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Page 1: New Nigeria IT Local Content Policy_NITDA

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 Draft  Framework  and  Guidelines  for  Nigerian  Content  in  Information  

Technology.  

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Authors

National Information Technology Development Agency (NITDA)

In collaboration with:

Dr. Armstrong Takang

Dr. Adeniyi Onamusi

Mr. David Agogo

Mr. Inye Kemabonta

Contributors

• Information Technology (Industry) Association of Nigeria (ITAN)

• Computer and Allied Products Dealers Association of Nigeria (CAPDAN)

• Institute of Software Practitioners of Nigeria (ISPON)

• Nigeria Internet Registration Association (NIRA)

• Nigeria Computer Society (NCS)

• Microsoft Corporation

• Hitachi Data Systems

• Oracle Corporation

• Mrs. Mary Uduma

• Mrs. Florence Seriki

• Chief Leo Stan Ekeh

• Mr. Ibrahim Balogun

• Mr. Pius Okigbo

• Mr. Will Anyaegbunam

• Dr. Emmanuel Ekuwem

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ACRONYMS AND GLOSSARY

ATCON – Association of Telecom Companies of Nigeria AU – African Union BS - Broadband Services BPP – Bureau of Public Procurement CMD - Centre for Management Development CNII – Critical National Information Infrastructure CNSI – Critical National Software Infrastructure CPN – Computer Professional (Registration Council) of Nigeria CSO – Civil Society Organisation CITO - Chief Information Technology Officer DPA - Data Protection Act ECOWAS – Economic Community of West African States EU – European Union FCSC – Federal Civil Service Commission FGN – Federal Government of Nigeria FIRS – Federal Inland Revenue Service FJSC – Federal Judicial Service Commission FME – Federal Ministry of Education FMST – Federal Ministry of Science and Technology GIS - Geographical Information System GII - Global Information Infrastructure GSM – Global System for Mobile Telecommunication HIS - Health Information System ICT – Information and Communications Technology ICT4D – Information and Communications Technology for Development IDP – International Development Partners

IKE – Information and Knowledge Economy ISPON – Institute of Software Practitioners of Nigeria ITF - Industrial Training Fund IT - Information Technology/Information Communication Technology IAP - Internet Access Provider ISP - Internet Service Provider KS – Knowledge Society KPI – Key Performance Indicators LEEDS – Local Economic Empowerment and Development Strategy LII - Local Information Infrastructure MDA – Ministry, Department and Agency MDG – Millennium Development Goals NAPEP – National Poverty Eradication Programme NASSCOM – National Association of Software and Service Companies NASENI – National Agency for Science and Engineering Infrastructure NCC - Nigerian Communications Commission NCS – Nigerian Computer Society NDE - National Directorate of Employment NDS – Nigerian Developed Software NECC - National Electronic Commerce Council NII - National Information Infrastructure NIIB - National Information Infrastructure Backbone NITDA - National Information Technology Development Agency NITDEF - National Information Technology Development Funds NITEL – Nigerian Tele-communications Limited NITMA - National IT Merit Awards

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NITC - Nigeria IT Corps NOA – National Orientation Agency NOTAP – National Office for Technology Acquisition and Promotion NSP – National Software Policy NISRID – National Institute of Software Research, Innovation and Development NUC – National Universities Commission NYSC - National Youth Service Corps ODM – Original Design Manufacturer OECD – Organisation for Economic Cooperation and Development OEM – Original Equipment Manufacturer OSGF – Office of the Secretary to the Federal Government PC – Personal Computer PSF – Professional Service Firm R&D – Research and Development RID – Research Innovation and Development

RDBMS – Relational Database Management System SEEDS – State Economic Empowerment and Development Strategy SDT - Software Development Tools SFP – Software Fiscal Policy SI – Software Infrastructure SII - State Information Infrastructure SMART - Simple Moral Accountable Responsive Transparent SME - Small and Medium Enterprises SMEDAN – Small and Medium Enterprise Development Agency SON – Standards Organization of Nigeria TLD – Top Level Domain UNECA – United Nations Economic Commission for Africa UBE - Universal Basic Education POP- Point of Presence PSF- Professional Service Firm  WIPO - World Intellectual Property Organisation  

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Authors ...................................................... 1  

Contributors ................................................. 1  

Foreword (Honourable Minister, Federal Ministry of Communications Technology) ................................... 6  

Foreword (DG, NITDA) ......................................... 7  

Preface ...................................................... 8  

1.0 Introduction ............................................. 9  

1.1 Background ................................................... 9  1.2 Stakeholder Analysis of the IT Sector ....................... 10  

1.2.1 Analysis of Supply Side of the IT Sector ..................... 12  1.2.2 Analysis of Demand Side of the IT Sector ..................... 16  1.2.3 Analysis of Regulatory bodies in the IT Sector ............... 19  

