Stakeholders in the Nigerian tech space have said that the issue of forex overshadowed the various tech policies introduced by Bola Tinubu’s administration in the last one year as they struggled to meet forex obligations.
The stakeholders in their review of the administration’s one year said that though some critical policies were introduced in the period, the forex crisis took the shine for tech business, like other businesses in the economy.
This is against the backdrop of the Central Bank of Nigeria’s floating of the exchange rate, which saw the Naira value plummet to almost N2,000 in February this year before picking up again after the apex bank’s direct intervention in the forex market.
Specifically, the founder of Sycamore, a fintech startup, Mr. Babatunde Akin-Moses also noted that CBN’s forex policy had adversely affected fintechs in the last 12 months.
He noted that this led to a significant increase in forex costs for fintechs which have had to cut their forex exposures to stay afloat.
The Chief Commercial Officer of MTN Nigeria, Mr. Modupe Kadri, also told Nairametrics that the forex issue has eroded the value of its capital spending which is fixed in Naira.
A tough year for Nigerian tech industry
Meanwhile, Nigerian startups saw a slowdown in funding in one year of Tinubu’s administration. Although there was a general slowdown in funding for African startups in 2023, Nigeria’s slide from the position to 4th in Africa in terms of funding raised concerns over the country’s economic status.
- According to the analysis of the African startup funding in 2023 released by research outfit, ‘Africa: The Big Deal’, Nigerian startups raised a total of $410 million, less than half of what they raised in 2022 and 2021.
- However, a double deal by one of the Nigerian startups, Moove, put Nigeria ahead again in Africa in Q1 2024, although the funding drought continued for most of the country’s startups. Moove secured a total of $110 million in two separate deals to account for 24% of African startup funding in Q1 2024.
On a not-too-palatable development for the Nigerian tech industry, Microsoft shut down its Africa Development Centre in Nigeria earlier this month, which led to the loss of jobs for more than 200 Nigerian Engineers working in the facility.
Although reports suggest that the shutdown was due to the tough conditions in the operating environment, Microsoft said it was part of its “organizational and workforce adjustments.”
The center based in Lagos was opened in 2022 as part of Microsoft’s push to deliver high-end engineering and innovation solutions for the company.
In what could be the silver lining for the tech economy in the first year of the administration, ICT has maintained steady growth in contribution to the country’s Gross Domestic Product (GDP) over the last two quarters.
- In Q4 2023, data from the National Bureau of Statistics (NBS) revealed that ICT contributed 16.66% to Nigeria’s real Gross Domestic Product (GDP) in Q4 2023, an increase in contribution over 16.18% recorded in Q3 2023.
- Data for Q1 2024 just released also indicated a further growth in ICT contribution to the country’s GDP as the sector added 17.89% in real terms.
Tech policies at a glance
A look at the activities of the Ministry of Communications, Innovation and Digital Economy, which supervises the tech industry, shows that the industry Ministry has introduced a number of policies in the last 12 months to drive tech growth. These include:
- The launch of the 3,000,000 Technical Talent (3MTT) initiative aimed at building Nigeria’s technical talent backbone to power our digital economy and position Nigeria as a net talent exporter. The project touches on President Tinubu’s promised 1 million tech jobs in its first two years.
- We are launching of the Fourth Industrial Revolution Technology Application (4|RTA) to leverage technology for sustainable development.
- The launch of the Startup Support and Engagement Portal, streamlining registration for startups and innovation hubs.
- The release of White Papers on the National Al Strategy, steering the Al revolution towards achieving national goals around job creation, social inclusion, and sustainable development.
- The launch of ‘Project 774LG Connectivity’, designed to address limited internet and digital access by connecting all 774 Local Government secretariats across Nigeria to the internet.
- FEC approval for the conversion of an existing property of the Federal Government in San Francisco, California, USA, to a Nigerian Digital Technology Exchange Programme Hub (Nigeria Startup House).
- Launching of a Special-purpose Vehicle to support the delivery of an additional 90,000 km of fiber-optic cable, complementing Nigeria’s existing connectivity infrastructure and delivering a stronger national backbone for universal access to the internet across the country.
No impact yet
However, analyzing the tech policies of the administration and its impacts on the tech industry, the founder of Sycamore, a fintech startup, Mr. Babatunde Akin-Moses, said everything that has been done was laying the groundwork for the future and has not had an immediate effect yet.
“We have seen initiatives such as the 3MTT; the project 774, which plans to connect all Nigerian Local Governments to fast internet services, and the AI positioning of Nigeria in the global scape, from the Office of the Minister of Communication, Innovation and Digital Economy.
“The three initiatives are great and foundational improvements that need to happen. The thing is, investment in human capital and backbone infrastructure will take a while to implement and manifest outwardly,” he said.
A Science, Technology, and Innovation (STI) Policy Advisor and Founder of Jidaw System, Mr. Jide Awe, believes the 3MTT has been the most visible tech policy of the Bola Tinubu administration so far. He, however, also pointed out that the impacts of the policy will take time to manifest.
“The 3MTT initiative is certainly the most visible program or policy of this administration so far. This is because training Nigerian youths in important tech skills relevant to the digital economy, locally and globally, will harness Nigeria’s massive youth potential.
“However, we can only evaluate the program based on its actual long-term impact on job creation, economic diversification, and entrepreneurship and innovation in Nigeria. It takes time for tech policies of this nature to show significant impact. We should, in the next few years, look at jobs created, businesses created, new products and services developed, the impact on the startup ecosystem, skills gap reduction and global competitiveness,” he said.
Unaddressed challenges
The Jidaw founder observed that despite the promises by the administration to address critical challenges facing the tech industry, they have not done anything in that regard in one year.
According to him, the high cost of Right of Way is still a major obstacle to telecom infrastructure deployment in the country and the government has not done anything to address it.
“Extortionist Right of Way charges, multiple taxation, insecurity of telecom infrastructure, the indiscriminate shutting down of telecommunication sites, and bureaucratic bottlenecks continue to hinder business development for telecom companies. This, in turn, slows down infrastructure development and technological adoption. Making telecoms a critical national infrastructure is long overdue to protect infrastructure investments,” he said.
The President of the National Association of Telecoms Subscribers (NATCOMS), Mr Deolu Ogunbanjo, shared a similar sentiment, noting that while the government has come up with new initiatives to drive the growth of the ICT industry, many of the challenges such as multiple taxation, high cost of Right of Way charges are yet to be addressed.
He, however, noted that the administration did well by appointing someone with Knowledge of the tech industry in the person of Dr. Bosun Tijani as the Minister of Communications, Innovation, and Digital Economy. (Nairametrics)
