The Information technology sector has been experiencing rapid growth in the country. Will this growth continue despite the global economic crisis?
THE right answer is that yes we should continue. Like I have always shared with people, the global economic crisis presents an opportunity for Nigeria. The global crisis could be placed as a leveler in the sense that we can use it as an opportunity to do a catching up. From that point of view, I think the trend should not stop.
You can look at it from the technology point of view, but in terms of service delivery, in terms of helping the progress, we should never stop. And to that extent, I feel that Nigeria will benefit a lot if we sustain the momentum, but obviously, the question should be, where will the money come from? Again you have to look at it from the investment point of view, IT is a major investment. IT should not be sacrificed in the financial crisis.
Is the IT spend by banks commensurate with their service delivery?
I would say yes and I would say the banks are getting bigger and better in doing things, with automation as the underlying factor. The consolidation has brought about mega banks. Lots of them are eager to drive volume within geography, and the only way they can do this and fast, is to use automation and technology. If you look at the investment the various banks have made, they have made investment in their processes, their procurement, their human resources. They have actually made a lot of investment. They also tend to respond to the market in terms of service delivery and also to maintain efficiency. They have done a lot and still much needs to be done. Because the thing about IT is that they can use it to do a lot of things. You take and use it, the next thing is that you will sit down always looking at opportunities, and things get better and better with technology. And then that could pose some challenges and additional burden, and what was relevant a year ago, in the last two years, you can do it better.
And the market dynamics are changing which could be imposed through a regulatory regime or imposed through a demographical shift and change. All these things do play together, basically to change the complexities, not as to change the way they play to win.
I will say they have come a long way but we are not there yet. Certainly I am sure they will still spend more on IT generally. They have added all the building blocks, in order to deliver services, and that is the trend that Nigeria must go even as we mature as a country through our development index.
How would you assess bank’s investment in IT?
When you look at their investment one would say they have done well, on a average Because the banks have to change their hardware, train their staff, upgrade their websites, all this put together could have cost between 12 and 15 million dollars. And out of the 24 banks that have merged, one time or the other are going to change their technology, that suggests to me that on the average they could have spent almost 360 million dollars. And that is not talking about ATM deployment and similar facilities.
I mean when you look at it, just estimate that an aggregate of what is spent by all the banks would not be less than half a billion dollars. That is the kind of investment you are looking at. If you now look at other intangibles, like training of the whole staff, the knowledge base etc, the investment just balloons.
Looking at what the banks are offering now in terms of services and products, does the spend you are talking about actually match what they are doing?
I will say it does. There are infrastructural challenges that actually would not allow us to appreciate how much the banks are working hard to ensure that things actually work. It is common today that whether you travel to your village or anywhere in Nigeria, you walk into a bank and get your cash withdrawn. Even at times when they have difficulties with the system, they make sure that they serve you, and all is driven by the culture of service they have built as institutions.
To that extent, I believe they have done very well. The only way you can appreciate how well Nigerian banks are doing is when you look at the influence they have brought to other West African banking institutions. They have actually brought those banks to life, in terms of marketing, in terms of service delivery, and these are the kind of things they have been able to achieve over time, which has actually made a difference.
I believe Nigerian banks are working very hard irrespective of all the challenges they are facing. The banking sector is where accuracy counts because they are dealing with money. But we still have a long way to go.
A long way to go, is it in absolute terms or relative to what obtains in advanced countries?
I would say in relation to what obtains in advanced countries. Let me draw a few parallel between what happens in the advanced countries and here. The developed countries do have good infrastructure that makes the environment IT friendly, and we don’t have it here. Secondly, the developed world collaborate more and can come together to share common infrastructure at a basically lower price, though we are having collaboration in the e-payment scheme. In the developed world you find out that IT services have actually involved looking for the best, or in other words, you will see outsourcing as a very acceptable practice.
It is also driven by competence, people would be driven by their core competence. It has both the negative and positive sides. IT skills can be based in the country and outsourced in the right place. Be that as it may, you will see that these are trends, all of which I am sure will mature in the IT space.
What is your general view of IT development in the country?
The general view is that things could still be better. Let me remember one thing, the computer terminology - you are as strong as the weakest link. We might be very brilliant individuals, but assuming with that brilliance you don’t have the necessary tool, life becomes so difficult because when you get from point A to B, you are limited in scope. What I am saying is that there are opportunities to add, be more service oriented, particularly in Nigeria, not only in the IT industry alone but everywhere.
I would say service delivery on IT generally is not where it should be especially in the public sector, but companies in the private sector know that it is what determines their success. That is why they put a lot of resources to train, but at times things don’t happen the way they should.
Does it have to do with lack of skills?
It is a combination of factors. Let me give you one example, we operate in Nigeria and operate in Ghana. I will say from the CEO perspective, the productivity we get in Ghana is far more than the productivity we get in Nigeria. And I can also testify to you from a different position, that each time we take our consultants to Ghana we have a good picture of things, but each time they are here in Nigeria, it is always a struggle. you can interpret that to mean that there are differences. But I am actually seeing it from the totality of friendliness of the environment, how the place is, and that is just the difference.
