IT LOCAL CONTENT ANALYTICS: Past, Present and Future BY S. A. Bello Kayafas Konsult

IT LOCAL CONTENT ANALYTICS:Past, Present and Future

BYS. A. Bello

Kayafas Konsult

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.

• 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.

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)

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%

SOFTWARE PRODUCTS- LOCAL CONTENT VALUE CHAIN

• ACTIVITY RELATIVE VALUE• PRE-IMPLEMENTATION 40%• Problem specification• Program design• Algorithm selection

• IMPLEMEMTATION 20% Coding and debugging

• POST IMPLEMENTATION 40% Testing and verification documentation maintenance TOTAL 100%

1) 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.

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• Import substitution policy of the 70’s has become outdated and has failed Nigeria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

• 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

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.

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