A report by the United Nations Conference on Trade and Development identified limited access to venture capital as the biggest challenge to the software sector of the Information and Communication Technology (ICT) industry in African countries and the Middle East. In Nigeria, this challenge was the subject of discussion at the ISPON President’s Dinner at the weekend. ADEYEMI ADEPETUN reports. Excerpts
WITH 60.3 per cent youth population, according to a United Nation’s statistics, Nigeria is definitely a nation to reckon with in the emerging information society.
As such and with this statistic in mind, Analysts are of the opinion that if youths can channel their energy into a more productive activity, such as ICT with special interest in software development, this will not only reduced the armies of unemployed people in the country, but equally jumpstart the economy and makes it competitive globally.
According to them, collaboration between government and the private sector, patronage among others, can open up Nigeria’s N200 billion software sub-sectors.
Beside, they have also argued that the sector needed the support of venture capitalist.
Venture capital (VC) is financial capital provided to early-stage, high-potential, high risk, growth startup companies.
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As such, while the spread of ICTs has continued to facilitate technological change in the global economy, various reports have shown how the rapid diffusion of mobile telephony and improved international broadband connectivity, including in the least developed countries (LDCs), as well as, the introduction of new services and applications, are facilitating more inclusive development.
Indeed, this not only has implications for enterprise development, but it also expands the scope for leveraging ICTs in such development areas as health, education, governance, the private sector and more.
In order, however, to ensure that this improved access to ICTs brings about the desired benefits, the devices and services provided have to respond positively to the needs and capabilities of users. In many instances, this in turn necessitates access to relevant technological capabilities within the domestic economy. This applies in particular to the area of software, which critically influences the functionality of goods and services offered by both the private and public sectors.
While Gartner has projected that global IT spending will hit $3.7 trillion by the end of this year, it has also pointed out that software spending will reach $158 billion by 2016. This translates to the fact we now live in a ‘Software-First World, where Nigeria’s future resides.
However, while software prospects remain bright, accessing capital for its development has become a tall order for young entrepreneurs in Nigeria.
This was attested to by the UN study titled; ‘Information Economy Report 2012’, which informed that ICT software and services are dominated by the developed world but developing economies are catching up gradually.
Apart from low venture capital, the study shows that piracy, poor ICT infrastructure and inadequate protection of intellectual property rights as some of the major challenges hindering ICT software development and service expansion in developing regions such as Africa.
In spite of these challenges hovering on the software sector in the two regions, the report maintained that local software production and development can spur economic growth in Nigeria and other developing economies.
The report urged governments in developing countries, which are significant buyers of software, to help the software sector by putting in place policy measures to facilitate the development of affordable ICT infrastructure and introducing legal frameworks to protect intellectual property rights.
Supporting the call for improved local software development in Nigeria, the Founder, Visafone Communications Limited, Mr. Jim Ovia said despite several challenges, the country recognizes software practitioners.
Ovia, at the ISPON’s President Dinner, noted that in most countries, it is usually the private sector that drives the economic growth, stressing that government alone cannot do the task.
According to him, there is huge need to encourage, motivate and inspire ICT entrepreneurs, stressing that what is required in ICT development are skills and passion. He stressed that private sector must be willing and ready to support local initiatives whenever they are called upon.
Indeed, while the UN report noted that enhanced access to ICTs in developing countries is widening opportunities in areas including health, education, governance, business creation and expansion, the Visafone Founder was of the opinion that the best way to boost ICT growth was to support the young people who have the ideas.
Ovia, who spoke on: “Framework for Entrepreneurship and Venture Capital in the ICT industry—the Role of Software”, called for more innovation from Nigerians, stressing that a major breakthrough in new technology would put the country on a higher pedestal.
“We have the opportunities, populations, directions and forecasts favour Nigeria. Therefore, the way to go for ICT practitioners is to continue to innovate and continue to think of meeting the needs of users. Microsoft, Apple, Dell, HP, Facebook, Amazon, Oracle are all American firms. They have been on for long and remained very strong. There must have been a pattern of encouragement that makes all of them to remain strong and that is one lesson we must learn in Nigeria. They get local patronage”, he stated.
