IT LOCAL CONTENT ANALYTICS: Past, Present and Future

1. IT LOCAL CONTENT ANALYTICS:Past, Present and Future BY S. A. Bello KayafasKonsult

2. There is need for all stakeholders in the IT industry to understand and agree on what constitutes local content • It is also necessary for us to develop a metric for determining the proportion if local content a product has • What do we mean when we say that Mercedes is a German car or Peugeot is a french car? Is the Peugeot 504 that is assembled in Kaduna no a Nigerian car.

3. Every product whether tangible or intangible has a monetary value attached to it • In the past, materials, labour and semi automatic production machines were the main factors of production • In the present knowledge-based economy, the components that make up the cost of a product have changed.

4. Factors of production- Modern concepts • Software component: the composition of most ICT products are now about 50 to 70 per cent software by value • Innovative skills and intellectual property rights have become major factors of production • Product design skills- ability to make products that meet tight specifications • Mass production techniques (Robotics and automation)

5. ICT PRODUCT VALUE CHAIN • TASK % of product cost • Intellectual property (R&D) 15% • Product design 15% • Cost of component parts(+ firmware) 40% • Production machine cost 10% • Final assembly 5% • Testing and quality control 10% • Administrative overhead 5%

7. SOFTWARE PRODUCTS- LOCAL CONTENT VALUE CHAIN • ACTIVITY RELATIVE VALUE • PRE-IMPLEMENTATION 40% • Problem specification • Program design • Algorithm selection • IMPLEMEMTATION 20% Coding and debugging

8. POST IMPLEMENTATION 40% Testing and verification documentation maintenance TOTAL 100%

9. DEFINITION OF LOCAL CONTENT: • The financial equivalent of local value added to the development, design, fabrication and assembling of ICT products as a proportion of the ex-factory cost or production cost. • AND • the proportion of indigenous manpower input to the provision of ICT services.

10. PAST POLICIES ON LOCAL CONTENT • Resellers, Sole representative, Distributor to major overseas manufacturers • Import substitution policy of the 70’s has become outdated and has failed Nigeria • Local car assembly plants in Lagos(Volkswagen), Ibadan(leyland) Bauchi( Steyr) Mercedes (Enugu) have all gone bankrupt

11. Presently, Nigeria has 5 Computer assembly plants • The plants only contribute 10% of product value ie 10% local content • The 5 computer assembly plant may in the near future follow the footsteps of the vehicle assembly plants if care is not taken

12. WAY FORWARD • We need a more aggressive policy on local content • Local assembly of CKD parts is not sustainable on the long run unless it is accompanied by a policy of continuous incremental improvement in local content through indegenous R&D effort.

13. NEW INDUSTRIAL POLICY • A minimum of 50% local content is required for long term sustainability and profitability • Indigenous companies and manufacturers must participate actively in all segments of the ICT product value chain Local R&D Local product development Local product design Local development of mass production technology