The downturn in the economy occasioned by the slump in crude oil prices is taking its toll on all sectors. It is compounded by the free fall of the naira against major currencies, especially the dollar, and the policy that shuts access to foreign exchange (forex) from the Central Bank of Nigeria (CBN). LUCAS AJANAKU reports on their crippling impact on the information communications technology (ICT) sector.
The continuous slide of the naira, to less than 50 per cent of its value since April 2015 is spelling serious technological development concerns and consequence for Nigeria. It is such a worrying moment for businesses, technology and telecom firms operating in Nigeria.
Although many economists and financial analysts have, from different academic perspectives, debated the effects and impact of the free-falling currency on the country, it appears only a few have considered the enormous loss in naira power and the dire consequence on the country’s technological development.
The treacherous slip of the currency down the slope and alley of technology stagnancy or backwardness is, to state the least, the resulting disaster that awaits technology stakeholders at all levels of the economy. The issue, if not checked quickly, may exacerbate and further send the country backwards from what is already an ‘eggshell’ fragile technology development, onto a banana skin retrogression which could make other nations leave Nigeria further way behind.
A Senior Manager at Accenture, Michael Ogunjobi, said the precarious state of the economy in recent months, which many commentators attribute to the aftermath of maladministration by past governments, is almost unprecedented. The free-fall of the Naira has definitely surpassed the currency devaluation shocks of the late 1980s – 2010, which fuelled the exodus of thousands of young, intelligent and enterprising human resources in droves for better lives, new hope and new beginnings to the Western world.
In between the ‘mass exodus’ of the last two to three decades, the world has witnessed the advent, rise and boom of the internet technology which had turned out to be a blessing to a large number of Nigerians in the Diaspora who seized the opportunity to retrain into new careers in IT.
Over the last two decades, Nigerians living in the West have become one of the best sets of people that have great technology expertise, second only to Asians.
Ogunjobi said while many Nigerian technology experts and professionals in the Diaspora have done very well for themselves and for their adopted countries, most were no longer contemplating return to motherland until about five years ago when the country began to open its doors for their return through the attraction of fairly stable exchange rate and businesses’ willingness to pay fairly decent wages in return for the expertise provided, which made returning home a bit more attractive
The availability of such indigenous experts in the country, no doubt, amplified implementation and technology delivery success rates which were the values they gave in return. To a large degree, businesses, local resources and Nigeria as a whole benefited from the arrangement that saw indigenous professionals back into the country.
“No doubt Nigeria has made more strides in the technology space in the last five years than the previous 15 years, largely due to the ‘Returnees’ coming back home with cutting edge skills, knowledge and enhanced work ethics, which to a large extent was made easier by the equilibrium struck between knowledge and reward. However, this stability is now being threatened by the disruption that has been rocking naira since last year, 2015. Recent decisions made by the government to stem the foreign exchange outflow from the economy, reduced crude oil prices and the alleged misappropriation of funds are few of the many factors causing unwillingness of technology professionals to return to Nigeria in the recent months. And, where they are willing to come to Nigeria, they are asking for 200 per cent+ of the usual 2015 earnings and in many cases demand to be paid in foreign currencies, which employers are finding harder to come by,” he said.
Arguably, the economic cycle in which Nigeria finds herself has yielded more cons than pros such that business and technology development have been slowed down considerably as the exchange rate saga plays out. More and more technology professionals are returning to Europe and America to ply their trade as the loss of naira value is no longer justifying their stay in the country nor able to maintain their life styles. In a number of cases, many of them have immediate families living abroad and therefore have foreign exchange commitments which cannot be met on their current naira income. For example, a technology professional engaged in April 2015 when the rate was $1: N150 is now effectively earning half of the wage in 2016 when unofficial rate from banks is $1: N320. With mortgage, education and other commitment abroad, the professional may be left with no option but contemplate a return to a place where he or she can meet her/his obligations.
Expanding ICT infrastrcuture becomes a daunting challenge in this case.
IHS Co-Founder and Interim CEO, Mohamad Darwish, said telecoms service quality will continue to be a challenged until the yawning gap between available base transimssion stations(BTS) and the required number is bridged.
He also said lack of equipment is a factor as technology transits from 2G, 3G and 4G, adding that studies have shown that there is a deficit of some 20,000 BTS in the country. He also said that investment is still needed to bridge existing gaps in the industry.
All these equipment could only be imported into the country with forex.
Meanwhile, in order to achieve the goals of the National Broadband Plan (NBP) and the three cardinal objectives of President Muhammdau Buhari’s administration of job creation, ant-graft war and national security, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof Umar Garba Danbatta, has urged the Federal Government to consider relaxing its forex policy for telecommunication companies in the country so that they can expand current capacity.
Danbatta said the call was necessary in view of the fact that Nigeria is currently at the bottom 10 of the world in terms of infrastructure development, and hence the need for special incentives for the telecoms firms “to tackle our infrastructure deficit”.
Ogunjobi lamented that unfortunately, ‘home coming’ dream of many technology professionals willing to make a difference is being put on hold, rather the ones that came in earlier are returning to their adopted countries, just as it was in the 1990s and early 2000s. Needless to say that recruiting technology professionals from Europe or United States (U.S.) in the last 12 months has been painful and almost impossible or where this has been achievable, the brave or selfless professionals recruited are easily getting distracted and saddened at the rate at which their agreed remuneration gets eroded by the fall in naira value. It is getting to a stage where most are requesting their employers to hedge their income against stable currencies, but the conundrum is that most employers do not seem to have foreign exchange to pay the professionals for their services unless they turn to the black market.
Delivering technology is becoming more challenging and very expensive once again as skilled technologists are becoming rarer in Nigeria, by the day. Even the local resources that were shadow-learning or understudying ‘Returnees’ are beginning to find their out of the country for pastures anew. There is a new level of attrition amongst technology personnel, especially those with less than five years of experience, most of whom either find ways to travel overseas or hop to another local employer to double their earnings.
“Yes, many are beginning to head for the exit door, driven with the fear of tomorrow and focus on themselves as against the bigger picture, the development of Nigeria. But can anyone blame them? The biggest winners in the technology/currency quagmire are the Western countries who open their doors to skillful Nigerians and provide them with the platform and reward for greater productivity in their countries. And the biggest loser is Nigeria. Certainly, Nigeria need these experts to develop her potentials,” Ogunjobi said.
