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Draft Framework and Guidelines for
Nigerian Content in Information
Technology.
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Authors
National Information Technology Development Agency (NITDA)
In collaboration with: Dr. Armstrong Takang Dr. Adeniyi Onamusi Mr. David Agogo Mr. Inye Kemabonta
Contributors
• Information Technology (Industry) Association of Nigeria (ITAN) • Computer and Allied Products Dealers Association of Nigeria (CAPDAN) • Institute of Software Practitioners of Nigeria (ISPON)
• Nigeria Internet Registration Association (NIRA) • Nigeria Computer Society (NCS)
• Microsoft Corporation • Hitachi Data Systems • Oracle Corporation • Mrs. Mary Uduma • Mrs. Florence Seriki • Chief Leo Stan Ekeh • Mr. Ibrahim Balogun • Mr. Pius Okigbo • Mr. Will Anyaegbunam • Dr. Emmanuel Ekuwem
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ACRONYMS AND GLOSSARY
ATCON – Association of Telecom Companies of Nigeria
AU – African Union BS - Broadband Services BPP – Bureau of Public Procurement
CMD - Centre for Management Development
CNII – Critical National Information Infrastructure CNSI – Critical National Software Infrastructure CPN – Computer Professional (Registration Council) of Nigeria
CSO – Civil Society Organisation CITO - Chief Information
Technology Officer
DPA - Data Protection Act ECOWAS – Economic Community of West African States
EU – European Union
FCSC – Federal Civil Service Commission
FGN – Federal Government of Nigeria
FIRS – Federal Inland Revenue Service
FJSC – Federal Judicial Service Commission
FME – Federal Ministry of Education
FMST – Federal Ministry of Science and Technology
GIS - Geographical Information System
GII - Global Information Infrastructure
GSM – Global System for Mobile Telecommunication
HIS - Health Information System ICT – Information and
Communications Technology ICT4D – Information and
Communications Technology for Development
IDP – International Development Partners
IKE – Information and Knowledge Economy
ISPON – Institute of Software Practitioners of Nigeria
ITF - Industrial Training Fund IT - Information
Technology/Information Communication Technology
IAP - Internet Access Provider ISP - Internet Service Provider KS – Knowledge Society
KPI – Key Performance Indicators LEEDS – Local Economic
Empowerment and Development Strategy
LII - Local Information Infrastructure
MDA – Ministry, Department and Agency
MDG – Millennium Development Goals
NAPEP – National Poverty Eradication Programme
NASSCOM – National Association of Software and Service
Companies
NASENI – National Agency for Science and Engineering Infrastructure
NCC - Nigerian Communications Commission
NCS – Nigerian Computer Society NDE - National Directorate of Employment
NDS – Nigerian Developed Software
NECC - National Electronic Commerce Council
NII - National Information Infrastructure
NIIB - National Information Infrastructure Backbone NITDA - National Information Technology Development Agency NITDEF - National Information Technology Development Funds NITEL – Nigerian
Tele-communications Limited
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NITC - Nigeria IT Corps NOA – National Orientation Agency
NOTAP – National Office for Technology Acquisition and Promotion
NSP – National Software Policy NISRID – National Institute of Software Research, Innovation and Development
NUC – National Universities Commission
NYSC - National Youth Service Corps
ODM – Original Design Manufacturer
OECD – Organisation for Economic Cooperation and Development OEM – Original Equipment Manufacturer
OSGF – Office of the Secretary to the Federal Government PC – Personal Computer
PSF – Professional Service Firm R&D – Research and Development RID – Research Innovation and Development
RDBMS – Relational Database Management System
SEEDS – State Economic Empowerment and Development Strategy
SDT - Software Development Tools SFP – Software Fiscal Policy SI – Software Infrastructure SII - State Information Infrastructure
SMART - Simple Moral Accountable Responsive Transparent
SME - Small and Medium Enterprises
SMEDAN – Small and Medium Enterprise Development Agency SON – Standards Organization of Nigeria
TLD – Top Level Domain
UNECA – United Nations Economic Commission for Africa
UBE - Universal Basic Education POP- Point of Presence
PSF- Professional Service Firm
WIPO - World
Intellectual
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Authors
... 1
Contributors
... 1
Foreword (Honourable Minister, Federal Ministry of
Communications Technology)
... 6
Foreword (DG, NITDA)
... 7
Preface
... 8
1.0 Introduction
... 9
1.1 Background ... 9
1.2 Stakeholder Analysis of the IT Sector ... 10
1.2.1 Analysis of Supply Side of the IT Sector ... 12
1.2.2 Analysis of Demand Side of the IT Sector ... 16
1.2.3 Analysis of Regulatory bodies in the IT Sector ... 19
1.3 Growth Potential of the Local Technology Industry ... 19
1.4 Need for a Local Content Policy and National IT Guidelines .. 22
1.4.1 Benefits ... 23
1.4.2 Risks ... 23
1.4.3 Balanced Perspective ... 24
1.5 Multinational Companies as enablers and partners ... 24
1.6 Role of Government and Regulatory Bodies ... 25
2.0 The Content Policy Proposition
... 27
2.1 Policy Vision ... 27
2.2 Policy Objectives ... 27
2.3 Strategic Policy Goals: ... 28
2.4 Policy Framework ... 29
3.0 Local Content Policy and Guidelines
... 33
3.1 Policy on Development of the Information Technology Industry 33 3.1.1 Policy Statement ... 33
3.1.2 Policy Objectives ... 33
3.1.3 Policy Directives & Strategies: Hardware ... 33
3.1.4 Policy Directives & Strategies: Software ... 35
3.1.5 Policy Directives & Strategies: Telecommunications, Network & Internet Services ... 36
3.1.6 Policy Directives & Strategies: Data & Information Management 37 3.1.7 Policy Directives & Strategies: Professional Services ... 38
3.2 Policy on Intellectual Property Regulation and Protection ... 38
3.2.1 Policy Statement ... 38
3.2.2 Policy Objectives ... 38
3.2.3 Policy Strategies & Directives ... 39
3.3 Policy on Indigenous Innovation ... 40
3.3.1 Policy Statement ... 40
3.3.2 Policy Objectives ... 40
3.3.3 Policy Strategies & Directives ... 41
3.4 Guidelines for Local Content Development in IT ... 43
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3.4.2 Indigenous Firm Recognition ... 43
3.4.2 IT Capacity Development ... 45
3.4.3 Funding and Capital Sourcing ... 46
3.4.4 Product Development ... 47
3.4.5 Demand Generation ... 48
3.4.6 Support and Maintenance ... 49
3.4.7 Fiscal and Regulatory Support ... 50
4.0 Policy Performance Measurement
... 51
4.1 Guidelines for Monitoring and Evaluation of the Policy ... 51
4.2 Metrics for Measuring this Policy ... 51
4.3 Recommendations for Policy Review ... 56
Appendix 1: Government & Civil Service Guidelines
... 57
e-Government ... 57
e-Education ... 57
e-Health ... 58
Guidelines for IT Project Implementation in Government, e-Education and e-Health ... 58
Project Management Guidelines ... 60
Project Implementation Guidelines ... 61
Project Sustainability Guidelines ... 62
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Foreword (Honourable Minister, Federal Ministry of
Communications Technology)
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Preface
This policy document was created through an integrative process that took into consideration a wide range of stakeholders, global best practices as well as current realities in the Nigerian IT sector. The strategies and policies contained in this volume represent a new direction with potential to create sustainable progress and success for all stakeholders in the Nigerian IT sector.