1.3 Growth Potential of the Local Technology Industry ........... 19  1.4 Need for a Local Content Policy and National IT Guidelines .. 22  

1.4.1 Benefits ..................................................... 23  1.4.2 Risks ........................................................ 23  1.4.3 Balanced Perspective ......................................... 24  

1.5 Multinational Companies as enablers and partners ............ 24  1.6 Role of Government and Regulatory Bodies .................... 25  

2.0 The Content Policy Proposition .......................... 27  

2.1 Policy Vision ............................................... 27  2.2 Policy Objectives ........................................... 27  2.3 Strategic Policy Goals: ..................................... 28  2.4 Policy Framework ............................................ 29  

3.0 Local Content Policy and Guidelines ..................... 33  

3.1 Policy on Development of the Information Technology Industry 33  3.1.1 Policy Statement ............................................. 33  3.1.2 Policy Objectives ............................................ 33  3.1.3 Policy Directives & Strategies: Hardware ..................... 33  3.1.4 Policy Directives & Strategies: Software ..................... 35  3.1.5 Policy Directives & Strategies: Telecommunications, Network & Internet Services .................................................. 36  3.1.6 Policy Directives & Strategies: Data & Information Management 37  3.1.7 Policy Directives & Strategies: Professional Services ........ 38  

3.2 Policy on Intellectual Property Regulation and Protection ... 38  3.2.1 Policy Statement ............................................. 38  3.2.2 Policy Objectives ............................................ 38  3.2.3 Policy Strategies & Directives ............................... 39  

3.3 Policy on Indigenous Innovation ............................. 40  3.3.1 Policy Statement ............................................. 40  3.3.2 Policy Objectives ............................................ 40  3.3.3 Policy Strategies & Directives ............................... 41  

3.4 Guidelines for Local Content Development in IT .............. 43  3.4.1 Overview ..................................................... 43  

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3.4.2 Indigenous Firm Recognition .................................. 43  3.4.2 IT Capacity Development ...................................... 45  3.4.3 Funding and Capital Sourcing ................................. 46  3.4.4 Product Development .......................................... 47  3.4.5 Demand Generation ............................................ 48  3.4.6 Support and Maintenance ...................................... 49  3.4.7 Fiscal and Regulatory Support ................................ 50  

4.0 Policy Performance Measurement .......................... 51  

4.1 Guidelines for Monitoring and Evaluation of the Policy ...... 51  4.2 Metrics for Measuring this Policy ........................... 51  4.3 Recommendations for Policy Review ........................... 56  

Appendix 1: Government & Civil Service Guidelines ........... 57  

e-Government .................................................... 57  e-Education ..................................................... 57  e-Health ........................................................ 58  Guidelines for IT Project Implementation in e-Government, e-Education and e-Health .......................................... 58  Project Management Guidelines ................................... 60  Project Implementation Guidelines ............................... 61  Project Sustainability Guidelines ............................... 62  

Bibliography ................................................ 64  

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Foreword (Honourable Minister, Federal Ministry of

Communications Technology)

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Foreword (DG, NITDA)

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Preface

This policy document was created through an integrative process that

took into consideration a wide range of stakeholders, global best

practices as well as current realities in the Nigerian IT sector.

The strategies and policies contained in this volume represent a new

direction with potential to create sustainable progress and success

for all stakeholders in the Nigerian IT sector.

The following methodology was used to develop this policy document.

Phase Tools/Techniques

Desk Research Literature review and analysis of similar policies in other sectors & countries.

Stakeholder Engagement Structured interviews, questionnaires, workshops, and online contribution.

Compilation of Draft Report Analysis of data and writing of draft report

Stakeholder Validation of Draft Report

Feedback on draft policies and guidelines obtained through workshops, consultation sessions and roadshows

Final Report Incorporation of feedback and amendments made to final copy of the report

Executive/Ministerial Approval

Approval is granted to the report and implementation commences

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1.0 Introduction

1.1 Background

Digital technologies have been the most transformative force in the

world over the latter half of the 20th century. No aspect of modern

life or sector of business has been left untouched by its

transformative power which has led to the destruction of entire

industries as well as the creation of new jobs and lines of business.

Digital technologies have fanned the flames of globalization and

transformed the world into a microcosm, as time and distance have

become easily dealt with by the click of a button. As these changes

continue to happen, forward thinking governments realise the need to

evolve policies and guidelines to serve as a foundation for managing

the effects of technology in people, businesses and society.

In Nigeria, the past decade has been a time of unprecedented growth in

the use and adoption of various digital technologies for communication

and computing. The explosion of mobile telecommunications technology

in Nigeria has seen an increase in tele-density from 0.73% in 2001 to

about 70% in ten years, with a total of 109 million active mobile

phone subscriptions across the country as at October 2012. The growth

in the number of homes with computers and Internet access, while still

extremely low, has almost doubled between 2003 and 2010 and the number

of personal computers (PCs) shipped into Nigeria has quadrupled. These

changes have occurred at the same time that businesses and government

have turned to various forms of technology to aid in carrying out

operations and improving service delivery, permanently changing the

economic landscape as result.

