Enormous Potential for Nigerian Software Industry

Nigeria has an unfortunate global reputation as the home of 419 scams. A typical 419 scam involves sending emails to people around the world in order to extort money from them. Online scams may show an unexpected technical sophistication for a country associated with poverty, but are a sign that some of Nigeria’s plentiful talents are being turned to illegal activities rather than building legitimate businesses.

Many argue that Nigeria is missing its potential to become an African legal software powerhouse. The Institute of Software Practitioners of Nigeria said the country’s annual consumption of software reached US $900 million in 2006, making it possibly Africa’s biggest market.

“Nigeria stands a good chance of dominating both the local and West African diaspora in a thriving global software market,” it argues.

Production of computer software is a major income earner for countries like the United States and India.

Many argue that Nigeria has enormous potential, if it can address some common problems: an absence of software quality assurance, poor investment in software development, poor product standards and a lack of proper documentation. In short: if Nigeria’s software industry takes on board global best practice, then it is sitting on a goldmine of legitimate business opportunities.

Chris Uwaje, president of the Institute of Software Practitioners of Nigeria (ISPON), told Business Day that the country’s software technology, if well retooled and strategically positioned for global competitiveness, could earn about US $10 billion annually from foreign software exchange.

He argued that developing the software industry would have many benefits for the population as a whole.

“Software has … become and will remain one of the fastest growing industries with power to enrich, and sustain national economies,” Uwaje said.

Some estimates put the world software industry and associated markets at US $1,300 billion, with 90 percent of the world’s software exports coming from the United States and Europe. Outside the U.S., U.K., Germany and Japan, the new and emerging countries within the software industry are India and China, and to a lesser extent Singapore and Malaysia.

According to market researcher DataMonitor, the worldwide software industry grew by 6.5 percent between 2007 and 2008.

DataMonitor forecasts that in 2013, the global software market alone will have a value of US $ 457 billion, an increase of 50.5 percent since 2008 (Datamonitor’s Software: Global Industry Guide).

Africa has a high proportion of entrepreneurs because people have next to no social supports to fall back on and need to do business to survive. Nigeria’s large youth population – 43.2 percent of the total – could be the driver of this new economy if used right.

Nigeria mostly imports software solutions despite having an extensive capacity in software development. If developed well, software could surpass oil as a revenue generator for the country.

According to A Profile of Nigeria’s Software Industry by H. Abimbola Soriyan and Richard Heeks, “A typical software company (in Nigeria) had between 11 and 50 customers (the average was 36 though a few firms involved with package installation had several thousand). There was a strong concentration among these customers. Almost all were private sector … There was a surprising lack of government/public sector organizations as customers (reflected above in the limited number of firms found in Abuja).”

Jimson Olufuye, president of the Information Technology Association of Nigeria (ITAN), believes that more needs to be done to support the software developers. And while on paper there is strong support for this sector in information technology policy, “In addition, we need to establish more IT parks with appropriate policies on infrastructure, human resources, incentives and business plan.”

Wahab Sarumi, chief executive officer of Wadof Software Consulting, explains the problem: “Indigenous software developers are an endangered species, abandoned by the government, neglected by its own people and bullied by the poachers from India, to whom Nigerian businesses rush to buy software applications to solve local business problems.”

Already, Nigerian software firms are offering existing off-the-shelf software that they custom package with local services. This recognizes software made in advanced countries isn’t entirely right for developing countries: and this is where business opportunities await for software developers.

But the key to success, at the end of the day, is to be the best solution on offer for the right price. James Agada, managing director of ExpertEdge Limited, believes people buy the best software for the task and don’t care where it comes from.

“If you want to sell software, the buyer does not buy the software alone, he buys the software, buys capacity to support the software, buys your capacity to improve on the software, he buys what he assumes is your mastery of the domain the software … the software must be able to compete favourably with its competitors.”

By David South, Development Challenges, South-South Solutions

Published: February 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Nollywood: Booming Nigerian Film Industry

The digital revolution in filmmaking over the last decade has given birth to an African success story: Nollywood – Nigeria’s answer to Hollywood, uses low-cost digital filmmaking and editing to tell local stories — in the process making money and creating thousands of jobs.

This do-it-yourself (DIY), straight-to-DVD and video market has in just 13 years ballooned into a US $250 million-a-year industry employing thousands of people. In terms of the number of films produced each year, Nollywood is now in third place behind India’s Bollywood and America’s Hollywood. Despite rampant pirating of DVDs and poor copyright controls, directors, producers, actors, stars, vendors and technicians are all making a living in this fast-growing industry.

The power of creative industries to create jobs and wealth has been a focus of UNESCO, through its Global Alliance for Cultural Diversity. UNESCO has been in the forefront in helping African countries re-shape their policies to take cultural industries into consideration. The promotion of cultural industries also has been incorporated into the New Partnership for Africa’s Development (NEPAD).