The following methodology was used to develop this policy document.
Phase
Tools/Techniques
Desk Research Literature review and analysis of similar
policies in other sectors & countries.
Stakeholder Engagement Structured interviews, questionnaires,
workshops, and online contribution.
Compilation of Draft Report Analysis of data and writing of draft report
Stakeholder Validation of
Draft Report Feedback on draft policies and guidelines obtained through workshops, consultation
sessions and roadshows
Final Report Incorporation of feedback and amendments made
to final copy of the report Executive/Ministerial
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1.0 Introduction
1.1 Background
Digital technologies have been the most transformative force in the world over the latter half of the 20th century. No aspect of modern
life or sector of business has been left untouched by its transformative power which has led to the destruction of entire industries as well as the creation of new jobs and lines of business. Digital technologies have fanned the flames of globalization and transformed the world into a microcosm, as time and distance have become easily dealt with by the click of a button. As these changes continue to happen, forward thinking governments realise the need to evolve policies and guidelines to serve as a foundation for managing the effects of technology in people, businesses and society.
In Nigeria, the past decade has been a time of unprecedented growth in the use and adoption of various digital technologies for communication and computing. The explosion of mobile telecommunications technology in Nigeria has seen an increase in tele-density from 0.73% in 2001 to about 70% in ten years, with a total of 109 million active mobile phone subscriptions across the country as at October 2012. The growth in the number of homes with computers and Internet access, while still extremely low, has almost doubled between 2003 and 2010 and the number of personal computers (PCs) shipped into Nigeria has quadrupled. These changes have occurred at the same time that businesses and government have turned to various forms of technology to aid in carrying out operations and improving service delivery, permanently changing the economic landscape as result.
While the country appears to be in step with technological
advancements and global innovation and there are exceedingly high levels of ICT consumerism, the Nigerian IT 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. This is evidenced by the
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nonexistence of technology exports and very low level of patronage of locally produced ICT products including hardware and software.
Nevertheless, stakeholders in the sector have worked hard on several fronts to grow the ICT sector and keep more Nigerians in step with the rapid developments in the world of ICT. The presence of major multinational hardware and software companies in Nigeria and the entry of technology service companies into the Nigerian market are growing. And 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. This has led to several efforts to stimulate the ability of local companies to innovate and participate more effectively. These efforts have included attempts at providing venture capital; the establishment of business incubators across the country and scholarship schemes for students in ICT related fields. Most of these initiatives are being driven by various MDAs, organizations and groups that see the need of investing in enabling local companies and Nigerian professionals to play more active and value-adding roles in the sector. It is with this background in mind that NITDA aims to put forth this policy document for the sector.
1.2 Stakeholder Analysis of the IT Sector
The stakeholder analysis of the sector is carried out using the Supply-Enabling Environment-Demand(SEED) model in order to support full understanding of different contributors and participants in the Nigerian IT sector. This allows us to identify and determine the impact of different groups within the sector and to provide a broad overview of what can be done to strengthen growth in the industry
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Supply (Content Producers): refer to individuals, organizations or
ministries, departments and agencies of government responsible for providing, producing or manufacturing IT products and services as well as modifying and maintaining existing products to deliver value to consumers. The supply side can also be called the IT sector, and it has as primary categories hardware providers, software providers, network and telecommunication service providers and professional services providers.
Enabling Environment (Regulators): refer to groups, organizations or
ministries, departments and agencies of government that carry out the task of monitoring, managing and controlling the interaction between content creators and content consumers. The task of regulating the IT industry is increasingly more sophisticated due to the pace of change in the sector. To achieve a more cohesive regulatory regime and a progressive policy approach the different agencies responsible for different areas impacted by IT can no longer afford to operate in silos, rather must collaborate effectively.
Demand (Content Consumers): refer to individuals, organizations or
ministries, departments and agencies of government that are end users of products and services being served through a particular digital technology or platform. The demand side of any industry forms the basis for growth and innovation as consumers demand and pay for goods
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and services. The demand side of the IT industry includes the retail consumer market, the enterprise market and the public sector/government consumer.
1.2.1 Analysis of Supply Side of the IT Sector
The following sections describe the supply side in more detail and provide information about the major organizations and stakeholders active in each area.
