Role Of Vendor Policy In Value Addition In Software Ecosystem

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Raymond Ogbu
Raymond Ogbu

A policy according to English dictionary is a plan of action adopted or pursued by an individual, government, party or business establishment for the smooth running of its activities. Policies are made and adopted by an establishment to guide its operations or change the modus of operation of such organization for effectiveness.

The National Office for Technology Acquisition and Promotion (NOTAP), a federal establishment with the statutory mandate of regulating the inflow of foreign technology through the registration of technology transfer agreements in 2012, initiated a policy known as Local Vendor Policy to promote indigenous software development in Nigeria. In the cause of executing her mandates, NOTAP discovered that out of every 10 technology agreements registered, 7 were on software sector with huge amount of money leaving the country as licensing fees. 

This worrisome situation necessitated NOTAP as a regulatory body to institute a policy framework that would encourage indigenous software development to reduce the over dependence on foreign software providers. The policy stipulates that before any agreement on software licensing is concluded in NOTAP, the component of technology transfer which entails involvement of an indigenous IT company for deployment and maintenance of the software must be guaranteed. This policy is aimed at blocking financial leakages in the country’s software industry, while saving huge sums of forex for the country as well as building the competencies and financial strength of the local software companies. 

According to the director-general of NOTAP, Dr. DanAzumi Ibrahim, the policy was designed to adequately build the capacity of local IT vendors by ensuring their involvement in the deployment and maintenance of foreign software that are licensed in Nigeria. NOTAP in 2017 revealed that the cost of licensing foreign software in Nigeria varied between $10 million and $100 million, depending on the capacity and specification of the software.

However, the software is expected to be maintained yearly at an annual technical service (ATS) fee of between 12 per cent and 23 per cent of the licensing fee, while 40 per cent of every amount paid to the foreign software company as ATS goes to the local vendors that were involved in the deployment and maintenance of the software. This according to available records in NOTAP has started benefiting many indigenous IT vendors. The agency in furtherance of its resolve to promote and strengthen the IT sector in Nigeria and reduce foreign software dominance in the Nigeria economy, in collaboration with the National Information Technology Development Agency (NITDA) inaugurated a national software think tank (NSOFT) in 2017 to fashion out a clear ICT development roadmap for the country. 

According to the coordinator of NSOFT, Mr. Christ Uwaje, NSOFT is a convergence of Information and Communication Technology (ICT) expert group set up by NOTAP with the main thrust to advance five-year strategic plans to encourage adaptation of indigenous software for the security and growth of the economy, build commensurate capabilities and capacities to alleviate the critical challenges of the indigenous software ecosystem and provide formidable roadmap for the advancement, sustainable development and competitiveness of software in Nigeria.

The introduction of the Local Vendor Policy in Nigeria is now helping in mitigating the influx and dominance of foreign software in the country. The policy, which is directly under the supervision of NOTAP, is aimed at bringing sanity into the sub-sector, curbing capital flights, and encouraging local players. “We have passion to support the development of home-grown technology. Nigeria was hitherto loosing huge amount of money to foreign countries through licensing fees of foreign software, but we have to change the narrative through the Local Vendor Policy” DG-NOTAP said.

In a related development, the president, Association of Telecom Companies of Nigeria (ATCON), Mr. Olusola Teniola, in a presentation at the 2020 programme of (ATCON) said: “Local software development needs government protection through policy formulation and implementation. We need local content development protection to drive local software. We wish to appreciate NOTAP for it has taken the bold and fruitful steps to build the trust and confidence of the local vendors. Indigenous software developers in Nigeria have the requisite skills to solve software challenges of the country but Nigerians especially the banking industry who are the major consumers of software are yet to build the confidence in local software providers. NOTAP should continue with the implementation of the policy to ensure speedy development of the sector in Nigeria is maintained.

 The director-general of the National Information and Technology Development Agency (NITDA), Dr. Isa Ali Ibrahim, said importation of various Information and Communication Technology (ICT) products and services was costing Nigeria on a yearly basis over $2.8 billion. These ICT goods include telecommunication, audio and video, computer and related equipment, electronic components etc. He revealed that out of the $2.8 billion, almost $1 billion or above four per cent of the sum was expended on importation of software in 2017 which, according to him, was inimical to local content growth in the country. “We are committed to reverse this trend of uncontrolled inflow of foreign software to the detriment of our own local software. We seek to identify, strengthen and promote our indigenous software as an alternative to the foreign software that currently dominates our ICT sector. After all, fact and figures at our disposal suggest that the local software alternatives are performing well at much cheaper cost,” he pointed out.

According to former deputy governor of Delta State, Prof Amos Utuama, software technology is the driving force of most human endeavour and a country that wants to develop technologically must engender a strategic policy that will stimulate the growth of ICT sector. Utuama said coding or programming is an essential element of software engineering that has become a 21st century skill required in today’s workforce and emerging knowledge. “ICT is the evident and stimulating way of introducing our youths to our connected world on how to understand and harness data, information and knowledge for their socio-economic growth and inclusion,” he noted. This underscores the importance of protecting the indigenous software developers through the local vendor policy so that jobs that are hitherto given to the foreign software developers are now offered to indigenous ICT companies.   It was disclosed that some of the indigenous software developing companies like the Computer Warehouse Group (CWG) have immensely benefited from this policy.

According to the head of account of the company, Mr. Eweyemi Akintude in a virtually interaction prior to the introduction of the policy, the local software developers were at the lowest ebb, a situation whereby the country’s economy was totally run-on foreign software and there was little or no encouragement to spore the growth of local IT companies. He said if any notable indigenous software company managed to be engaged by the foreign software provider, they would pay only 10 per cent of the ATS fees but with the introduction of Local Vendor Policy, Computer Warehouse Groups (CWG) gets up to 40 per cent of ATS which according to him is a huge improvement. This development he said has pushed the company’s profile, technical capabilities as well as the financial base to the point of establishing its presence in some other West-African sub-region like Ghana, Cameroun and Uganda. 

He said with their export to these African countries, CWG makes an annual revenue of over $1 million from exports alone. He further stated that the policy has brought about infrastructural expansion and employment of many more Nigerians thereby contributing to employment generation as well as increasing the Gross Domestic Product (GDP) of the country. According to Akintude, the policy has energized other smaller indigenous software providers who didn’t have the financial capacity to expand their facilities as well as upscale their research capabilities to do that. 

CWG has also provided an enabling environment for starters to leverage on their expansion and proficiency in building their own unique brands to be competitive in the Nigeria ICT space.

According to a report of Statista Research Department published in February 17, 2021, the export revenue of the Indian Information Technology Industry stood at 136 billion US dollars in fiscal year 2019. This revenue according to the report was estimated to grow further to 147 billion US dollars in 2020 fiscal year. It was further gathered that the share of revenue generated from the ICT export was higher than that of the revenue generated from domestic market and the gap continues to widen. This income was made mostly from developing countries of the world with Nigeria inclusive, hence the need to pursue with vigour the adaptation and domestication of foreign software for the growth of the Nigerian economy through local vendor policy. 

However, the United States of America (USA) 2018 turnover in the software market was projected to be $183.8 billion while Nigerian revenue on export of ICT goods to other countries stood at 1.124 million USD in 2019 which was a huge increase from the previous year of 40.102 thousand USD. It is evident that the local vendor policy of NOTAP is capable of transforming the economic landscape to put Nigeria in equal pedestrian with the ICT global players.

Raymond Ogbu wrote in from the public relations and protocol unit of the National Office for Technology Acquisition and Promotion. He can be reached on

Raymond Ogbu
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