While the country appears to be in step with technological

advancements and global innovation and there are exceedingly high

levels of ICT consumerism, the Nigerian IT landscape is plagued by a

paradoxical economic deficit and a negative balance of trade as the

economic value generated locally with the imported technologies used

by Nigerians is far below optimal. This is evidenced by the

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nonexistence of technology exports and very low level of patronage of

locally produced ICT products including hardware and software.

Nevertheless, stakeholders in the sector have worked hard on several

fronts to grow the ICT sector and keep more Nigerians in step with the

rapid developments in the world of ICT. The presence of major

multinational hardware and software companies in Nigeria and the entry

of technology service companies into the Nigerian market are growing.

And there has been reasonable participation of an increasing number of

local companies in various aspects of ICT including OEM manufacturing,

internet services provision, backhaul networking provision, submarine

and terrestrial communications cabling and so on.

In spite of all of these achievements, there is the belief that the

participation and contribution of predominantly local companies and

Nigerian professionals in the value chain for the provision of most

ICT services is not significant. This has led to several efforts to

stimulate the ability of local companies to innovate and participate

more effectively. These efforts have included attempts at providing

venture capital; the establishment of business incubators across the

country and scholarship schemes for students in ICT related fields.

Most of these initiatives are being driven by various MDAs,

organizations and groups that see the need of investing in enabling

local companies and Nigerian professionals to play more active and

value-adding roles in the sector. It is with this background in mind

that NITDA aims to put forth this policy document for the sector.

1.2 Stakeholder Analysis of the IT Sector

The stakeholder analysis of the sector is carried out using the

Supply-Enabling Environment-Demand(SEED) model in order to support

full understanding of different contributors and participants in the

Nigerian IT sector. This allows us to identify and determine the

impact of different groups within the sector and to provide a broad

overview of what can be done to strengthen growth in the industry

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Supply (Content Producers): refer to individuals, organizations or

ministries, departments and agencies of government responsible for

providing, producing or manufacturing IT products and services as well

as modifying and maintaining existing products to deliver value to

consumers. The supply side can also be called the IT sector, and it

has as primary categories hardware providers, software providers,

network and telecommunication service providers and professional

services providers.

Enabling Environment (Regulators): refer to groups, organizations or

ministries, departments and agencies of government that carry out the

task of monitoring, managing and controlling the interaction between

content creators and content consumers. The task of regulating the IT

industry is increasingly more sophisticated due to the pace of change

in the sector. To achieve a more cohesive regulatory regime and a

progressive policy approach the different agencies responsible for

different areas impacted by IT can no longer afford to operate in

silos, rather must collaborate effectively.

Demand (Content Consumers): refer to individuals, organizations or

ministries, departments and agencies of government that are end users

of products and services being served through a particular digital

technology or platform. The demand side of any industry forms the

basis for growth and innovation as consumers demand and pay for goods

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and services. The demand side of the IT industry includes the retail

consumer market, the enterprise market and the public

sector/government consumer.

1.2.1 Analysis of Supply Side of the IT Sector

The following sections describe the supply side in more detail and

provide information about the major organizations and stakeholders

active in each area.

Hardware Providers: refers to companies involved in the

conceptualization, design, production, manufacture, distribution and

sales of the physical elements of a computer system. There are

currently five Original Equipment Manufacturers (OEMs) in Nigeria

namely, Zinox Technologies, Omatek Computers, Beta Computers, Brian

Integrated Systems and Veda Technology. However, HP and Dell accounted

for almost 60% of the 743,000 computer units sold in Nigeria in 2012.

There have been several initiatives on the demand side to stimulate

the acquisition of hardware among Nigerian consumers. The Computer for

All Nigerians (CANi) program was created to increase IT penetration

and improve patronage of local OEMs specifically for this purpose.

Since then, there have been several assisted purchase programs

instituted by various arms of government and public sector

institutions across the country that allow Nigerians to purchase

computer hardware and network subscriptions at discounted rates and

using flexible repayment plans. Also, there have been concerted

efforts to increase government patronage of local OEMs, including the

passing of circulars to the effect. Some local organizations actively

working for the growth of this sector include ITAN, CAPDAN and NCS.

Multinationals active in this segment of the industry include HP,

Dell, Samsung and Acer which collectively have over 70% of the market

share for computer hardware. A large amount of sales is done through

local partners who retail computers across the country in technology

markets across the country. Available figures for hardware sales in

the market tend not to include the thriving market for used computers

which still flock into the country despite regulations on the control

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of hazardous waste and their disposal, such as the Basel Convention,

being enforced by the Standards Organisation of Nigeria (SON).

