‘How vendor policy stems influx of foreign software, capital flights’

Expert recommends 35% tax on importation

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 the National Office for Technology Acquisition and Promotion (NOTAP), is said to be bringing sanity into the sub-sector, curbing capital flights, and encouraging local players.

The Director-General of NOTAP, Dr. Dan-Azumi Mohammed Ibrahim, made the disclosure during his welcome reception organised by the National Software Think Tank (NSOFT) in Lagos.He said though there had been stiff opposition to the implementation of the policy, “NOTAP would continue its implementation because it has saved the country and IT vendors, huge sum of money that could have left the country as capital flight.”

Ibrahim explained that the implementation of the Local Vendor Policy in licensing of foreign software in Nigeria will continue to block financial leakages in the country’s software industry while saving huge sums of money for the Federal Government and the local Information Technology (IT) vendors. He explained that the policy, which was designed to build the capacity of local IT vendors, allowed them get involved in the deployment and maintenance of every foreign software that is licensed in Nigeria.

“Cost of licensing foreign software varies between $10 million and $100 million, depending on the capacity and specifications of the software, and a foreign company is expected to pay Annual Technical Service (ATS) fee of between 12 percent and 23 percent of the license fee.

“Also, 40 percent of every amount paid by the foreign software company goes to the local IT vendor for deployment and maintenance of the software, and many IT vendors are already benefitting from the policy implementation.

“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.

“The policy stipulates that before any agreement on foreign software licensing is concluded with NOTAP, it must involve a Nigerian IT company for the deployment and maintenance of the software before approval for registration is given. I see it as a bold initiative of government, even though it came with resistance from different quarters who usually benefit from foreign software licensing,” Ibrahim said.
According to him, while the Federal Government comes up with nice policy, the implementation matters and “that is what NOTAP is ensuring by insisting on full compliance of the Local Vendor Policy.”

Ibrahim informed that NOTAP has a mandate to implement policies that will not only develop local software capacity, but also ensure patronage of locally developed software. He assured that NOTAP will continue with the implementation of policy, with government ministries, agencies and departments (MDAs), before extending it to the private sector.

NOTAP chief noted that as Nigerians, we have a collective responsibility to promote software development in the country and there is need for synergy among ndustry stakeholders to achieve this objective. .

The Coordinator, National Software Think Tank (NSOFT), Chris Uwaje, said: “NSOFT is a convergence of ICT expert group set up by NOTAP, with the main thrust to advance a five-year strategic plan to encourage adoption 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 a formidable roadmap for the advancement, sustainable development and competitiveness of Software Nigeria.”

A member of NSOFT, Bimbo Abioye, also said: “Our greatest challenge is absence of regulation. We have seen instances where locally developed software, perform better than foreign software. If for any reason any organisation prefers the use of foreign software to local software, then technical training of staff on the foreign software must be done in Nigeria.

According to him, Nigerians spend so much on foreign licensing and patronage every year, a mindset that must change. Aboiye said there should be imposition of tax that is as high as 35 per cent on foreign software to discourage its patronage in Nigeria.

President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, said: “Local software development needs government protection through policy formulation and implementation. We need local content development protection to drive local software.”