News Column

Johnson - Government Is Passionate About Implementing Local Content Guidelines

February 24, 2014

The Minister of Communications Technology, Mrs. Omobola Johnson, spoke with ICT journalists on government's willingness to implement the local content guidelines in the Information Technology (IT) sector, as well as other industry issues, reportsEmma Okonji. Excerpts:

Today Nigeria has a document on local content guidelines for the IT industry. What actually inspired government into this?

Several factors inspired and guided government in developing the local content guidelines for the industry. When the Ministry of Communications Technology was created in 2011, we did a comprehensive assessment of the industry and discovered that even though the industry was doing well in the areas of job creation and nation development, the local companies were not participating much in the growth and development of the country. The industry was dominated by foreign multinational companies. Our belief from our assessment was that the few Nigerian companies that were visible, were only playing at the fringes of the industry. Having discovered these lapses on the part of the Nigerian companies, we decided to setup a committee to design a document for local content in the industry. The essence is to grow and support more Nigerian companies in the ICT sector.

The ICT industry is made up of IT practitioners and the telecommunications and broadcast practitioners. So which section of the industry is the local content guidelines targeting?

The local content guideline is primarily focused on the IT industry, but there are some areas of the document that talked about telecoms, in the areas of SIM cards, and value added services in the telecoms sector. So about 90 per cent of the guidelines is focused on IT, while the remaining 10 per cent is focused on telecoms. The truth is that there is integration that has brought about a thin line between IT and telecoms, such that you cannot discuss telecoms without talking about IT at the same time.

The oil and gas industry has the local content Act that has helped in boosting development in the sector. Is government looking at replicating same in the ICT industry?

Yes government will wish to replicate what is going on in the oil and gas sector in the ICT industry, in terms of local content, but the truth is that before we came up with the local content document, we first seek audience with the Executive Secretary of the Nigerian Content Development and Monitoring Board, Ernest Nwapa. He shared some experiences with us on local content development and advised us on how to go about it. The board started with guidelines, and graduated into law that actually backed up all that they were doing. For us, we are looking at regulation that would be implemented through the IT development agency, the Nigerian Information Technology Development Agency (NITDA). But whether we will graduate into having a law on local content development for the IT sector, is what I do not know as of today, but I think it will really depend on how much progress we are making and how fast we are making that progress.

How would government go about its implementation, in order to sustain it?

The implementation would be carried out through the IT development agency, which is NITDA, and it will set up an office to monitor its implementation. So we need to be careful on this so that this initiative will not be buried prematurely, like most government initiatives in the past. We must guide against its failure because it is strategic and important not only for the IT industry, but also for the country itself. So there would certainly be an office to monitor its implementation.

So what does Nigeria and Nigerians stand to gain from the implementation of local content in the IT industry?

Oh! very tremendous gains would be achieved by Nigeria and Nigerians. One of the major things that the initiative will bring about is to create jobs, and another is to open up opportunities for Nigerian companies to participate in developmental programmes and projects that will make them relevant in the current scheme of things. Again, it will help to increase the size of the IT industry, in relation to Gross Domestic Product (GDP) growth. So if at the end, we get all these things right, Nigeria as a country, will begin to position itself as an ICT hub for Africa, in the area of skills development, capacity building, infrastructure development, and of course Nigeria will become the centre of attraction in ICT development, not only in Africa, but with the rest of the world.

In terms of review, how flexible would the guidelines be?

It is quite flexible, when in it comes to review and amendment in the future, because these were done closely with industry stakeholders that understand the dynamics of the industry. The guidelines were developed in collaboration with industry stakeholders, and I can assure Nigerians that during implementation, if there are things that needed to be changed or adjusted, it would be allowed, because the document is not rigid but flexible. Although certain things could be changed in the course of implementation, but certain things remained unchanged for the good of the industry.

NITDA is a government parastatal that is responsible for IT implementation for the country, but do think it has the capacity to implement local content for the IT sector?