And it is the same when you take the Nigerian to a place like the United Kingdom. With little effort he becomes very brilliant. So there is something in our environment that we actually need to work on, and it is not only the government but everybody. It is not only the tangible things like the electricity, but it involves the intangibles as well. It also has to do with how we relate with one another, how we cultivate one another, all this boils down to our service culture.
If you travel overseas you can also draw parallel on service culture. The airline industry gives a good example of how the service culture is. I mean you enter some airline you want to go more and more, because of the friendliness, from the way you are received, from the air hostess even to everything. I remember once traveling from Abuja in an aircraft by our local airline, I just cracked a joke with the air hostess and the response back to me was totally negative, it was an attack. So I am just saying that we as a nation and as people, we have a lot of work to do. The thing is that most of the time we come from our negative strength, and I believe we should start moving from our positive strength, to overcome the negative.
From your point of view, where is the global recession affecting u?
It has started affecting us. Our revenue per capital has dipped, from the main source that is oil, it has gone down. That in essence means lesser money will trickle out, that also means that the ability of organizations to increase their earning capacity is also limited. And when that situation happens, you have to prioritize, when that situation happens you have to look at what ought not be done, what can wait, or what can be scrapped, that is the priority you have to look at.
Definitely some things could be delayed, but from the little insight I have about the Nigerian banking system, I know a lot of them are looking beyond the recession, looking at their position, whether at the regional or at the continental level, and if they have to achieve that, time is on the edge way, and that is why I said that even now it is better to play the catch up. Many of the banks in the developed world are in a worse position, and the ability to do any thing now would become very difficult.
So if the Nigerian banks that have taken a long term strategic view need to put technology in place to be competitive, and to position themselves so that by the end of the year, and in two years time when things take shape, they can take them shoulder to shoulder. Even not only for Nigerian banks but as a country. I was so much confused when I read the advise given by Dr. Ngozi Okonju Iweala, that this is the time we can use the money in the excess crude account, when it can give some benefits.
With the recession in the world today, you have a better negotiating power, and we can actually use that money strategically, basically to position ourselves. In the life of an organization as well, you can still achieve those objectives which the organization has planned for itself. Like I have just indicated, you have to do it in the right way, at the right cost that you can still deliver these objectives.
Some of the equipment we are using in the IT sector are imported, and you also know that revenue is dipping. How do you reconcile this with the need to invest in IT?
Let me put it this way, any investment is strategic. you have some millions of naira and you want to buy a car for example, but you are the type of person that travels very wide, and you want something comfortable, so rather buying a saloon car you decided buying a caravan car, that can make life easier for you. Either of the two you will still get to where you are going. I believe because you have decided that these are important things that need to be done, the question now becomes how do you pay. This is when you begin consider outsourcing. Outsourcing is for people like us, that the banks need a solution and will call us and say I will be paying you on a regular basis, and that is what people are doing today. It is all about you don’t own the software, you don’t own the system but still have access to the service. This is a concept that is not fully injected into the market place by the IT firms. But I believe most vendors like us are constantly in search of alternatives, that can make IT affordable, so rather than paying one time probably you pay five times. And your business is growing. That brings me to another thing. I know that this has been an issue in the IT world, about banks using foreign software. We need to take a global view that IT is a global thing. I am very much aware of many Nigerians there, that are working on Oracle, using Microsoft tool, are working on banking applications. that question is that if you use local products is liking cutting our nose to spite it, something like that.What I am trying to say is that IT is very strategic to Nigeria, even rather than banning or owning foreign software per say, we should encourage Nigerians, encourage our universities for people to acquire more skills on those field, and you can see that we can put people back to employment and can earn a lot of revenue from service.
How well are we doing in terms of software development as a country?
If you compare us to countries like India, Philippines, we are not doing great yet. But again you have to understand the configuration of development generally and for Nigeria to take good advantage of it. You will also find out that in India lots of the software that are successful that even India is making lots of money from surrounds the global application that are conceived either in America, or in Europe. I will tell you that most Indian companies make more money on SAP, on Oracle, on Microsoft, and the like.
Is it in any fraudulent way?
Not in any fraudulent way. It all boils down to the service culture that I talked about. Before anybody can reveal their IP knowledge to you, they needed to be protected. Your legal system has to be very strong, rules of copyright have to be very strong, with all the infrastructure issues that I talked about. So those are some of the limiting factors that I talked about, it is not for one person to solve.
If you are the minister of technology what step will you take to ensure growth in the area?
There are two things I need to do if I were the minister of technology. I would not look at software development but IT services, of which software development is one. It is easier to render services and have a considerable gain in that. I will complement it with locally groomed software and we can do lot of things to encourage it, to promote it, market it, but to be able to do that successfully we need to back it with IP right, good protection and legal system.