Software Providers: refers to companies involved in the

conceptualization, design, development, release, sale and support of

the logic which enables the processing of data. The NCS estimates

current local capacity for software design and development, web

content and portal services and graphic and multimedia development to

be below 35,000 companies. A large number of these companies are

represented under the umbrella of ISPON. Some leading Nigerian

software companies include Allied Soft, Progenics, AC&S, Computer

Warehouse Group, SystemSpecs, Infographics, Socket Works and Chams

Plc. Many of these companies make a huge portion of their revenues

from reselling and servicing multinational software brands. In

general, across the software landscape in Nigeria very few companies

have the capacity for any large scale software development projects or

specialist software for critical sectors such as banking, petroleum

industry, etc. Some commonly cited reasons for this inability of

Nigerian software companies to take on projects with long development

cycles include the poor scalability of solutions due generally non

standardized processes and practices across many sectors, the absence

of capital to support long term development needed, widespread

deficiency of qualified personnel leading to high costs of hiring

seasoned developers as well as very high attrition rates as qualified

developers tend to hop from job to job or leave to start their own

companies. This entrepreneurial bent does not always serve the

industry well as many software companies in Nigeria are actually one

man businesses that focus on small projects for quick returns leading

to aggressive competition and high levels of commoditization of

certain basic skills. Further, the focus on short term gains and the

mad dash for self-controlled businesses among emergent developers is

linked to substandard work, dissatisfied clients and the preponderance

of untested software with grand performance claims but hardly able to

deliver as promised. This general absence of standards that is

essential to the growth of a sophisticated software industry cannot be

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better illustrated than through the substandard quality and escalating

rate of defacement of government websites over the past three years.

In summary, these and many other conditions have led to a situation

where Nigerian software companies can rarely compete in regional or

global software markets.

The current condition in the Nigerian software market makes for a

sweeping opportunity for many multinational software companies with

established brands and tested products that have been actively

developed in other nations’ industries which lack many of the

constraints prevalent in Nigeria (such as India, Brazil, etc). NOTAP

reports that imports of software may be costing Nigeria up to 1

billion dollars annually.

Recently, many global software companies have participated more

actively in grooming the local industry as part of their desire to

grow the local ecosystem and cultivate loyalty to their respective

platforms. Some multinational software companies with local presence

include Oracle, SAP, Microsoft and Google. The Federal Government of

Nigeria has long maintained partnerships with Microsoft Corporation

for the licensing of its software to government institutions as well

as for other collaborative efforts to grow the local ICT sector.

Network and Telecommunication providers: refers to companies involved

in the establishment, maintenance and administration of technologies

and equipment that enable interconnection between multiple devices and

systems. This market is characterised by high convergence between

internet service providers and mobile service providers. Nigeria has

seen an explosion in the use of mobile and internet services over the

past decade, a situation that led to the arrival of additional

submarine cables in Nigeria by 2010 and has subsequently improved the

amount of bandwidth available to over 45 million Nigerians (currently

26.5% penetration as at 2012). However, there is still a lot to be

done as the country still registers extremely high tariff per month of

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690 dollars for 100 kilobits a second connection and an extremely low

distribution of fixed high speed broadband internet at 0.3 subscribers

per 100 people. These conditions have led to a high degree of

dependence on mobile phones for internet connectivity, a trend across

most of Africa where the majority of people connecting to the internet

are doing so via mobile phones. Nigeria is the second largest mobile

market in Africa is growing at a fast rate. 25% of internet traffic

from Nigeria is from mobile phones, and 90% of 18 to 27 year old

Nigerians access the internet primarily from their mobile phones

rather than from computers. Some stakeholders in this area include

ALTON, NIRA and the Nigeria Internet Group.

The area of telecommunications has seen a much faster growth and

development as well as a fair amount of local content participation

across board. It is estimated that the telecommunications sector has

created over 5,000 direct jobs and 500,000 indirect jobs over the past

decade. In addition, there have been efforts to establish telecoms

engineering centres of excellence to increase the supply of highly

skilled local talent to support the fast growing sector.

Multinational companies play a key role in the value chain of the

networking and telecommunication industry with all telecommunication

and network equipment manufacturers and all but one telecommunication

service providers being multinational companies. The NCC works

actively to regulate the activities of the telecommunication aspect of

the sector, however, with the growing convergence of these

technologies there is still a lot to be done in the coming years to

grow the capability of the sector and its contribution to national

development targets..

Professional Services Providers: refer to companies involved in sales,

consultancy, systems implementation and integration, support and

maintenance of IT infrastructure. The past decade has seen a growth in

the number of boutique companies owned and controlled by Nigerian

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professionals created to meet the demand for professional services

relevant to different sectors of the economy.

