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Local content in Nigeria’s telecom is only 16% – Report

A study commissioned by the Nigerian Communications Commission (NCC) has revealed that Nigeria accounts for only 16% of the hardware components being used in the country’s telecom industry, while 84% are foreign.  

According to the final report of the study on the level of indigenous content in Nigeria’s telecom published by the Commission, most of the equipment and devices being used in the telecom sector are imported with hardly any significant indigenous technological contribution recorded.

The report noted that the dominance of foreign hardware in the telecom industry has huge implications for Nigeria’s national security, hence the need to build more local capacity in telecom equipment. 

It was also revealed that the country has not been contributing enough when it comes to software powering the telecom industry. This was in spite of some remarkable strides the country had recorded in software development, especially in the area of payments.   

The findings 

Highlighting the findings of the study conducted under the supervision of NCCs Research and Development Department, the final report stated:  

  • Study findings show that up to 84% of the hardware is of foreign origin while only 16% is manufactured locally in Nigeria. Critical equipment such as Base Transceiver Stations are mainly procured from overseas manufacturers. Aside from the national security implications of the over-reliance on foreign manufactured equipment, it also negatively impacts the national economy in many ways, majorly around the obligations to expend scarce foreign exchange to fund the importation. 
  • While the growth in the Nigerian telecommunications sector has been phenomenal, from some 400,000 functional phone lines in 2001 to over 209 million active mobile subscriptions, achieving a teledensity of 110%, as of August 2022, the growth in indigenous software in the sector has not been as phenomenal. Study findings show that the current level of local content on software in the Nigerian Telecoms Industry has a ratio of 77% to 23% to the advantage of foreign software manufacturers.” 

While noting that innovative software developed and manufactured locally such as Remita by SystemSpecs Limited for Treasury Single Account (TSA) management used by MDAs stands out as a success story in Nigeria, the report stated that this needs to be replicated in the telecom industry with the right motivation.

It also cited another successful indigenous software offering outside the telecoms ecosystem including the e-Government Operation Solution (eGOS) by Connect Technologies Limited, and iX-Trac by Infosoft Nigeria Limited which are robust pieces of software able to stand their own against any foreign software of the same category. 

Nigerians dominate workforce 

On the human side, however, the telecom industry is dominated by Nigerians, according to the report.  

  • The study findings reveal the dominance of Nigerians in the Nigerian Telecoms sector workforce to the ratio of 97% to 3%. Although the number of employed Nigerian staff is far higher than expatriates, the former are predominantly junior workers and mid-management employees in various companies.  
  • The Nigerian telecommunication operators employ around eight thousand people directly and around three million indirectly. Although direct employment is easier to quantify, indirect employment has a wider and more profound impact. The top category of indirect employment encompasses equipment sales, infrastructure deployment, advertising, marketing, and public relations as well as security workers who are involved in the protection of base stations. At the base of the pyramid, there are mobile service resellers, technicians, recharge card distributors, retailers, phone booth operators as well as street vendors,” the report established.  

NCC in the report, emphasized that increasing local content in the delivery of services and products in key sectors of the country’s economy could make a major contribution to the achievement of the UN’s Sustainable Development Goals (SDGs).

It added that this could also improve the local economy, lower project costs, ensure infrastructure is well maintained and above all, create jobs. 

 

 


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