Hardware Providers: refers to companies involved in the
conceptualization, design, production, manufacture, distribution and sales of the physical elements of a computer system. There are currently five Original Equipment Manufacturers (OEMs) in Nigeria namely, Zinox Technologies, Omatek Computers, Beta Computers, Brian Integrated Systems and Veda Technology. However, HP and Dell accounted for almost 60% of the 743,000 computer units sold in Nigeria in 2012. There have been several initiatives on the demand side to stimulate the acquisition of hardware among Nigerian consumers. The Computer for All Nigerians (CANi) program was created to increase IT penetration and improve patronage of local OEMs specifically for this purpose. Since then, there have been several assisted purchase programs instituted by various arms of government and public sector institutions across the country that allow Nigerians to purchase computer hardware and network subscriptions at discounted rates and using flexible repayment plans. Also, there have been concerted efforts to increase government patronage of local OEMs, including the passing of circulars to the effect. Some local organizations actively working for the growth of this sector include ITAN, CAPDAN and NCS. Multinationals active in this segment of the industry include HP, Dell, Samsung and Acer which collectively have over 70% of the market share for computer hardware. A large amount of sales is done through local partners who retail computers across the country in technology markets across the country. Available figures for hardware sales in the market tend not to include the thriving market for used computers which still flock into the country despite regulations on the control
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of hazardous waste and their disposal, such as the Basel Convention, being enforced by the Standards Organisation of Nigeria (SON).
Software Providers: refers to companies involved in the
conceptualization, design, development, release, sale and support of the logic which enables the processing of data. The NCS estimates current local capacity for software design and development, web content and portal services and graphic and multimedia development to be below 35,000 companies. A large number of these companies are represented under the umbrella of ISPON. Some leading Nigerian software companies include Allied Soft, Progenics, AC&S, Computer Warehouse Group, SystemSpecs, Infographics, Socket Works and Chams Plc. Many of these companies make a huge portion of their revenues from reselling and servicing multinational software brands. In general, across the software landscape in Nigeria very few companies have the capacity for any large scale software development projects or specialist software for critical sectors such as banking, petroleum industry, etc. Some commonly cited reasons for this inability of Nigerian software companies to take on projects with long development cycles include the poor scalability of solutions due generally non standardized processes and practices across many sectors, the absence of capital to support long term development needed, widespread deficiency of qualified personnel leading to high costs of hiring seasoned developers as well as very high attrition rates as qualified developers tend to hop from job to job or leave to start their own companies. This entrepreneurial bent does not always serve the industry well as many software companies in Nigeria are actually one man businesses that focus on small projects for quick returns leading to aggressive competition and high levels of commoditization of certain basic skills. Further, the focus on short term gains and the mad dash for self-controlled businesses among emergent developers is linked to substandard work, dissatisfied clients and the preponderance of untested software with grand performance claims but hardly able to deliver as promised. This general absence of standards that is essential to the growth of a sophisticated software industry cannot be
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better illustrated than through the substandard quality and escalating rate of defacement of government websites over the past three years. In summary, these and many other conditions have led to a situation where Nigerian software companies can rarely compete in regional or global software markets.
The current condition in the Nigerian software market makes for a sweeping opportunity for many multinational software companies with established brands and tested products that have been actively developed in other nations’ industries which lack many of the constraints prevalent in Nigeria (such as India, Brazil, etc). NOTAP reports that imports of software may be costing Nigeria up to 1 billion dollars annually.
Recently, many global software companies have participated more actively in grooming the local industry as part of their desire to grow the local ecosystem and cultivate loyalty to their respective platforms. Some multinational software companies with local presence include Oracle, SAP, Microsoft and Google. The Federal Government of Nigeria has long maintained partnerships with Microsoft Corporation for the licensing of its software to government institutions as well as for other collaborative efforts to grow the local ICT sector.
Network and Telecommunication providers: refers to companies involved
in the establishment, maintenance and administration of technologies and equipment that enable interconnection between multiple devices and systems. This market is characterised by high convergence between internet service providers and mobile service providers. Nigeria has seen an explosion in the use of mobile and internet services over the past decade, a situation that led to the arrival of additional submarine cables in Nigeria by 2010 and has subsequently improved the amount of bandwidth available to over 45 million Nigerians (currently 26.5% penetration as at 2012). However, there is still a lot to be done as the country still registers extremely high tariff per month of
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690 dollars for 100 kilobits a second connection and an extremely low distribution of fixed high speed broadband internet at 0.3 subscribers per 100 people. These conditions have led to a high degree of dependence on mobile phones for internet connectivity, a trend across most of Africa where the majority of people connecting to the internet are doing so via mobile phones. Nigeria is the second largest mobile market in Africa is growing at a fast rate. 25% of internet traffic from Nigeria is from mobile phones, and 90% of 18 to 27 year old Nigerians access the internet primarily from their mobile phones rather than from computers. Some stakeholders in this area include ALTON, NIRA and the Nigeria Internet Group.
The area of telecommunications has seen a much faster growth and development as well as a fair amount of local content participation across board. It is estimated that the telecommunications sector has created over 5,000 direct jobs and 500,000 indirect jobs over the past decade. In addition, there have been efforts to establish telecoms engineering centres of excellence to increase the supply of highly skilled local talent to support the fast growing sector.
Multinational companies play a key role in the value chain of the networking and telecommunication industry with all telecommunication and network equipment manufacturers and all but one telecommunication service providers being multinational companies. The NCC works actively to regulate the activities of the telecommunication aspect of the sector, however, with the growing convergence of these technologies there is still a lot to be done in the coming years to grow the capability of the sector and its contribution to national development targets..
Professional Services Providers: refer to companies involved in sales,
consultancy, systems implementation and integration, support and maintenance of IT infrastructure. The past decade has seen a growth in the number of boutique companies owned and controlled by Nigerian
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professionals created to meet the demand for professional services relevant to different sectors of the economy.
