONES SMART PHONES FIXED PHONES AND CPEs LAN ROUTERS PBXs, KTS & APPLICATIONS VOICE SWITCHING EQPT WAN DATA ROUTERS & SWITCHES WIRELESS INFRASTRUCTURE MOBILE ACCESS INFRASTRUCTURE TRANSMISSION EQUIPMENT INFRASTRUCTURE SERVICES CARRIER SERVICES FIXED VOICE TELEPHONY BUSINESS DATA SERVICES INTERNET ACCESS & SERVICES MOBILE VOICE TELEPHONY MOBILE DATA SERVICES PAY TV TELECOMMUNICATIONS Communication Equipment Carrier Services INFORMATION TECHNOLOGY IT Equipment & Hardware Software & Solutions IT Services & Solutions

7 6 OVERVIEW OF SEGMENTS OF INFORMATION TECHNOLOGY INDUSTRY Anatomy of Nigeria IT Industry Value Added Services Technology Consulting Shared Services Content Development Content Providers Training and Educational services Transaction services and switching Support Services Distribution Channel Operators Sale and Distribution of consumables IT EQUIPMENT & HARDWARE Servers Workstations Desktops Notebooks Printers Copies Monitors & Public Information Display Accessories & Peripherals SOFTWARE & SOLUTIONS System Infrastructure Software Application Software Productivity Implementation Services Enterprise Software SaaS Applications

8 7 Anatomy of Nigeria IT Industry Foreign PlayersLocal Player Hewlett PackardZinox Samsung Acer Group Lenovo Toshiba MSI Sony LG Electronics LocalForeign OEMs11%89% Mobile Phones importation0%100% Sim production0%100%  Consumer preference for global vs local brands Source: IDC EMEA PC Tracker,Q4 2012

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10 9 9 Past Efforts Efforts  Software Nigeria  Buy Made in Nigeria  Insufficient significant participation in the value chain.  Limited structures to assist local players develop in light of market competition from global players.  Low commitment at all levels of society to change the situation.  Limited access to finance to deploy advanced services and technology locally.  Limited financial support to stimulate demand or support local content production.  Fragmentation  Absence od suitable platform Problems

11 10 Processes Adopted for Current Efforts Extensive stakeholder consultations Holistic approach ( software, hardware, services, subsectors, etc) Implementation framework for sustainability

12 The Case for Nigerian Content 11 CONTENTS

13 12 Impact of LC from Other Countries Brazil Regulation Australia ISO United Kingdom ABOEC

14 13 Local Content Policy 1.With the growing pressure of globalization, every government as well as captains of industry are charged with the burden of finding ways to ensure that their regions stay competitive and are capable of fulfilling local demand. 2.Not only that, but given the wide availability of information technology being created to serve markets world over, it is imperative that the right frameworks be created to enhance the ability of indigenous companies to maximally explore and exploit local opportunities, as well as remain competitive globally. 3.Local content aims to achieve the development of local skills, technology transfer, use of local manpower and local manufacturing. It is defined as the amount of incremental value added or created in Nigeria through the utilisation of Nigerian human and material resources for the provision of goods and services in the ICT industry within acceptable quality and standards in order to stimulate the development of indigenous capabilities.

15 Objectives of the Guidelines ProjectionsProjections 14 CONTENTS

16 Objectives of the Guidelines 15 Enable the local ICT industry to contribute meaningfully towards the achievement of national development targets Stimulate and increase the production, sales and consumption of high quality information technology products and services developed by indigenous companies that serve the unique needs of the local and global market Enable indigenous information technology companies and provide them opportunities that will improve their ability to provide relevant products and services that amply satisfy the Nigerian consumer. Facilitate efforts to build capacity and equip Nigerians to serve as active workers and participants in the local ICT industry Provide a framework for the regulation and legislation on the creation, distribution and use of Information Technology and its associations within Nigeria Promote and encourage an environment within Nigeria that is welcoming to foreign investments in Information and Communications Technology, as well as the export of indigenously made ICT goods and services