What is particularly attractive about Nollywood to the poor in the South is its rough-and-ready approach to filmmaking: combining low-cost digital cameras and film editing software on personal computers, with small budgets and fast turn-around times. Films are made on location using local people. These factors make getting into filmmaking accessible and within reach of more people.

Nollywood grew out of frustration, necessity and crisis: in the late 1980s and early 1990s, Nigerian cities became crime hotbeds. People were terrified to go out on the streets, and this led to the closing down of many movie theatres. Desperate for entertainment at home – and unsatisfied with foreign imports from India and the West – Nigerians turned to telling their own stories to stave off the boredom of staying in.

The film credited with sparking off the industry is 1992’s Living in Bondage – a huge financial hit credited with raising the level of professionalism and production values in Nigerian cinema.

Now, between 500 and 1,000 feature-length movies are made each year, selling well across the continent of Africa. Average productions take 10 days and cost around US $15,000 (www.thisisnollywood.com). Nollywood stars are famous throughout Africa – and Nigeria culturally dominates West Africa just as the US does the world. It is estimated there are 300 producers and that 30 titles go to shops and market stalls every week. On average, a film sells 50,000 copies: a hit will sell several hundred thousand. With each DVD costing around US $2, it is affordable to most Nigerians and very profitable for the producers.

“These are stories about Africa, not someone else’s,” well-known actor Joke Silva told the Christian Science Monitor.

Focused on Africa, the films’ themes revolve around AIDS, corruption, women’s rights, the occult, crooked cops and prostitution. They do so well because they speak directly to the lives of slum-dwellers and rural villagers.

“We are telling our own stories in our way, our Nigerian way, African way,” said director Bond Emeruwa. “I cannot tell the white man’s story. I don’t know what his story is all about. He tells his story in his movies. I want him to see my stories too.”

The big brands – Sony, Panasonic, JVC and Canon – all produce cameras capable of high-definition digital filmmaking and these have become the staple tools of this filmmaking revolution.

More and more, the films are capitalising on the large African diaspora around the world, on top of Africa’s large internal market. And this is offering a step-up into the global marketplace for Nigerian directors and producers.

The Nollywood phenomemon has been documented in the documentary This is Nollywood, directed by Franco Sacchi, a teacher from the Center of Digital Imaging Arts at Boston University.

The prospects for the industry are only looking up: the Nigeria in the Movies project has been launched to help grow the industry, establish standards, improve distribution and broaden its international appeal and awareness. It also offers filmmaking grants for neophyte filmmakers.

Of course, filmmaking can be a tricky business: authorities in largely Muslim northern Nigeria have imposed 32 restrictions on the local film industry — nicknamed “Kannywood” after the city of Kano. A six-month ban lost the industry US $29 million and put thousands out of work: a sign of the economic importance of this DIY filmmaking business. The message is clear: filmmakers need to be sensitive to the cultural norms of the communities in which they work.

Kannywood, started in 1992, has 268 production companies and 40 editing studios, employing over 14,000 people.

Adim Williams is one Nigerian director who is getting an international audience. He spends about US $40,000 on films that take two weeks to shoot. He has already secured an American release of a comedy, Joshua. Another director, Tunde Kelani, is regularly featured at international film festivals, where Nollywood screenings are more common.

And some, like young director Jeta Amata, believe Nollywood’s cheap, fast-production, DIY approach has a lot to teach Hollywood, with its expensive filmmaking and ponderous production cycles.

By David South, Development Challenges, South-South Solutions

Published: March 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Cited in Innovation Africa: Emerging Hubs of Excellence edited by Olugbenga Adesida, Geci Karuri-Sebina, Joao Resende-Santos (Emerald Group Publishing, 2016)

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Growing a Southern Brand to Global Success: The Olam Story

Most people haven’t heard of Olam International, but they know the brands they work for and they more than likely eat their produce. The story of Olam (http://www.olamonline.com) – a global food supply company in ‘agri-products’ that got its start in Nigeria – shows how a Southern brand can grow and go global, and overcome the difficulties of cross-border trade.

Olam supplies well-known global food brands including Cadbury (chocolate), Nestle, Lavazza (coffee), Mars (chocolate), Tchibo and Planters (peanuts).

Olam not only survived its startup in Nigeria, it has thrived, trading around Africa and across the globe, becoming a major supplier to the world’s top food brands.

The quantity of agri-products harvested in the world is 5.2 billion metric tonnes. In that market, Olam is a significant producer of cashews, peanuts, spices, beans, coffee, cocoa, sheanuts, packaged foods, rice, wheat, barley, sugar, cotton, wood, and rubber. It is already the world’s largest supplier of cashew nuts and sesame nuts and in the top three for peanuts. Olam’s cashew business in Africa provides work for 17,000 people, 95 percent of whom are women.