Nevertheless, this area of the economy is still heavily dependent on foreign expertise and multinationals. This is not surprising given rapidly evolving trends in the software, hardware, networking and telecommunications industries, which ultimately drive the need for professional services across the economy. In the case of foreign companies that have presence in Nigeria, local staff are mainly engaged to aid market entry and to drive local sales while other crucial activities in the value chain take place outside the country. While there is a general recognition of the need to improve the number of highly trained and capable Nigerian professionals in this space, the sales focus of many multinationals does not do a lot to grow or strengthen local capacity.
Similarly in the area of business to business transactions, much more can be done to improve the capacity of Nigerian companies to serve the needs of long established multinationals in various sectors, part of the imperative behind the Nigerian Oil and Gas Development Law 2010. Another critical local skills gap is the absence of qualified systems integrators. This often leads to large wastes and failed technology projects due to the inability of companies to effectively integrate disparate technologies to meet unique local needs and is partly responsible for the tendency of consumers to continuously procure new technology rather than optimize and build on existing systems.
1.2.2 Analysis of Demand Side of the IT Sector
The following sections describe the demand side of the IT sector in more detail and provide information about the major categories of buyers active in the Nigerian IT market.
Retail consumer market: refers to the retail of IT and digital
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personal computers, handhelds, mobile phones and related accessories as well as a wide array of software and services that run on them. Globally, this is a fast growing segment of the IT sector due to the availability of low cost IT devices and more affordable Internet. In Nigeria, recently considered one of the more optimistic markets in Africa with respect to buyer sentiment, there is immense potential for the growth of this market segment. Given the large population and drawing a corollary from the high demand for mobile devices and smartphones, as the economy improves Nigeria may well be on the cusp of an explosion in demand for IT products. The Nigerian market is also heavily biased towards consumption of IT, with over a third of the population being youths, most of whom are eagerly welcoming of western influenced media, entertainment and technology. Analysts report that almost half of Nigerians above the age of 15 own mobile phones with about 22% of mobile phones possessing Internet access capabilities. Globally it is envisaged that in 2013 more smartphones will be sold than feature phones. Although this is not yet the case in Nigeria, as economic conditions improve there is a clear trend towards the adoption of smartphones. At the same time, the National Bureau of Statistics reports that only 5% of Nigerians have access to computers, including publicly accessible cybercafés. This hints at the need to ramp up ownership of personal computers across the country as well as the creation of incentives that will drive Nigerians, especially youth, to do more than simply consume content using these devices.
Enterprise market: refers to organisations and businesses that require
IT to support core strategic and operational activities. Globally, this is the largest category of consumers as many sectors and industries, such as banking and professional services, are heavily IT-dependent. Consumers within this space in Nigeria comprise small and medium scale businesses (SMBs) as well as large corporations and multinational companies. And small, medium and large-scale vendors of professional IT support services constitute the supply side of this
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market. The main difference between this market and the retail consumer market is in the economic value generated from services procured from vendors. Businesses rely heavily on information and communication technologies to drive day-to-day operations, save time and costs whilst improving productivity, communication and collaboration. User demand and revenues generated within this space has not yet been accurately measured, however if the growth in SMEs, consumer packaged products, the retail banking industry and even Nollywood and the entertainment industry can be used as a proxy indicator, it can be extrapolated that there is a significant amount of untapped potential in this market segment.
Public sector/government consumer: refers to MDAs and government
purchasers of various IT products and services. Globally, the public sector is the third largest spender on IT, behind the enterprise sector. In Nigeria, government is the single largest spender on IT. Forrester Research reports that IT related purchases in the public sector constitutes 23% of the total IT market, which comes to about $320 million. Of this amount, hardware is 55% of the amount, services is 22% and software constitutes the balance of 23%. Analysts further report that expenditures on education and defense make up over half of the total public sector IT expenditure in Nigeria. Global growth areas such as healthcare and transportation constitute a mere 3% and 4% of public sector spending, suggesting room for tremendous growth as other macroeconomic indicators stabilize in the Nigerian polity over the next few years.
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1.2.3 Analysis of Regulatory bodies in the IT Sector
The following sections describe the regulatory bodies active in IT sector in more detail.
Ministry of Communication Technology
Created in 2011, the Ministry of Communication Technology is mandated to foster a knowledge based economy and information society in Nigeria. The Ministry was created to facilitate ICT as a key tool in the transformation agenda for Nigeria in the areas of job creation, economic growth and transparency of governance. The Ministry has five agencies namely: National Communication Commission, National Information Technology Development Agency, Nigerian Postal Service, Nigerian Communications Satellite Company and Galaxy Backbone Services.
National Information Technology Development Agency
NITDA was established by the provisions of the National information Technology Development Agency Act (NITDA Act) of 2007 to regulate, monitor, evaluate, and verify the progress of the development of the Information Technology industry in Nigeria. NITDA is central to the creation and promotion of this policy document.
1.3 Growth Potential of the Local Technology Industry
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
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$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.
Hardware:
In 2012, about 750,000 personal computing units were sold in Nigeria with only 10% sold by Nigerian OEMs. A significant proportion of OEMs value chains exist outside the country, further reducing the local impact of this economic activity. It can be projected that there is a Total Available Market (TAM) in Nigeria of over 3 million computer units to be harnessed over the next 4 years, valued at about 400 billion naira. Of this market, it is estimated that a third will be captured by general consumers, another third by school based programs for teachers and students and the balance made up of assisted PC purchase programs and other forms of corporate procurement.
In addition, the hardware support market in Nigeria currently has an estimated 80 billion naira potential, given global performance in this sector. However, the infrastructural challenges peculiar to the Nigerian context pose challenges to this vital sub-sector as organisations are unable to deliver industry accepted service standards and most crucial functions such as back up and disaster recovery systems are outsourced to other countries. As the reforms in the power industry gain traction, it is important that the interest be cultivated for companies to move more hardware support services in-country.