17 16 Projections  On a global basis, it is forecasted that IT purchases will total $2,090 billion in 2013, up by 3.3% from $2,023 billion in  Software at $542 billion (26% of the total) remains the largest category of global IT purchases. Computer equipment at $416 billion (20%) is the second largest category. Professional services will be the third largest at $404 billion (19%), with systems integration project work having more than two-thirds of this market and strategy and other consulting services a bit less than one-third.  IT outsourcing, including computer hardware support services, will be $399 billion (19%). Communications equipment at $328 billion (16%) will be the smallest sector of IT spending (Forrester Research).  In Nigeria, the IT industry is currently estimated to be a $1.3 billion industry at current levels of technology penetration and usage, with significant potential for further growth and expansion.

18 Projections  computer units were sold in Nigeria in 2012 with only 10% sold by Nigerian OEMs. The total available market (TAM) is 3million computer units per annum and this is valued at about 500 billion Naira The Nigerian Hardware Market is currently estimated at 80billion Naira. The Nigerian Hardware Market is currently estimated at 80billion Naira. However, the infrastructural challenges peculiar to the Nigerian context pose challenges to this vital sub-sector as OEMS struggle to compete with foreign brands and contend with an unfavourable consumer perception. However, the infrastructural challenges peculiar to the Nigerian context pose challenges to this vital sub-sector as OEMS struggle to compete with foreign brands and contend with an unfavourable consumer perception. The low demand for local brands also make investments a risky venture as ROI cannot be guaranteed. The low demand for local brands also make investments a risky venture as ROI cannot be guaranteed. Hardware 17

19 Software Currently, Nigeria is largely dependent on foreign developed software in most sectors as there is a massive mismatch in local needs and capacity. NOTAP records that technology transfer agreements for the importation of foreign software solutions and licenses, a fraction of actual software purchases, has cost N25 billion in the past decade. The software demand in Nigeria has been estimated to be up to 110 billion naira as at 2012 and this is billed to grow at a rate of 12% per annum. 18 Projections

20 Software Projections Cont’d However, few Nigerian software offerings are structured to compete in this market and to take advantage of the demand in the sector. However, few Nigerian software offerings are structured to compete in this market and to take advantage of the demand in the sector. The absence of adequate customization to local realities and lax regulation on intellectual property has left this market wide open to software pirates, earning the nation a bad reputation globally. The absence of adequate customization to local realities and lax regulation on intellectual property has left this market wide open to software pirates, earning the nation a bad reputation globally. 19

21 20 Nigeria accounts for an estimated 40% of the total Internet traffic on the African continent Network Services & Internet Access Nigeria 2 X Ghana 12 X Mainland China, India & SA 120 X USA 300 X Macao, China Nigeria accounts for an estimated 40% of the total Internet traffic on the African continent Nigeria accounts for an estimated 40% of the total Internet traffic on the African continent The ecommerce and online payment services is largely untapped and our population is a great advantage. The ecommerce and online payment services is largely untapped and our population is a great advantage. Despite the prohibitive cost of broadband Nigerian businesses and consumers are flocking online and the trend is going to continue as broadband cost in developing countries has been falling at an average of 30% annually for the past five years Despite the prohibitive cost of broadband Nigerian businesses and consumers are flocking online and the trend is going to continue as broadband cost in developing countries has been falling at an average of 30% annually for the past five years Projections

22 Internet Access Cont’d However some of the key questions are: – How much of that traffic is localized, using Nigerian Exchange Points? – How much of that traffic is secure? – How much of that traffic is used for e- learning, telemedicine, e-government services, and to access Nigerian content? 21

23 Brief Review Authority and EnforcementAuthority and Enforcement StructureStructure CoverageCoverage ApplicationApplication Key ProvisionsKey Provisions Implementation Framew orkImplementation Framew ork 22 CONTENTS OF THE GUIDELINES

24 23 Authority and Enforcement  Authority for the guidelines are anchored on Section 6, 17 and 18 (4) of the NITDA Act 2007  The enforcement of these guidelines shall be by NITDA and other relevant authorities in both the private and public sectors, including Federal, State, and Local bodies in charge of ICT procurement, regulation, and development under a framework developed by NITDA.