Olam also uses its success to play a critical role in securing the world’s food supply and has specialized in meeting the food needs of the world’s rapidly growing population, especially in China and India. Between 2001 and 2007, annual increases in the global consumption of agricultural commodities were larger than during the 1980s and 1990s. Higher incomes are leading to higher consumption of proteins like meat. And as meat demand rises, so does the demand for grain and protein feeds to produce the meat. It takes two kilograms of grain to produce one kilogram of chicken, four kilograms of produce for one kilogram of pork, and eight kilograms of produce for one kilogram of beef.

Chris Brett, Olam’s senior vice president and head of corporate social responsibility and sustainability, said the company tries to blend business success with wider social goals.

“We are one of the few businesses investing in rural environments and am tackling the problem of urbanization,” said Brett in Olam’s London office – the company’s global headquarters is in Singapore.

In 2008, it won the World Business Development Award for its contribution to achieving the Millennium Development Goals (MDGs) (http://www.un.org/millenniumgoals/).

Olam also has been recognized for its contribution to global food security. By providing farmers with credit to help build their communities, it has also been able to revive declining rural economies and help stem the outflow of farmers to the big cities and urban slums.

“Many countries are afraid to lend to farmers,” Brett said. “We gather the farmers together in groups of 500 and Olam manages the loan while a local bank receives the money. Defaults have been low and farmers are building up a credit rating. In this way, farming becomes a business not just a subsistence existence.”

The dramatic changes taking place in African countries – especially rapid urbanization that has made the continent home to 25 of the world’s fastest growing cities (International Institute for Environment and Development) – means there is an urgent need to increase food production and stabilize rural economies to support farming.

Olam International, started in 1989 in Nigeria by its India-born CEO Sonny George Verghese has many lessons for any Southern entrepreneurs who have their sights set high.

After developing its skills in exporting cashew nuts from Nigeria, Olam moved into cotton, cocoa and sheanuts. From 1993 to 1995, the company explored ways of taking their skills into other countries and different products. It was a period of rapid expansion into other African countries including Benin, Togo, Ghana, Cote d’Ivoire, Burkina Faso and Senegal.

Olam now operates in 26 African countries.

There has been a renaissance in South-South trade in recent years before the current economic crisis, growing by an average of 13 percent per year between 1995 and 2007. By 2007, South-South trade made up 20 percent of world trade.

Olam started with one product, got its supply right, and then started looking around and seeing what other products and services it could offer, applying already-tested expertise and supply skills – what the company calls the ‘Olam DNA’.

Olam claims its success has come from building strong relationships with farmers to guarantee high standards for the food products. The company does this by tightly tracking its stock and its quality. Olam then uses the information to analyze risks to the supply network. The company also keeps both warehouses and field managers close to the farmers. Olam estimates 65 percent of its profit comes from managing the journey from farmer’s field to factory gate.

Its selling point to customers is the ability to guarantee the entire journey from farmer’s field to factory gate, taking on all the risk and stress for ensuring the product is of the right standard and delivered on time.

Its niche is to provide the food products required by some of the world’s top food brands. The company has grown from just one product in Nigeria and two employees in 1989, to directly employing over 10,000 people worldwide and supplying 20 products in 60 countries, according to Brett. He says the company, which had a total 2008 turnover of US $5.75 billion, was “born out of Africa.”

Brett says the company is now “investing heavily in Africa in processing and distribution centres” – proof that a success story feeds back into more success and investment. It has been able to use its profits to go back and buy up failing businesses and former state-run enterprises, and modernize them. Olam now grows the food, processes it, and transports it to market.

Olam actively works with international donors, global NGOs like Technoserve (farmer business development), WWF (environmental impact of supply chain), and the Bill and Melinda Gates Foundation (cocoa and cashew farmers).

Olam, however, has received criticisms for its past practices. The global environmental group Greenpeace attacked its logging in the Democratic Republic of Congo (DRC) (http://www.greenpeace.org.uk/tags/olam), and the International Finance Corporation (IFC) divested its holdings from Olam for it trading illegally cut timber.

Olam and the Gates Foundation project are working with 200,000 cocoa farmers in West Africa to double their incomes. In Ghana, cocoa farming has become synonymous with poverty and perceived as an occupation of last resort. The work force is rapidly aging and the industry will die out if it doesn’t become more profitable and attractive to young people.

“We want the farmers to be profitable, the transporters to be profitable,” Brett said. “We believe a supply chain does not work if one player takes too much.”

And what advice does Olam have for budding food producers and growers? “Catchy, simple brands work. Our Mama Mia pasta caught the wave of the Abba revival.”

“Our Tasty Tom brand became very popular in Africa so we extended the brand into other products than just tomato paste. You reduce the cost of advertising by extending the brand name.”

“We feel SMEs (small, medium enterprises) growth is critical because it would give us more support. If more people invested in SMEs, we would have more people to do business with. We want to be able to make deals: they could be entrepreneurs.

“If you can add extra value it costs nothing but time.”

Brett advises budding SMEs: “It’s all about quality: trust and shared business ethics like formal contracts. When you have those, the bigger brands will give you support.”

By David South, Development Challenges, South-South Solutions

Published: October 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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