Ovia noted that globally, a major challenge is access to broadband, with Internet penetration at 30 per cent, compared with Nigeria’s six per cent.
He admonished countries and companies to innovate, arguing that those who refuse to innovate will continue to struggle to meet global demands.
In his welcome address, the president of ISPON, Dr. Chris Uwaje said 2012 was a year of multiple challenges to the ICT sector in terms of venture capital investment, adoption of national software strategy, policy and patronage for indigenous software.
Uwaje said there was need to look at the 2013 ICT outlook and its windows of opportunities for IT entrepreneurs, with particular reference to software startups.
“The comfortable mantra seeking to explain the inability to designate special funding scheme to promote innovation and youth entrepreneurship start-up development on the grounds of lack of realistic for lending opportunities collateral for lending opportunities, is to state the least, a blatant misinformation to the pioneers and champions of software Nigeria”, he stated.
According to him, no time was more auspicious to address the national software issue than now. He stressed that there was an urgent need to retool the national workforce to respond to the challenges of the knowledge economy.
Uwaje stressed the need for a political will in the drive towards software development
“It should be note that there is a fundamental ICT shift both in policy articulation, strategic approach and implementation actions—consciously driven by political will”, he said.
But the chairman of the occasion, Vice Chancellor, Covenant University, Ota, Ogun state, Prof. C.K. Ayo believed that education today would be incomplete without knowledge and support of enterprises.
Prof. Ayo said the country should know that it is competing with other nationals and institutions in the world. “It is a known fact that in a capitalist economy, financial benefits flow to those who control and supply the financial capital but in a knowledge-based economy, necessitated by the current globalisation drive, financial benefits accrue to those who control and supply intellectual capital.
“It is not surprising therefore that allover Africa; most lucrative jobs are gotten by foreign nationals, particularly the Asian Tigers. This is a wakeup call”, he stated.
The Covenant VC believed that if software development must attract venture capital there was need to resolve the missing link in the nation’s knowledge capacity; stimulate software capacity development amongst Nigerian youths; recognize and mentor the best software start-up of the year and turn Nigeria into a globally recognized software development nation.
According to him, Nigeria currently imports over 90 per cent of the total ICT software and infrastructure. “Let us emulate the Indian experience”, he stressed.
However, as part of efforts aimed at building the right foundation for software development, the minister of Communications Technology, Mrs. Omobola Johnson at the just concluded Social Media Week in Lagos restated government’s commitment towards developers.
Johnson said government would launch the much awaited $15 million venture capital fund for software developers by April 2013.
According to her, the ministry on behalf of the Federal Government is going through the process of selecting the fund managers.
The $15million venture capital fund, according to Johnson is to be launched in April after the selection of fund managers who will serve on the investment committee.
“There’ll be money available for software developers, not only those that are in government inspired hubs but those that are actually developing software.
“They can actually apply for this fund…and if the investment committee thinks they are worthy then they get the fund.”
It will be recalled that the plan to launch the ICT venture capital fund was first announced August last year by the minister.
It must also be mentioned that some firms, including Intel are already providing ICT tools, support and other logistics for Nigeria’s software development.
In an interview with The Guardian, during his visit to Nigeria last week, Intel’s Senior Director, Software Alliances, Kumar Balasubramanian, said software services and content was a very fundamental part of what the world needed today. “You can buy the device, the laptop, smart phone anywhere, but I think more than ever, the usage experience is becoming a critical part of what makes people want to own to own these devices.
“Our support to app developers in Nigeria is to ensure software innovation happens faster and keep pace with the hard ware innovation across the globe.”
Indeed, the UN report noted that “Software production can contribute to the structural transformation of economies, that is, wean them away from dependence on low-technology goods and on a limited number of products for export.”
The report noted that Kenya and South Africa top the continent in supplying software and services for domestic consumption, with areas of focus being smartphones and tablets, as well as mobile applications driven by mobile broadband Internet services.
A software developer, Kehinde Lawal, who spoke to The Guardian believed strongly that a startup fund for developers would spur more innovation.
“Nigerians are fantastic. The Youths are very creative. The challenge is funding. You need to see people at the Co-Creation Hub in Yaba and see codes people are writing. The challenge has always been funds and channels of marketing our innovations.”
– Guardian Nigeria