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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 industry in Nigeria (internally alone) has a potential worth as at 2013 of up to 110 billion naira annually. However, few Nigerian software offerings are capable of competing in this market and the high cost of foreign developed software, the absence of adequate customisation 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. In addition, local software companies are unable to effectively compete in the global software industry, one of the most geographically dispersed sectors that there is. The government has carried out several efforts to change this by creating the National Software Development Initiative, National Software Development Taskforce and the National IT Policy as well as the establishment of a venture capital fund for software development.
Network Services & Internet Access:
While Nigeria currently has the most people on the Internet in Africa, an estimated 40% of the total Internet traffic on the continent, the situation is far from favourable to further penetration and supporting innovation. Nigerians spend most of their disposable income on broadband connection. Currently, the costs of internet and mobile services remain extremely high, with the ITU reporting that fixed-broadband costs as a percentage of Gross National Income per capita sits at 60.7% (in 2011), twice that of Ghana, 12 times that of mainland China, India and South Africa, 120 times that of the USA and 300 times that of Macao, China. This current condition is despite significant improvements that have occurred in the sector, including consolidation among ISPs, entrants of fixed-wireless and mobile
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network operators into Internet service provision. The arrival of a second international submarine fibre-optic cable (Glo-1) in 2009 and a third one (Main One) in 2010 reduced the cost of international bandwidth by 90%, but barely had an impact on the cost burden felt by the Nigerian customer when consumer prices for broadband in developing countries have continued fall at an average of 30% annually for the past five years. There are however concerted efforts in this space by the NCC and its arms, such as the USPF, notable of which include Wire Nigeria (WIN), State Accelerated Broadband Initiative (SABI), Backbone Infrastructure Project (BTRAIN) Pilot Project to deploy 500km of fibre in the country, the Rural Broadband Initiative (RUBI) as well as the planned opening up of the 2.5GHz frequency band for internet service distribution.
1.4 Need for a Local Content Policy and National IT Guidelines
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. 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. 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.
While an indigenous company refers to any company with reasonable presence of company representatives (other than sales) within Nigeria,
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a local (Nigerian) company is one formed and registered in Nigeria under the Companies and Allied Matters Act 1990 with not less than 51% equity shares owned by Nigerians. An indigenous firm or a foreign firm can be regarded as a local company if the shareholding representation of the entity is predominantly Nigerian.
1.4.1 Benefits
• Increased support for indigenous IT companies
• Increased amount of funds made available for investment in the ICT sector
• Demonstration of short to medium term revenue streams for local companies that will encourage them to expand their operations, and its attendant positive impact on the economy
• Increased support for research and development of local companies and improving their willingness to take business risks
• Curtailment and containment of current trends of massive capital flight in IT industry
1.4.2 Risks
The creation of a local IT content policy as well as a set of national guidelines:
• May be falsely construed as the government attempting to toy with the free market and make it difficult for non-indigenous
companies to compete
• Could be interpreted as a condition that will make the Nigerian market unwelcoming to foreign companies in the short term
• May lead to the creation of oligopolistic market place for IT which will lead to higher cost for consumers and other ill economic effects in the long run
• May encourage risky behavior among indigenous companies that may negatively impact the industry in the long run
• Could lead to dissatisfaction of customers if local companies are unable to deliver adequate choice and high quality services at reasonable cost
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1.4.3 Balanced Perspective
The government has a primary responsibility to her citizens as they look up to her for jobs and a means of sustenance. In fact, the hard work of Nigerian entrepreneurs, trained professionals and other stakeholders has to be supported and built upon as a priority. Such efforts as this are key to national progress and long term stability of the country. Some form of intervention is always needed by the government to create a fertile ground for commerce to thrive. In this case, this policy is targeted at growing the IT sector to a place of prominence and major contribution to the Nigerian economy. We believe that this can be done without harming the competitiveness of local companies or making the country unwelcoming to foreign investors and multinational companies. To this effect, this policy contains provisions not much different from those in similar policy documents that have been adopted by many other countries across the world studied in its preparation.
1.5 Multinational Companies as enablers and partners
Rather than being a threat to the existence of multinational
companies, part of the targets of this policy document is to establish the kind of competitive environment that will help foreign companies meaningfully active in the Nigerian market to unlock hidden potential and improve their capacity to innovate. To transform this sector, there is crucial role that multinational companies need to play. Some key reasons why the intentions of this policy cannot be achieved without widespread participation across board and across national boundaries are as follows:
1. Many multinationals own critical intellectual property rights and remain the driving force behind the world’s most important
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2. Many multinationals will be critical in transferring knowledge and technology that can engender the growth and maturity of the local IT industry
3. Many multinationals hold the key to opening up indigenous
companies to foreign markets for export, business outsourcing and other potential growth areas for the local IT industry
In short, efforts to grow the IT sector that alienate multinational companies and overly obstruct the free market may fail or worse, result in unforeseen circumstances and blowback in the ICT sector or even unrelated sectors of the Nigerian economy. The onus lies on NITDA to craft a role for these organizations to play, as well as for these multinationals to proactively seek out ways to add greater value to the Nigerian marketplace and its participants. Some ways that this may be possible include:
1. Multinational companies showing greater commitment to their place and potential in the Nigerian market by investing more
aggressively
2. Multinational companies registering Nigerian branches of their companies with majority Nigerian shareholding to achieve greater integration and participation in the local market as well as enjoy privileges that accrue from an indigenous status
3. Multinational companies partnering with government and other organizations to facilitate technology transfer to Nigerians in order to be part of the next wave of growth that is on the horizon for the Nigerian IT market
1.6 Role of Government and Regulatory Bodies
In order to achieve the objectives set out in this policy document, some key actions have to be taken by government and regulatory bodies in this sector. They are as follows:
1. Develop and support programs that will spur the growth and development of a highly indigenous IT industry
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2. Provide funding for initiatives in this sector
3. Create support for innovation and new business creation by providing incentives to Nigerian entrepreneurs
4. Establish platforms that promote the local IT industry and its participants on an international stage
5. Work to strengthen existing legislations that govern the IT industry in Nigeria
6. Support local companies towards the production of high quality and genuine IT products and services that are suitable for the Nigerian market
7. Champion efforts that protect the rights of the Nigerian consumer of IT
8. Support the expansion of existing IT products and services into native Nigerian languages
9. Support the full inclusion of all underserved populations displaced by deficient infrastructure and environments through the establishment of reasonable accommodations
10. Provide leadership and a harmonised vision and policy to be shared by government organizations like National Copyright Commission, Copyright Reform Expert Working Group; National Office for Technology Promotion and Acquisition, etc with the support of non-governmental and civil organizations like Intellectual Property Institute, Nigerian Chapter of the World Intellectual Property Organization, Copyright Society of Nigeria, etc.