Nevertheless, this area of the economy is still heavily dependent on

foreign expertise and multinationals. This is not surprising given

rapidly evolving trends in the software, hardware, networking and

telecommunications industries, which ultimately drive the need for

professional services across the economy. In the case of foreign

companies that have presence in Nigeria, local staff are mainly

engaged to aid market entry and to drive local sales while other

crucial activities in the value chain take place outside the country.

While there is a general recognition of the need to improve the number

of highly trained and capable Nigerian professionals in this space,

the sales focus of many multinationals does not do a lot to grow or

strengthen local capacity.

Similarly in the area of business to business transactions, much more

can be done to improve the capacity of Nigerian companies to serve the

needs of long established multinationals in various sectors, part of

the imperative behind the Nigerian Oil and Gas Development Law 2010.

Another critical local skills gap is the absence of qualified systems

integrators. This often leads to large wastes and failed technology

projects due to the inability of companies to effectively integrate

disparate technologies to meet unique local needs and is partly

responsible for the tendency of consumers to continuously procure new

technology rather than optimize and build on existing systems.

1.2.2 Analysis of Demand Side of the IT Sector

The following sections describe the demand side of the IT sector in

more detail and provide information about the major categories of

buyers active in the Nigerian IT market.

Retail consumer market: refers to the retail of IT and digital

products and services for personal use. Some of these products include

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personal computers, handhelds, mobile phones and related accessories

as well as a wide array of software and services that run on them.

Globally, this is a fast growing segment of the IT sector due to the

availability of low cost IT devices and more affordable Internet. In

Nigeria, recently considered one of the more optimistic markets in

Africa with respect to buyer sentiment, there is immense potential for

the growth of this market segment. Given the large population and

drawing a corollary from the high demand for mobile devices and

smartphones, as the economy improves Nigeria may well be on the cusp

of an explosion in demand for IT products. The Nigerian market is

also heavily biased towards consumption of IT, with over a third of

the population being youths, most of whom are eagerly welcoming of

western influenced media, entertainment and technology. Analysts

report that almost half of Nigerians above the age of 15 own mobile

phones with about 22% of mobile phones possessing Internet access

capabilities. Globally it is envisaged that in 2013 more smartphones

will be sold than feature phones. Although this is not yet the case in

Nigeria, as economic conditions improve there is a clear trend towards

the adoption of smartphones. At the same time, the National Bureau of

Statistics reports that only 5% of Nigerians have access to computers,

including publicly accessible cybercafés. This hints at the need to

ramp up ownership of personal computers across the country as well as

the creation of incentives that will drive Nigerians, especially

youth, to do more than simply consume content using these devices.

Enterprise market: refers to organisations and businesses that require

IT to support core strategic and operational activities. Globally,

this is the largest category of consumers as many sectors and

industries, such as banking and professional services, are heavily IT-

dependent. Consumers within this space in Nigeria comprise small and

medium scale businesses (SMBs) as well as large corporations and

multinational companies. And small, medium and large-scale vendors of

professional IT support services constitute the supply side of this

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market. The main difference between this market and the retail

consumer market is in the economic value generated from services

procured from vendors. Businesses rely heavily on information and

communication technologies to drive day-to-day operations, save time

and costs whilst improving productivity, communication and

collaboration. User demand and revenues generated within this space

has not yet been accurately measured, however if the growth in SMEs,

consumer packaged products, the retail banking industry and even

Nollywood and the entertainment industry can be used as a proxy

indicator, it can be extrapolated that there is a significant amount

of untapped potential in this market segment.

Public sector/government consumer: refers to MDAs and government

purchasers of various IT products and services. Globally, the public

sector is the third largest spender on IT, behind the enterprise

sector. In Nigeria, government is the single largest spender on IT.

Forrester Research reports that IT related purchases in the public

sector constitutes 23% of the total IT market, which comes to about

$320 million. Of this amount, hardware is 55% of the amount, services

is 22% and software constitutes the balance of 23%. Analysts further

report that expenditures on education and defense make up over half of

the total public sector IT expenditure in Nigeria. Global growth areas

such as healthcare and transportation constitute a mere 3% and 4% of

public sector spending, suggesting room for tremendous growth as other

macroeconomic indicators stabilize in the Nigerian polity over the

next few years.

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1.2.3 Analysis of Regulatory bodies in the IT Sector

The following sections describe the regulatory bodies active in IT

sector in more detail.

Ministry of Communication Technology

Created in 2011, the Ministry of Communication Technology is mandated

to foster a knowledge based economy and information society in

Nigeria. The Ministry was created to facilitate ICT as a key tool in

the transformation agenda for Nigeria in the areas of job creation,

economic growth and transparency of governance. The Ministry has five

agencies namely: National Communication Commission, National

Information Technology Development Agency, Nigerian Postal Service,

Nigerian Communications Satellite Company and Galaxy Backbone

Services.

