Slow IT Growth in Nigeria impacts the West African IT Ecosystem

Slow IT Growth in Nigeria impacts the West African IT Ecosystem

 

It has been revealed the slow growth of Nigeria’s Information Technology Industry is responsible for the challenges being experienced in the West African IT Ecosystem.

The volatility in oil price in the global market and the current political tensions in Nigeria, typical of election seasons, are said to be affecting investors for the regional market. The one source economic revenue policy of the country with its dependence on oil has been shown to be a major problem slowing investment into its ICT growth

‘The slow growth may persist owing to the too much dependence on oil and insufficient diversification plans, say in the oil and gas sector, which is currently unstable is putting so much pressure on the lean revenue, said Jyoti Lalchandani, Group Vice President and Regional Managing Director, International Data Corporation.  The upcoming elections have also impacted a more cautious investment stance by 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, said there was a significant slowdown in the Personal Computer, tablet, mobile phone markets, notably due to economic pressures and volatility.

He expressed concerns over the impact of currency exchange rates on the IT sector, recalling how the fluctuations from N250/$1 to about N500/$1 at a point in time and $350/$1 now put pressure on the sector.

Talking about organisations, he said: ‘They don’t want unpredictability at 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.’ Organizations also consider it an expense item in terms of power infrastructure, cooling expenses etc. and so, the worry about building efficiency and remaining stable in the 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, Nigeria’s large market size and the influence of its companies, many of which operate regionally, makes it necessary to invest in its IT Sector and manage such investments properly to help the industries growth in West Africa.

‘It is the center 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.’

 

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 forthcoming 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 the 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, Dell EMC, Habib Mahakian, Nigeria remains a great investment destination but challenged by so many issues, political uncertainties in this election season being one of them.

 

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 and stressed the importance of having foreign investors play an active role in this agenda.

‘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,’ he said.

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