Yes it has the capacity to implement it, even though it has not done it before, because this is the first time we are implementing local content guidelines for the IT industry. Within NITDA, government has to build capacity in terms of monitoring and evaluation of the entire process. Like I said earlier, we will burrow from the Nigerian Oil and Gas industry that had been doing it successfully in the past years. We are going to work closely with them to understudy them. We have both qualitative and quantitative targets that we want to achieve, and the best way to achieve that is to build capacity for implementation and monitoring, and ensure that we have the right skills in NITDA to do this. We will collaborate with the Oil and Gas industry to achieve this.

Recently you gave telecoms companies ultimatum to stop importation of SIM cards. Is this part of the local content initiative, and what is the time frame for the ultimatum?

Yes we gave telecoms operators operating in the country, ultimatum to stop importation of SIM cards because government is aware that the SIM cards could be produced locally in Nigeria if the operators are willing to boost local content in the country. The time frame is two years from the day the campaign was launched, which was in December last year. So by December 2015, we expect all telecoms operators to begin local SIM card manufacturing. We allowed up to two years because in the course of our consultation with the operators, government was made to understand that the operators do place orders on a long term basis and government decided to allow them receive the last batch of orders placed, before they stop further importation.

Again the two years time lag is to enable our local industry to prepare very well and put in place all that is needed for local SIM card production in the country. This is so because they must be able to produce the same quality of SIM cards that were being ordered by the operators. From our own investigation, government is convinced that we have local manufacturers that could produce SIM cards locally in the country. Already, there are local companies that are producing chips for banks, and it is the same technology to produce SIM cards.

Most Nigerian entrepreneurs are skeptical about quality in local manufacturing, be it in SIM cards, computers, mobile phones, software development, and other electronic gadgets. How is government going to ensure quality products in its drive for the implementation of local content guidelines?

Local manufacturing of devices is actually easier doing so in the IT sector than any other sectors in the world. If you take the hardware device for instance, you will discover that there are very few countries in the world that manufacturer devices from the scratch to completion stage. What majority do is assembling. They go to a particular set of manufacturers with specifications and they take the products to their countries to assemble them from their assembling plants. For chip manufacturing, we have about three or four companies in the world that are into it, and other countries go there to manufacture. If we work with the Original Equipment Manufacturers (OEMs) and ensure that they order the right and genuine parts in terms of their specifications, then the country will have no issue with substandard quality, and our entrepreneurs will be rest assured of quality products. Yes it is true we do not have the infrastructure that some foreign countries have, but there is need to support our local OEMs in terms of financing and patronage, which of course will create jobs in the country. I have been using locally produced computer in the last two years and it is serving me well, and in am a heavy consumer of local products. Nigerians should be encouraged to do same.

We have a lot of foreign OEMs in the country doing business of selling their foreign manufactured products in Nigeria, yet they do not have assembling plants in the country. What policies are in place to ensure that they comply with Nigeria's local content initiative?

Yes you are right that the foreign OEMs do not have factories in Nigeria, yet they sell a lot of their products in Nigeria, and that is what government is trying to address with the local content initiative. We commend Rlg Communications from Ghana, for setting up its mobile phone and laptop factories in Osun State, and we encourage other OEMs to do same. But again, government need to create the enabling environment and the incentives for them to come to Nigeria. But the foreign OEMs do not necessary need to set up their factories in Nigeria. What they can also do to boost our local content initiative, is to partner with our local OEMs to produce locally and promote local brands, using their own expertise and resources. We will be happy to see that kind of partnership, where they could produce in Nigeria and sell to other ECOWAS countries from Nigeria, and that makes it very attractive.

Government came up with a policy sometime ago for local OEMs to capitalise with N2 billion. What is the time frame to achieve this, and is the government providing any kind of support for them?

The time frame is 18 months from the date of the campaign launch, and what government is saying is that the local OEMs should look for partners that will help them raise the money. Such partnership could be in the form of merger, just like we had it in the banking industry. The issue is that our local OEMs are playing at the fringes of the same market where the foreign OEMs are in full control. So we need them to grow as well and this can only be achieved through capitalisation and merger. Any company that is coming to set up a factory in Nigeria, must be able to have at least N2 billion for a start, going forward.

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Source: AllAfrica

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