National Information Technology Development Agency

NITDA was established by the provisions of the National information

Technology Development Agency Act (NITDA Act) of 2007 to regulate,

monitor, evaluate, and verify the progress of the development of the

Information Technology industry in Nigeria. NITDA is central to the

creation and promotion of this policy document.

1.3 Growth Potential of the Local Technology Industry

On a global basis, it is forecasted that IT purchases will total

$2,090 billion in 2013, up by 3.3% from $2,023 billion in 2012.

Software at $542 billion (26% of the total) remains the largest

category of global IT purchases. Computer equipment at $416 billion

(20%) is the second largest category. Professional services will be

the third largest at $404 billion (19%), with systems integration

project work having more than two-thirds of this market and strategy

and other consulting services a bit less than one-third. IT

outsourcing, including computer hardware support services, will be

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$399 billion (19%). Communications equipment at $328 billion (16%)

will be the smallest sector of IT spending (Forrester Research).

In Nigeria, the IT industry is currently estimated to be a $1.3

billion industry at current levels of technology penetration and

usage, with significant potential for further growth and expansion.

Hardware:

In 2012, about 750,000 personal computing units were sold in Nigeria

with only 10% sold by Nigerian OEMs. A significant proportion of OEMs

value chains exist outside the country, further reducing the local

impact of this economic activity. It can be projected that there is a

Total Available Market (TAM) in Nigeria of over 3 million computer

units to be harnessed over the next 4 years, valued at about 400

billion naira. Of this market, it is estimated that a third will be

captured by general consumers, another third by school based programs

for teachers and students and the balance made up of assisted PC

purchase programs and other forms of corporate procurement.

In addition, the hardware support market in Nigeria currently has an

estimated 80 billion naira potential, given global performance in this

sector. However, the infrastructural challenges peculiar to the

Nigerian context pose challenges to this vital sub-sector as

organisations are unable to deliver industry accepted service

standards and most crucial functions such as back up and disaster

recovery systems are outsourced to other countries. As the reforms in

the power industry gain traction, it is important that the interest be

cultivated for companies to move more hardware support services in-

country.

Software:

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Currently, Nigeria is largely dependent on foreign developed software

in most sectors as there is a massive mismatch in local needs and

capacity. NOTAP records that technology transfer agreements for the

importation of foreign software solutions and licenses, a fraction of

actual software purchases, has cost N25 billion in the past decade.

The software industry in Nigeria (internally alone) has a potential

worth as at 2013 of up to 110 billion naira annually. However, few

Nigerian software offerings are capable of competing in this market

and the high cost of foreign developed software, the absence of

adequate customisation to local realities and lax regulation on

intellectual property has left this market wide open to software

pirates, earning the nation a bad reputation globally. In addition,

local software companies are unable to effectively compete in the

global software industry, one of the most geographically dispersed

sectors that there is. The government has carried out several efforts

to change this by creating the National Software Development

Initiative, National Software Development Taskforce and the National

IT Policy as well as the establishment of a venture capital fund for

software development.

Network Services & Internet Access:

While Nigeria currently has the most people on the Internet in Africa,

an estimated 40% of the total Internet traffic on the continent, the

situation is far from favourable to further penetration and supporting

innovation. Nigerians spend most of their disposable income on

broadband connection. Currently, the costs of internet and mobile

services remain extremely high, with the ITU reporting that fixed-

broadband costs as a percentage of Gross National Income per capita

sits at 60.7% (in 2011), twice that of Ghana, 12 times that of

mainland China, India and South Africa, 120 times that of the USA and

300 times that of Macao, China. This current condition is despite

significant improvements that have occurred in the sector, including

consolidation among ISPs, entrants of fixed-wireless and mobile

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network operators into Internet service provision. The arrival of a

second international submarine fibre-optic cable (Glo-1) in 2009 and a

third one (Main One) in 2010 reduced the cost of international

bandwidth by 90%, but barely had an impact on the cost burden felt by

the Nigerian customer when consumer prices for broadband in developing

countries have continued fall at an average of 30% annually for the

past five years. There are however concerted efforts in this space by

the NCC and its arms, such as the USPF, notable of which include Wire

Nigeria (WIN), State Accelerated Broadband Initiative (SABI), Backbone

Infrastructure Project (BTRAIN) Pilot Project to deploy 500km of fibre

in the country, the Rural Broadband Initiative (RUBI) as well as the

planned opening up of the 2.5GHz frequency band for internet service

distribution.

1.4 Need for a Local Content Policy and National IT Guidelines

With the growing pressure of globalization, every government as well

as captains of industry are charged with the burden of finding ways to

ensure that their regions stay competitive and are capable of

fulfilling local demand. Not only that, but given the wide

availability of information technology being created to serve markets

world over, it is imperative that the right frameworks be created to

enhance the ability of indigenous companies to maximally explore and

exploit local opportunities, as well as remain competitive globally.

