Nigeria, with the largest population, economy and consumer market in a rising Africa, shows great market opportunities for those that wish to tap into Africa’s imminent boom in consumer spending. The country is expected to have the world’s second fastest-growing middle class, which are to reach 15 million households in 2030, and with the young urban population Nigeria provides a vibrant telecom scene. The number of smartphone users is expected to increase to 35 million by 2017. The Nigerian economy showed strong growth up on till 2015, when the growth slowed down due to the effects of the fall in the global price of crude oil, leading the authorities to adopt an expansionary 2016 budget with the aim to stimulate the economy. This has affected the hardware and mobile sales, the two main drivers of growth in the ICT sector, as it has decreased both the population, corporate and the governmental purchase power. Regulatory figures indicates that the mobile sector contracted by 1.5 % in the first quarter of 2016 and the hardware segment with 29.5 % in US dollar terms in 2015. Even though the mobile sector contracted, the mobile app usage is currently growing at an exponential rate and the ICT in general still holds 8.5 % of the national GDP. Even though the outlook for 2016 is a slow recovery of the ICT market, BMI forecasts suggest that 22% of the Nigerian households, a number that will increase to 34% in 2020, have an annual income sufficient to have the purchasing power for imported computer hardware. A strong governmental aim in combination with initiatives from private investors suggests that broadband internet connections will rise steadily, from an estimated 15.49 million at the end of 2015 to a forecast of 38.79 million at the end of 2020. Key growth factors of the mobile segment such as rapid network expansion to undeserved areas, promotional offers, economic growth, rising income levels and future subscriber growth opportunities shows potential for resumed growth, although caution is advised as the immature IT marker is vulnerable to the volatility of the Naira.

MARKET INITIATIVES
Nigeria’s consumer market, with its great potential, has attracted significant investment both from private and public sectors in a wide range of industries. One example of this are local and international retailers such as SPAR and Shoprite who has announced plans to open ‘hundreds’ of stores across Nigeria within the next few years. This will exercise pressure for modernization in order to spur the adoption of solutions for effective customer management and efficient service to gain competitive advantages. Parallel with this there is an ongoing development towards increased e-commerce as network infrastructure is improved. With 300,000 online orders being made on daily basis Nigeria’s e-commerce market is valued at around 10 billion USD a year. This increase in e-commerce will be an important demand driver for IT solutions such as transaction processing and online security systems. Financial services, retail, and aviation sectors are therefor expected to ramp up their IT investments to remain competitive.
This development is very much aligned with the governments’ strong will to develop e-services, which constitute opportunities for foreign players since there is deficiency of skilled domestic workforce in these areas. These services include e-government, cloud computing, e-healthcare, e-learning, e-agriculture, e-education, e-commerce, m-payment and services in charge of fighting cybercrime. There is also a growing demand for mobile enabled high-definition video, gaming services and internet based television in the middle-class market segment. Whereas the country may lack domestic skills in the development of e-services, the production of end user devices has remained stable with five PC assembly plants in Nigeria and a total production of 130,000 units, which indicates that 30% of all PCs sold in Nigeria are assembled in the country.
The Nigerian government is spurring the development of a stronger ICT sector by, for example, providing tax incentives and seed capital to ICT startups, a 120% tax deduction for R/D expenses incurred by ICT training companies and 5 years import duty waiver on computer components used for assembly of hardware. Apart from the government’s willingness to invest, there is also an expected increase of IT spending in Nigeria’s telecom sector. The telecom sector has shown strong subscriptions and value growth since the liberalisation of the market in 1999 and telecoms operators are presently the biggest users of BPO services in Nigeria.

Nigeria is still virgin land for IT Sectors. Nigeria and west Central Africa needs lot of integration of Information Technology in their traditional standard operating procedures. Now we are in Era of Automation and Cloud which is making enterprise level operation easy and provide better control. As Nigeria can adopt South Africa and Kenya ICT model to grow its economy which will bring lot of employment to young Nigerians.

 

By Ajay Tripathi

ajay.tripathi@techlinkng.com

References www.business-sweden.se

malak.sekkat@business-sweden.se

 

 

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