25 Structure 24

26 25 Coverage  The guidelines are targeted at growing the ICT sector to a place of prominence and major contribution to the Nigerian economy.  This can be done without harming the competitiveness of local companies or making the country unattractive to foreign investors and multinational companies. The local and multinational companies both have a role  The guidelines therefore contain provisions not very different from those in similar policy documents that have been adopted by many other countries across the world studied in its preparation.

27 26 Application  The persons and bodies to which these guidelines shall apply include but are not limited to: Federal, State and Local Council MDAs, Private sector institutions, business enterprises and individuals.  The relevant part of these guidelines shall form part of any existing or future requirements for periodic accreditation and renewal of license of Information and Communications Technology companies, including OEMs, ODMs, ISPs, MNCs, Value Added Service Providers etc and for the grant of approval or permission for the establishment of new manufacturing or assembly plants, software houses, IT Parks and allied facilities.

28 27 Key Provisions-Hardware OEMs Shall: 1.Have a grace period of two years from the effective date of this guideline to comply with the recertification criteria herein stated. 2.Maintain at least 50% local content by value either directly or through outsourcing to local manufacturers engaged in any segment of the product value chain. There will be a time frame of 3 years for achieving the 50% local content. 3.Maintain in-country R&D departments for the purpose of product conceptualization, innovation, adaptation, design and prototype development. 4.Design and develop products that support Nigerian languages and local use case.

29 28 Key Provisions-Hardware OEMs Shall: 1.Have a five-year duty waiver on computer components, which is for integration into locally assembled devices. Fully built computers or products are exempt. Multinational Companies shall: 1.Provide a local content development plan for the creation of jobs, recruitment of local engineers (not sales people), human capital development and value creation for the local ecosystem. All MDAs shall: 1.Source and procure all computer hardware only from NITDA approved OEMs. 2.Purchase all hardware products locally. 3.Give preference to companies with existing hardware support facilities and functional service stations with impressive customer service metrics measured frequently

30 29 Key Provisions-Hardware NITDA shall: 1.Lead and facilitate product demand generation initiatives such as Assisted PC purchase programs 2.Promote the use of digital technologies as well as local development of software solutions for Education by facilitating Computer purchase programs, provide funding for software solutions in education and drive technology adoption initiatives in education. 3.Collaborate with similar IT development agencies in neighbouring West African states in order to establish regional Information Technology tradeshows that will provide a platform to grow the local industry.

31 30 Key Provisions- Software ISVs shall: 1.Register their products, capabilities and organization on the NITDA portal. The service will be provided free of charge and devoid of bureaucracy and will ensure NITDA awareness of available resources. 2.Demonstrate the ability to provide on-going support and continued development and maintenance of any software sold or deployed.

32 31 Key Provisions- Software SDFs shall: 1.Register their products, capabilities and organization on the NITDA portal. The service will be provided free of charge and devoid of bureaucracy and will ensure NITDA awareness of available resources. 2.Demonstrate the ability to provide on-going support and continued development and maintenance of any software sold or deployed. 3.Hold and retain exclusive rights over the reproduction, preparation of derivative works, distribution and public performance and display of their copyrighted work. 4.Respect the intellectual property rights of others as set out in applicable local and global regulations.

33 32 Key Provisions- Software Multinational companies shall: 1.Provide verifiable information and sign affidavits about the origin, safety, source and workings of software being sold and deployed within the country in order to ascertain the full security of the product and protect national security 2.Submit a Local Content Development Plan to NITDA/NCC for their platforms and products as part of requirements for registration within Nigeria and pre-qualification for any project to be carried out with any MDAs. This applies to companies already registered and operating within the country.