Local content aims to achieve the development of local skills,

technology transfer, use of local manpower and local manufacturing. It

is defined as the amount of incremental value added or created in

Nigeria through the utilisation of Nigerian human and material

resources for the provision of goods and services in the ICT industry

within acceptable quality and standards in order to stimulate the

development of indigenous capabilities.

While an indigenous company refers to any company with reasonable

presence of company representatives (other than sales) within Nigeria,

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a local (Nigerian) company is one formed and registered in Nigeria

under the Companies and Allied Matters Act 1990 with not less than 51%

equity shares owned by Nigerians. An indigenous firm or a foreign firm

can be regarded as a local company if the shareholding representation

of the entity is predominantly Nigerian.

1.4.1 Benefits

• Increased support for indigenous IT companies

• Increased amount of funds made available for investment in the

ICT sector

• Demonstration of short to medium term revenue streams for local

companies that will encourage them to expand their operations,

and its attendant positive impact on the economy

• Increased support for research and development of local companies

and improving their willingness to take business risks

• Curtailment and containment of current trends of massive capital

flight in IT industry

1.4.2 Risks

The creation of a local IT content policy as well as a set of national

guidelines:

• May be falsely construed as the government attempting to toy with

the free market and make it difficult for non-indigenous

companies to compete

• Could be interpreted as a condition that will make the Nigerian

market unwelcoming to foreign companies in the short term

• May lead to the creation of oligopolistic market place for IT

which will lead to higher cost for consumers and other ill

economic effects in the long run

• May encourage risky behavior among indigenous companies that may

negatively impact the industry in the long run

• Could lead to dissatisfaction of customers if local companies are

unable to deliver adequate choice and high quality services at

reasonable cost

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1.4.3 Balanced Perspective

The government has a primary responsibility to her citizens as they

look up to her for jobs and a means of sustenance. In fact, the hard

work of Nigerian entrepreneurs, trained professionals and other

stakeholders has to be supported and built upon as a priority. Such

efforts as this are key to national progress and long term stability

of the country. Some form of intervention is always needed by the

government to create a fertile ground for commerce to thrive. In this

case, this policy is targeted at growing the IT sector to a place of

prominence and major contribution to the Nigerian economy. We believe

that this can be done without harming the competitiveness of local

companies or making the country unwelcoming to foreign investors and

multinational companies. To this effect, this policy contains

provisions not much different from those in similar policy documents

that have been adopted by many other countries across the world

studied in its preparation.

1.5 Multinational Companies as enablers and partners

Rather than being a threat to the existence of multinational

companies, part of the targets of this policy document is to establish

the kind of competitive environment that will help foreign companies

meaningfully active in the Nigerian market to unlock hidden potential

and improve their capacity to innovate. To transform this sector,

there is crucial role that multinational companies need to play. Some

key reasons why the intentions of this policy cannot be achieved

without widespread participation across board and across national

boundaries are as follows:

1. Many multinationals own critical intellectual property rights and

remain the driving force behind the world’s most important

technology innovations

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2. Many multinationals will be critical in transferring knowledge

and technology that can engender the growth and maturity of the

local IT industry

3. Many multinationals hold the key to opening up indigenous

companies to foreign markets for export, business outsourcing and

other potential growth areas for the local IT industry

In short, efforts to grow the IT sector that alienate multinational

companies and overly obstruct the free market may fail or worse,

result in unforeseen circumstances and blowback in the ICT sector or

even unrelated sectors of the Nigerian economy. The onus lies on NITDA

to craft a role for these organizations to play, as well as for these

multinationals to proactively seek out ways to add greater value to

the Nigerian marketplace and its participants. Some ways that this may

be possible include:

1. Multinational companies showing greater commitment to their place

and potential in the Nigerian market by investing more

aggressively

2. Multinational companies registering Nigerian branches of their

companies with majority Nigerian shareholding to achieve greater

integration and participation in the local market as well as

enjoy privileges that accrue from an indigenous status

3. Multinational companies partnering with government and other

organizations to facilitate technology transfer to Nigerians in

order to be part of the next wave of growth that is on the

horizon for the Nigerian IT market

1.6 Role of Government and Regulatory Bodies

In order to achieve the objectives set out in this policy document,

some key actions have to be taken by government and regulatory bodies

in this sector. They are as follows:

1. Develop and support programs that will spur the growth and

development of a highly indigenous IT industry

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2. Provide funding for initiatives in this sector

3. Create support for innovation and new business creation by

providing incentives to Nigerian entrepreneurs

4. Establish platforms that promote the local IT industry and its

participants on an international stage

5. Work to strengthen existing legislations that govern the IT

industry in Nigeria

6. Support local companies towards the production of high quality

and genuine IT products and services that are suitable for the

Nigerian market

7. Champion efforts that protect the rights of the Nigerian consumer

of IT

8. Support the expansion of existing IT products and services into

native Nigerian languages

9. Support the full inclusion of all underserved populations

displaced by deficient infrastructure and environments through

the establishment of reasonable accommodations

10. Provide leadership and a harmonised vision and policy to be

shared by government organizations like National Copyright

Commission, Copyright Reform Expert Working Group; National

Office for Technology Promotion and Acquisition, etc with the

support of non-governmental and civil organizations like

Intellectual Property Institute, Nigerian Chapter of the World

Intellectual Property Organization, Copyright Society of Nigeria,

etc.