11. Work to spread education and promote the ideals of this policy document
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2.0 The Content Policy Proposition
2.1 Policy Vision
The vision of this policy document as follows:
“Increase the amount of Nigerian content in Information Technology products and services that target Nigerian customers and stimulate the growth and development of a local IT industry capable of delivering high quality and innovative products and services that possess regional and global appeal”
2.2 Policy Objectives
The objectives of the IT local content policy include:
1 Enable the local IT industry to contribute meaningfully towards the achievement of national development targets
2 Stimulate and increase the production, sales and consumption of high quality, original and genuine information technology products and services developed by indigenous companies that serve the unique needs of the local and global market
3 Support 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.
4 Support efforts to build capacity and equip Nigerians to serve as active workers and participants in the local IT industry
5 Promote the adoption of relevant regulation and legislation on the creation, distribution and use of Information Technology within Nigeria
6 Promote and encourage an environment within Nigeria that is welcoming to foreign investments in Information and
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Communications Technology, as well as the export of indigenously made IT goods and services
2.3 Strategic Policy Goals:
Goal 1: Achieve a thriving ICT industry that contributes significantly to national development goals
Goal 2: Lay the foundations for a local ICT industry that can grow sustainably and compete globally
Goal 3: Support and ensure technology transfer, indigenous participation and the survival of indigenous companies in the ICT sector
Goal 4: Provide relevant guidelines for the adoption of technology use in critical sectors of the Nigerian economy
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2.4 Policy Framework
The framework of this policy document takes into consideration the vision, objectives and strategic goals as well as the role of NITDA. It is also tied directly into several performance measures that will form the basis for tracking the progress and impact of the policy in order to enable frequent stock taking and re-evaluation of strategies and directives – an approach that is critical for policy in such a fast paced and changing industry.
There are three core focus areas of this policy: driving indigenous innovation, developing the local IT industry and establishing Intellectual Property regulation and protection standards, each of which has a set of related strategic goals. These strategic goals form the basis of specific guidelines that include recommendations for the restructuring of the industry and actions required by NITDA and other government MDAs. They also create potential opportunities that local companies are expected to take advantage of. Further, this document provides a set of appropriate performance measures linked to the achievement of the strategic goals.
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Policy Strategic Goal Performance Measures
Policy on
Indigenous Innovation
Achieve a thriving ICT industry capable of contributing to national development goals
• Real economic value contributed by the industry to the Nation’s GDP
• Number and quality of jobs created within the industry
• Innovation &
Inventiveness of
Nigerians and Nigerian companies
Policy on
development of the IT industry
Lay the foundations for thriving ICT industry that can compete globally
• Quality standards among local ICT companies
• Self-sufficiency in the
value chains of
Indigenous companies • Capacity Building
efforts in the industry Policy on IP
regulation and protection
Support technology transfer, indigenous participation and the survival of local players in the sector
• Amount of
funding/support
available for Indigenous Companies
• Amount of Foreign Direct Investments in the industry
• Number of Innovation Centers/ Centers of Excellence
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• Number of global partnerships for growth Table 2.1: Policy Strategy and Goals Matrix
In addition to the policy set forth, this document will also address the activities of government and the civil service in this sector by providing a set of guidelines on various aspects of IT and technology use to inform the practices of government going forward. Several performance measures have also been identified to track the
achievement and adherence to the recommended practices set forward in this document.
Guidelines Strategic Goal Performance Measures
Government and Civil Service guidelines Provide relevant guidelines to guide technology use in critical sectors • Service delivery • E-Government
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3.0 Local Content Policy and Guidelines
3.1 Policy on Development of the Information Technology Industry
3.1.1 Policy StatementGovernment shall deploy political will and national resources to stimulate the development and growth of the local information
technology industry and all related sub-sectors in order to grow local capacity, drive sustainable development and ensure national
competitiveness.
3.1.2 Policy Objectives
1. Support the growth and development of the local Information Technology Industry
2. Manage and reduce the use of imported and outsourced digital technologies in critical sectors of the economy
3. Provide backing for any efforts to build capacity for research, design, development, manufacturing and production of hardware, software, networking and data technologies that will benefit the local industry
4. Build support for the local information technology industry among government establishments and MDAs at all levels (Federal, State and Local government)
5. Achieve the building of adequate human capacity to support the information technology sector through championing effective technology transfer
3.1.3 Policy Directives & Strategies: Hardware
a) All tiers of government to mandatorily source and procure all computer hardware for which there is local capacity for
manufacturing, assembling, testing, deployment and maintenance. b) In line with the Nigerian Oil and Gas Industry Content
Development Act, 2010, all Oil and Gas companies are required to actively source hardware from only local OEMs.
c) OEMs are to recapitalize and maintain a minimum capitalization of Two Billion Naira and develop adequate capacity to meet demands
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for high quality products that will be generated by the Local Content Policy.