34 33 Key Provisions- Software MDAs shall: 1.Source software for which there is local capacity to design, develop, compile, test, troubleshoot, launch, maintain and improve such software application. 2.Source and procure software from only local and indigenous software development companies; where the capacity for developing such software does not exist locally, procurement, installation and support will be provided by a Nigerian company. 3.Consider all software solution projects as turnkey deployments and not mere supply of licenses and software. Therefore the vendor must demonstrate systems integration capability in order to qualify to carry out the project deployment.

35 34 Key Provisions- Software NITDA shall: 1.Enforce the provisions set forward in the National IT Policy as well as in these guidelines 2.Enhance and promote the use of digital technologies as well as local development of software solutions for the critical sectors such as health, education, security etc. 3.Champion and encourage the set-up of Business Incubator Schemes to accelerate the growth of the IT industry. 4.Partner with financial institutions, venture capital firms, MNCs with venture capital divisions as well Angels investors to create a vibrant Venture Capital ecosystem for the IT sector.

36 35 Key Provisions- Network & Internet Services Networking companies shall: 1.Register their products, capabilities and organization on the NITDA portal. The service will be provided free of charge and devoid of bureaucracy and will ensure NITDA awareness of available resources. 2.Provide evidence of the origin, source, paths and workings of network and Internet tools and services being used by the government, including adequate access to ascertain the full security of communications being sent through such platforms. 3.Maintain security and audit protocols for all services being rendered which involve citizen’s data, data on corporations and MDAs 3.Maintain security and audit protocols for all services being rendered which involve citizen’s data, data on corporations and MDAs.

37 36 Key Provisions- Network & Internet Services MDAs shall: 1.Host their websites and other web services mandatorily on the.gov.ng domain as the only approved domain. 2.Migrate their internet peering provisions to locally available services within 18 months 3.Mandatorily source network and Internet services for which there are local capacity to setup up, maintain, monitor, optimize and access from local service providers with capacity to deploy such.

38 37 Key Provisions- Human Capital Development MNCs shall: 1.Be required to be more than sales divisions, management of sales agents and channels. They are to carry out value adding activities in country that contribute to job creation and the empowerment of Nigerians who comprise their market. 2.Be eligible for existing tax relief for Research and Development activities for multinational companies, a fiscal incentive which allows up to 120 per-cent of qualifying expenses on R&D to be tax deductible 3.Be eligible for tax relief for long term R&D on Local raw materials, a fiscal incentive which allows up to 140 percent of expenses on patentable research to be tax deductible.

39 38 Key Provisions- Human Capital Development NITDA shall: 1.Proactively address perception of quality of locally made ICT products and services by working with leading global quality organizations such as ISO, American Society for Quality, Lean Enterprise Institute, etc with the involvement of the Standards Organization of Nigeria (SON) and local industry groups (ITAN, NCS, ISPON etc.) to train and assist local ICT companies to improve their products and processes. 2.Promote specialization in different areas of ICT in higher institutions and where possible provide funding for the setup of centres of excellence in select universities and higher institutions. 3.Promote the setup of the University of Information Technology to lead the study of and research in ICT.

40 39 Implementation Framework The Role of NITDA  Legal  Institutional Stakeholders

41 Conclusion and Recommendations 40 CONTENTS

42 41 Recommendations for Review It is recommended that this guidelines be reviewed every four years in order to improve it constantly, enable responsiveness to the rapidly changing Information Technology landscape and continuously improve national strategy. The primary purpose of policy review activities include the following: Responsiveness to emerging trends in the global ICT industry: given the rapidly changing landscape of this sector, it may be necessary to take into consideration particular trends and occurrences in the global ICT industry that may have significant implications for the achievement of the objectives. Responsiveness to changes in local IT industry: as the gains of this policy are realized, further changes may be made to increase the opportunities available to indigenous companies and support further growth of the industry Review of policy performance: the development of any policy is an organic process. It is imperative that insights from periodic reviews of the impact of the policy are captured and form inputs to inform future revisions of this policy document.

43 THANK YOU Inye Kemabonta, Director Standards and Regulation, NITDA. 42

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