The Nigerian economy has lost over N212 billion transferred out of the country in the past 18 months for acquisition and maintenance of foreign software used in the economy including banking, oil and gas, information technology (IT), telecommunications and manufacturing sectors. The capital flight cuts across both public and private sectors.
Investigation by LEADERSHIP revealed the Nigerian banking and oil and gas sectors contribute much of the capital flight through importation of foreign software applications.
All foreign software are registered at the National Office for Technology Acquisition and Promotions (Notap), the federal government agency responsible for registering and monitoring all software before they are deployed. It was gathered that these foreign software applications are very expensive to purchase and come with annual maintenance fees.
Statistics from NOTAP show that already in 2012 over N59 billion have been transferred out in purchase and maintenance of software as at the first half of this year. In 2011, Nigeria lost $1 billion to foreign software purchase and maintenance and has been losing the same amount annually in the past few years.
The banking industry is the major user of foreign software as all the commercial, merchant banks and microfinance banks have foreign banking applications running their end of day (EoD) operations and other systems. Majority of the bank software applications come from India, and Europe.
Mrs. Omobola Johnson, Minister of Communications Technology who was shocked by the massive capital flight disclosed to LEADERSHIP that the government is not happy and is working on building software skills and attracting both software and hardware manufacturers to set up shop in Nigeria in order to keep the money within the economy.
Johnson revealed that in the IT sector where computer companies such as Zinox, HP, IBM, Acer, Dell and others operate, “Only 30 per cent of the computers bought by Nigerians in the formal market are locally assembled and none in the gray market are locally assembled.” She said as far as local content is concerned, these are unfortunate anomalies in the ICT industry.
The Minister disclosed that “The local software industry is one where we see tremendous potential for local content development. We are beginning to pursue policies and programmes that encourage a culture of patronage and consumption of locally developed software.
Government through its IT development agency NITDA is promoting the establishment of ICT incubation centres that operate in a private sector/entrepreneurial setting, to provide the required support for software entrepreneurs to thrive and be commercially successful.”
Included in this initiative is the promotion of a venture capital fund to provide alternative and more appropriate means of funding for software and other ICT entrepreneurs especially in their start up phases and providing avenues for the commissioning of bespoke software by the business community, especially the ‘heavy users’ of IT such as the banks and oil and gas industries.
The government has come up with a plan to establish a N1 billion Software Innovation Fund to fast track the development of made in Nigeria software by the youths. The fund commence with seed money from the government. The software innovation fund would be public-private partnership aimed at kick starting the creating of software cluster market for Nigeria.
NITDA has signed a memorandum of understanding (MoU) with the Cross River State Government to leverage a part of the infrastructure at the Tinapa Business and Leisure Resort to build a pilot incubation centre to create a knowledge city that will attract players in the ICT industry.
The ICT industry contributed 5.6 per cent to GDP in 2011. This industry has been growing at an average of 30per cent a year for the last two years making it one of the fastest growing sectors in the Nigerian economy.