d) NITDA will set a clear timeline for the implementation of the minimum capitalization requirement for OEMs.
e) NITDA will require OEMs to have and maintain ISO 9001:2008 or any other relevant quality certification in order to qualify for recertification and revalidation. Existing OEMs will forfeit their OEM status two years from the date of the announcement of this requirement if they fail to obtain said certification f) No new OEM will be registered or recognized by NITDA without a
quality certification or without the stipulated market capitalization required.
g) NITDA will encourage and facilitate mergers, acquisitions, partnerships or other forms of collaboration to strengthen the capacity of local OEMS and other ICT firms.
h) The Minister will facilitate the grant of a five-year duty waiver on components procured by local OEMs so as to ensure the
competitiveness of local products.
i) NITDA will work together with the Ministry and The Honourable Minister to provide incentives for private organizations to
patronize and purchase locally assembled or manufactured hardware by providing tax deductions for private organizations that
purchase locally assembled products.
j) NITDA will institute stiff sanctions and penalties against OEMs who fall short of expected service levels and quality
requirements.
k) Dispute resolution between OEMs and NITDA will be settled through expedited arbitration.
l) NITDA to facilitate and lead Computer Assisted Purchase Programs by providing zero Interest loans to students, teachers and other interest groups that might help stimulate innovation and economic growth.
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m) NITDA together with the Ministry to encourage multinational OEMs to register Nigerian entities that will have predominant Nigerian representation in keeping with the local content Act.
n) The Minister will facilitate the provision of tax breaks, duty waivers and level playing field for MNCs who plan to set up
assembly plants in Nigeria. Special considerations and incentives to be given to any ODM setting up locally.
3.1.4 Policy Directives & Strategies: Software
a) NITDA will enforce the provisions set forward in the National Software Policy
b) All tiers of government to mandatorily source software for which there is local capacity to design, develop, compile, test,
troubleshoot, launch, maintain and improve such software application.
c) All tiers of government to 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.
d) All tiers of government to use locally developed systems for generic functions such as finance, HR, inventory management, etc. A waiver must be obtained from NITDA by any agency requiring an imported application outside of operating system license and basic office productivity tools.
e) In accordance with the Nigerian Oil and Gas Industry Content
Development Act, 2010; Oil and Gas companies and Service companies are to procure local software for their operations and to make representation to The Nigerian Content Development and Monitoring Board for software which cannot be procured locally.
f) NITDA will promote and facilitate the creation of specialized software firms through incubation or funding programs so as to increase local participation in highly sophisticated systems design and development.
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g) NITDA will work with industry stakeholders to encourage local software firms to form international partnerships for research and product development.
h) NITDA will carry out risk-based due diligence to identify, prevent and mitigate actual and potential adverse impacts that may arise from using software, including risks that arise from technical dependencies on software conceptualized and developed outside Nigeria.
i) NITDA will promote awareness of the origin, source and workings of software being used by the government, including adequate access to ascertain the full security of elements of codes.
j) For off-the-shelf applications such as advanced engineering software and other sophisticated systems that cannot as yet be developed locally, NITDA will mandate compliance with the Nigerian Oil and Gas Industry Content Development Act, 2010 by ensuring that the
implementation of such systems is carried out by duly registered Nigerian companies.
k) NITDA will work with technology platform companies such as Intel, Microsoft, Google, Facebook and Apple to help Nigerian companies develop for such platforms and ensure that the country transitions from being a consumer to a producer of technology.
l) NITDA will require platform technology companies to submit a Local Content Development Plan for their platforms to be utilized or deployed by government agencies. This will include desktop, server, cloud, social media and mobile platforms companies such as
Microsoft, Google, Facebook, Twitter, Apple, etc.
3.1.5 Policy Directives & Strategies: Telecommunications, Network & Internet Services
a) All tiers of government will source telecommunications, network and Internet services for which there are local capacity to setup up, maintain, monitor, optimize and access mandatorily from local service providers with capacity to deploy such.
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b) All tiers of government and all agencies under them will host their websites and other web services mandatorily on the.gov.ng domain as the only approved domain.
c) All tiers of educational institutions will mandatorily host their websites and other web services on the.edu.ng as their primary domain.
d) NITDA in partnership with NIRA will promote the .ng TLD and advocate for businesses and private organizations to migrate to the .ng
domain.
e) NITDA will work in partnership with CBN, Financial Institutions and Payment platform companies such as PayPal, Google Wallet, VISA, MasterCard, Interswitch, Verve, etc. to ensure that Nigerian
merchants and consumers are able to transact and receive payments on the internet from anywhere in the world.
f) NITDA will promote awareness of the origin, source, paths and
workings of telecommunications, network and internet services being used by the government, including adequate access to ascertain the full security of communications being sent through such platforms.
3.1.6 Policy Directives & Strategies: Data & Information Management
a) NITDA and other arms of government will support efforts to improve local capacity to setup up, maintain, monitor, optimize and access government data and information as well as meet potential future information management needs
b) NITDA will promote awareness of appropriate data formats, database technologies, computer security and other data and information technologies that will be used by the government and the civil service in order to achieve the right degree of security
c) NITDA will promote as mandatory the presence of system logs and other computer data logging technologies to aid in the effective troubleshooting and forensic investigation of events in government and civil service systems
d) The Heads of each and every government MDA shall be responsible for ensuring that reasonable care is taken to adequately secure the data
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and information of government and civil service that is created, transferred and stored in digital formats
e) NITDA will ensure that all government data is hosted locally within the country and all government agencies without exemptions will comply with this directive.
f) NITDA will promote and support local data hosting firms and set appropriate service level requirements and standards for data service provisioning for such firms.
