An Overview of Nigerian Local Content Guideline by Inye

Report
December 3, 2013
CONTENTS
Background to Nigerian Content
Development
The Case for Nigerian Content
Objectives of the Guidelines
Review of the Guidelines Document
Conclusion and Recommendations
2
CONTENTS
Background
• Nigerian ICT Landscape
• Past Efforts
• Processes Adopted for Current Effort
3
BACKGROUND
• 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.
4
Anatomy of Nigeria IT Industry
Segments of the ICT Industry
Communication
Equipment
TELECOMMUNICATIONS
MOBILE PHONES
Carrier Services
IT Equipment &
Hardware
INFORMATION TECHNOLOGY
COMMUNICATION
EQUIPMENT
Software & Solutions
IT Services &
Solutions
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
5
Anatomy of Nigeria IT Industry
OVERVIEW OF SEGMENTS OF INFORMATION TECHNOLOGY INDUSTRY
SOFTWARE & SOLUTIONS
• System Infrastructure Software
• Application Software
• Productivity
• Implementation Services
• Enterprise Software
• SaaS Applications
IT EQUIPMENT & HARDWARE
•Servers
•Workstations
•Desktops
•Notebooks
•Printers
•Copies
•Monitors & Public Information Display
•Accessories & Peripherals
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
6
Anatomy of Nigeria IT Industry
OEM Participation –Total PC
Foreign OEMs
Zinox
 Consumer preference for global vs local brands
Others
10%
10%
Local
Foreign
OEMs
11%
89%
Mobile Phones importation
0%
100%
Sim production
0%
100%
80%
OEM Market Shares-Total PC
Foreign Players
Local Player
Hewlett Packard
Zinox
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Samsung
Acer Group
Lenovo
Toshiba
MSI
Sony
LG Electronics
77.00%
66%
21.4%
10.20%
Foreign Players
Source: IDC EMEA PC Tracker,Q4 2012
Zinox
2011
12.5%
11.9%
Others
2012
7
Past Efforts
Efforts
 Software Nigeria
 Buy Made in Nigeria
Problems
 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
9
Processes Adopted for Current Efforts
Extensive stakeholder
consultations
Holistic approach (
software, hardware,
services, subsectors, etc)
Implementation
framework for
sustainability
10
CONTENTS
The Case for Nigerian Content
11
Impact of LC from Other Countries
Brazil
Regulation
Australia
ISO
United Kingdom
ABOEC
12
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.
13
CONTENTS
Objectives of the Guidelines
• Projections
14
Objectives of the Guidelines
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
15
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 2012.
 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.
16
Projections
Hardware
 750 000 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
•
•
•
TAM
School based
programs
Asisted PC
procurement
General consumers
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.
The low demand for local brands also make investments a risky venture as ROI cannot be
guaranteed.
17
Projections
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
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.
•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
Projections
Network Services & Internet Access
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.
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
12 X
Mainland
China, India
& SA
120 X USA
300 X
Macao,
China
2 X Ghana
Nigeria
20
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 elearning, telemedicine, e-government
services, and to access Nigerian
content?
21
CONTENTS OF THE GUIDELINES
Brief Review
•
•
•
•
•
•
Authority and Enforcement
Structure
Coverage
Application
Key Provisions
Implementation Framework
22
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.
23
Structure
24
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.
25
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.
26
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.
27
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
28
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.
29
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.
30
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.
31
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.
32
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.
33
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 .
34
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.
35
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.
36
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.
37
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.
38
Implementation Framework
The Role of NITDA
 Legal
 Institutional
Stakeholders
39
CONTENTS
Conclusion and Recommendations
40
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.
41
THANK YOU
Inye Kemabonta, Director Standards and
Regulation, NITDA.
[email protected]
42
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