Building a Vibrant ICT Industry

eTech Africa 1 October - 5 October

Presenter: Mkhululi Ndlovu mk@westchase.co.zw

Taking IT to a Higher Level

Bio

• Mkhululi Ndlovu (MK) • Bsc Computer Science & Statistics (UZ) • Diploma in Business Leadership (ZIM) • Financial Mgt Training (ACCA) • Designing Strategy & Execution (GIBS) • Attended Management training in Egypt, Germany, Netherlands, Denmark, United States,

Singapore & Kenya • Microsoft Certified Professional • Microsoft Certified Trainer since 2007 • Waiting for Nottingham (MBA) results and 1st Year MA in Leadership, Innovation and Change with

Robert Kennedy University • First Vice Chair of ZNCC Harare branch • Westchase Consultants – Managing Consultant • Over 12 years experience in implementing enterprise solutions in various environments in 10

African countries • Hobbies Reading books and enjoy travelling • Married with 3 kids

Agenda

• Zim ICT Industry • Talent war and Human Capital

Issues • Shrinking Innovation Space • Research and Development • Zim Telecoms Sector • Global ICT Industry Success

Stories • Zim ICT Regulatory Framework • Conclusion & Benefits • Recommendations

ZIM ICT Industry players

• IT distributors • Hardware (ICT devices) and accessories movers (former Chinese

Clothes importers) • Warranty and repair centers • Telecoms operators • Software developers • Application Resellers • Training institutions • Focused niche players • Regional and Foreign ICT players • Connected players • Deal makers/Chancers • Monopoly

Factors militating against ICT Industry

• Culture of pulling him down • Culture of pettiness • Copying instead of being unique • Culture of using connections instead

of capability • Using surnames to get

ahead/tribalism • Corruption • Favoritism in awarding tenders • Myopic understanding of technology • Culture of not paying local vendors • Favoring foreign vendors against

locals • But Knowledge and expertise is not

passed on like chieftainship it is acquired!

Human Capital Issues

• Rapid creation of universities/training centres with questionable credentials

• Half baked graduates

• Universities teaching students the technology they “like” but not being used in industry

• Takes between 1-2 years to polish up the graduates

• The “we were mantra”

• Lack of opportunities

Shortage of Talent

Patents War – Shrinking Innovation Space

Knowledge Economy Indicator

Source: World Bank Knowledge Assessment www.worldbank.org\kami

Research and Development

• Create as you go does not give same impact as a properly researched and developed solution

• The 10,000 – Hour Rule (Malcom Gladwell - Outliers)

• R & D is the only way forward for success of the ICT industry.

R & D Expenditures for Tech Companies (2009)

Global ICT success stories - India

• India’s ICT industry exports have been rising at a rate above 20% per year

• ICT accounts for about 7% of GDP (2010 estimate)

• ICT export estimated at 60% (2010)

• Industry growth mainly due to deliberate efforts by government in the 1980s

• National vision to grow the ICT sector

• Aggressive Telecom reforms drove bandwidth cost down

• Encouraged venture capital

How did India do it?

Incentives

• 100% tax exemption on exports

• 100% tax exemption for first 5 years

• Carry forward of losses

• 100%foreign direct investment

Techno Parks Incentives and Special

Economic Zones

• 100% foreign equity permitted

• Income Tax exemptions for 15 years.

• Sales tax reimbursement

Federal States Incentives

• Extended financial concessions to level of employment created

• e.g. Andhra Pradesh offers a rebate of USD$450 on the land cost for every job created provided at least 333 jobs per acre

Type of Government Policy Instruments

Fiscal Policies

• Direct and Indirect tax concessions and waivers

• Subsidies grant, incentives and financial support

Innovation Policies

• Research and development support

• Intellectual Property rights (IPR) protection

• Providing incubation facilities

Human Capital Policies

• Education with focus on IT sector requirements

• Support training and capacity building initiatives

• Facilitate employment creation and attracting talent

Investment Climate

• Simplified investment framework

• Enabling development of e-Commerce /e-Government

• Venture Capital/Private equity market development

• Facilitating enabling infrastructure

MICT Vision and Mission

• Mission • To transform Zimbabwe into a knowledge-based society

so as to enhance the country’s • competitiveness in the world in order to stimulate and

sustain economic growth through • the systematic application and innovative use of

Information and Communication Technologies (ICT).

• Vision • To act as a catalyst for national socio-economic growth

thereby propelling Zimbabwe into • a knowledge based society with ubiquitous connectivity by

2015.

MICT (2010- 2014) Strategic Plan KRA

• 1. ICT Governance • 2. Infrastructure establishment, development and

management, • 3. ICT Utilisation • 4. e-Government and e-Business • 5. Application and services development • 6. ICT Industry, Investment and • partnerships • 7. Research and development, • 8. Security and quality assurance frameworks, • 9. Corporate Services

Success of Telecoms in Zimbabwe

• Massive investment by the telecoms firms since 2009

• Penetration ratios around 90%

• Fibre projects now online

• Strong investment from external sources

• Value addition starting to come on-stream

• Strong competition offering consumers choice

• Strong foundation for the other ICT service providers to build solutions on this infrastructure

ICT Companies Business Models

• Solutions Factory

• Price Leader

• Niche Specialists

• One Stop Shop

• Version Prisoner

• Orphanage

• Opportunist

Conclusion

• ICT players need to take stock of their capabilities and strengthen their positions

• But in order to reap the benefits the key players; government, private sector, software industry and development partners need to develop a shared vision of the future act on it

• The main objective should be to create a vibrant software export industry

• A clean non polluting industry employing people using their brains instead of their muscle

Benefits to Zimbabwe • Job Creation: for the nation’s education citizens. It can retard, stop or even

reverse the emigration of highly skilled labour. • Revenue generation: source of foreign currency revenues. Earnings within

the IT sector are generally higher than in many other industries • Spillovers (also known by economists as externalities) which may include:

– improvements in national business culture as firms outside the software industry learn and imitate the new business practices of successful software firms such as working conditions, professionalization of HR practices, new organisational structures, embracing internationals standards

– a new class of heroes celebrated and imitated; young, energetic, focussed. – knowledge transfer from the developed world as the industry participates in

the international market – investment in infrastructure which benefits other economic sectors – demand in various services such as transport, construction, accounting,

hospitality, higher education, specialised training institutes – ICT park locations can become attractive by spurring arts and entertainment

to flourish to cater for high-earning ICT professionals – companies engaging in social philanthropy

Recommendations

• Government vision and policy

– Provide an enabling environment through supportive regulations, incentives and strategic investments and promotional programs.

– Education, encourage ties between the IT industry and universities. – Encourage investment through reducing bureaucratic hurdles required to start

a local company or in attracting a foreign investor – Build and guide national infrastructure in technology parks and

telecommunications

• Human Capital – science and technology human capital – organisational human capital – linguistic human capital

• Wages and costs • National association – Coordinated Umbrella association • ICT Parks

Questions?

mk@westchase.co.zw, +263 733 417 390 +263 772 813 407