3.1.7 Policy Directives & Strategies: Professional Services
a) All tiers of government will mandatorily source implementation, integration and maintenance services from local professionals/ professional service firms who possess the required technical
knowledge and capacity to setup up, maintain, monitor, optimize and access hardware, software, telecommunications, network and internet systems, data and information management systems, etc.
b) NITDA will promote awareness of the origin, source, paths and workings of implementation, integration and maintenance services being used by the government, including ascertain the full
legitimacy of companies and organizations that will be privy to data and systems owned by the government and the civil service.
3.2 Policy on Intellectual Property Regulation and Protection
3.2.1 Policy StatementTo establish an appropriate regulatory regime and work with
existing agencies to oversee issues regarding the ownership of IT including the protection of intellectual properties, copyrights and derivative works.
3.2.2 Policy Objectives
1. Promote the enforcement of appropriate intellectual property protection for content creators in order to maintain reasonable incentive to constant innovation and production
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2. Promote the recognition of traditional safety valves and other mechanisms that protect the general public and indigenous content creators from overreaching intellectual property and copyright mechanisms
3. Ensure decent limitations on the intervention by government or
companies into the private lives of Nigerians, except for lawful and necessary purposes
4. Collaborate with other government agencies to promote the
recognition and adherence of applicable regulations within Nigeria on all digital platforms
5. Champion the passage of legislation that promotes the best interest of consumers as well as creators of IT products and services.
3.2.3 Policy Strategies & Directives
1. NITDA to work with the National Copyright Commission towards the implementation of the treaties of the WIPO, as well as drive the local adaptation of specific provisions
2. NITDA to work with the National Copyright Commission, Copyright Reform Expert Working Group; National Office for Technology Promotion and Acquisition, as well as with non-governmental and civil organizations like Intellectual Property Institute, Nigerian Chapter of the World Intellectual Property Organization, Copyright Society of Nigeria, etc. to achieve the harmonization of intellectual property rights so as to provide an incentive for innovators and creators.
3. NITDA to support and effect the rights of authors, including mandating cooperation of hosting companies, internet service providers (ISPs) and other intermediaries to take down materials that infringe copyrights, trademark or other forms of intellectual property
4. NITDA to champion the establishment of legislation that discourages digital piracy, phishing, identity theft and other forms of illegal activity perpetrated on digital platforms.
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5. ISPs and other service providers must provide the rights to consumers to delete their personal information, data and other records on any service on which they are subscribed
6. NITDA to establish programs that increase awareness of consumer rights and appropriate expectations from content creators among the general public
3.3 Policy on Indigenous Innovation
3.3.1 Policy StatementGovernment shall deploy political will and national resources with support of the private sector to prioritize the sourcing of Information Technology products and services first from
indigenous providers and then from global providers with
significant local presence in order to stimulate growth of the nation’s emerging digital economy and provide jobs and encourage entrepreneurship.
3.3.2 Policy Objectives
1. Create an environment highly supportive of innovation by indigenous companies
2. Offer incentives to promote the growth, development and expansion of indigenous creators of IT products and services
3. Build local capacity in Information Technology product and service creation through patronage and paying closer attention to the origin of IT goods and services being procured by government MDAs
4. Demand and support the improvement of quality standards of IT goods and services available locally
5. Support the Nigerian IT industry by contributing to build the
perception of quality among local consumers and regional and global markets
6. Leverage locally available IT goods and services to contribute towards the preservation of Nigerian culture and indigenous way of
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doing things in order to strengthen the peoples’ identity as Nigerians
7. Enable adequate contextualization and localization of foreign Information Technologies, systems and platforms being used by Nigerians regularly
8. Support the development of platforms that give improve the visibility of participants in the local IT industry locally and internationally
3.3.3 Policy Strategies & Directives
1. NITDA will work with other arms of government, private organizations and multinational companies to establish technology incubation
programs, start-up communities, ICT clusters and other IT development networks to stimulate the growth of the sector
2. NITDA will work with other arms of government to fund and support university based programs to drive innovation and invention in information technology using existing funds set aside for the purpose and by setting up of special intervention funds as may be necessary
3. NITDA will work with other arms of government and the legislature to support the enactment of other related policies to reduce
bureaucracies associated with doing business in Nigeria as well as other efforts required to make Nigeria desirable as a location for innovation and growth
4. NITDA will work with other arms of government to provide and support platforms that foster the growth and development of participants in the local IT industry and provide visibility for their products and services
5. NITDA will work with other arms of government, private organizations and multinational companies to specifically support social
entrepreneurship start-up companies that are created to address special needs and critical concerns of society
6. NITDA will hold conferences, tradeshows, exhibitions and other
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IT products and services across the economic sub-region, the continent and the globe
7. NITDA will collaborate with SON to develop a quality certification for IT goods and services that meet the local content requirements of this this policy
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3.4 Guidelines for Local Content Development in IT
3.4.1 OverviewThe guidelines set below are recommendations addressed by NITDA to all branches of government & all industry participants. Adherence to these guidelines will ensure that the operations of government and all other stakeholders are in harmony with this policy document in order to contribute to the attainment of the objectives set forth. The guidelines set forward provide principles and standards for dealing with IT local content development. They are consistent with this policy as well as applicable laws and best practice. Furthermore, matters covered by the guidelines may become the subject of further legislation, national law and other international commitments.
3.4.2 Indigenous Firm Recognition
Companies must fulfil certain criteria to benefit fully from the local content development policy and compliance with these guidelines is essential for on-going recognition by NITDA and other agencies.
1. A Nigerian company is one formed and registered in Nigeria under the Companies and Allied Matters Act 1990 with not less than 51% equity shares owned by Nigerians.
2. NITDA encourages MNCs to register their organizations within Nigeria at the Corporate Affairs Commission and maintain actively operating entities in Nigeria.
3. The operating entities for MNCs are 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.
4. OEMs certified by NITDA will be required to recertify every four years. Recertification will be based on the following conditions:
a. OEM must hold and maintain a minimum market capitalization base of two billion Naira only