11. Work to spread education and promote the ideals of this

policy document

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2.0 The Content Policy Proposition

2.1 Policy Vision

The vision of this policy document as follows:

“Increase the amount of Nigerian content in Information Technology

products and services that target Nigerian customers and stimulate the

growth and development of a local IT industry capable of delivering

high quality and innovative products and services that possess

regional and global appeal”

2.2 Policy Objectives

The objectives of the IT local content policy include:

1 Enable the local IT industry to contribute meaningfully towards

the achievement of national development targets

2 Stimulate and increase the production, sales and consumption of

high quality, original and genuine information technology

products and services developed by indigenous companies that

serve the unique needs of the local and global market

3 Support indigenous information technology companies and provide

them opportunities that will improve their ability to provide

relevant products and services that amply satisfy the Nigerian

consumer.

4 Support efforts to build capacity and equip Nigerians to serve as

active workers and participants in the local IT industry

5 Promote the adoption of relevant regulation and legislation on

the creation, distribution and use of Information Technology

within Nigeria

6 Promote and encourage an environment within Nigeria that is

welcoming to foreign investments in Information and

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Communications Technology, as well as the export of indigenously

made IT goods and services

2.3 Strategic Policy Goals:

Goal 1: Achieve a thriving ICT industry that contributes significantly

to national development goals

Goal 2: Lay the foundations for a local ICT industry that can grow

sustainably and compete globally

Goal 3: Support and ensure technology transfer, indigenous

participation and the survival of indigenous companies in the ICT

sector

Goal 4: Provide relevant guidelines for the adoption of technology use

in critical sectors of the Nigerian economy

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2.4 Policy Framework

The framework of this policy document takes into consideration the

vision, objectives and strategic goals as well as the role of NITDA.

It is also tied directly into several performance measures that will

form the basis for tracking the progress and impact of the policy in

order to enable frequent stock taking and re-evaluation of strategies

and directives – an approach that is critical for policy in such a

fast paced and changing industry.

There are three core focus areas of this policy: driving indigenous

innovation, developing the local IT industry and establishing

Intellectual Property regulation and protection standards, each of

which has a set of related strategic goals. These strategic goals form

the basis of specific guidelines that include recommendations for the

restructuring of the industry and actions required by NITDA and other

government MDAs. They also create potential opportunities that local

companies are expected to take advantage of. Further, this document

provides a set of appropriate performance measures linked to the

achievement of the strategic goals.

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Figure 2.1: Policy Performance Measures

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Policy Strategic Goal Performance Measures

Policy on

Indigenous

Innovation

Achieve a thriving ICT

industry capable of

contributing to

national development

goals

• Real economic value

contributed by the

industry to the Nation’s

GDP

• Number and quality of

jobs created within the

industry

• Innovation &

Inventiveness of

Nigerians and Nigerian

companies

Policy on

development of the

IT industry

Lay the foundations

for thriving ICT

industry that can

compete globally

• Quality standards among

local ICT companies

• Self-sufficiency in the

value chains of

Indigenous companies

• Capacity Building

efforts in the industry

Policy on IP

regulation and

protection

Support technology

transfer, indigenous

participation and the

survival of local

players in the sector

• Amount of

funding/support

available for Indigenous

Companies

• Amount of Foreign Direct

Investments in the

industry

• Number of Innovation

Centers/ Centers of

Excellence

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• Number of global

partnerships for growth

Table 2.1: Policy Strategy and Goals Matrix

In addition to the policy set forth, this document will also address

the activities of government and the civil service in this sector by

providing a set of guidelines on various aspects of IT and technology

use to inform the practices of government going forward. Several

performance measures have also been identified to track the

achievement and adherence to the recommended practices set forward in

this document.

Guidelines Strategic Goal Performance Measures

Government and

Civil Service

guidelines

Provide relevant

guidelines to guide

technology use in

critical sectors

• Service delivery

• E-Government

• Transparency and justice

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3.0 Local Content Policy and Guidelines

3.1 Policy on Development of the Information Technology Industry

3.1.1 Policy Statement

Government shall deploy political will and national resources to

stimulate the development and growth of the local information

technology industry and all related sub-sectors in order to grow local

capacity, drive sustainable development and ensure national

competitiveness.

3.1.2 Policy Objectives

1. Support the growth and development of the local Information

Technology Industry

2. Manage and reduce the use of imported and outsourced digital

technologies in critical sectors of the economy

3. Provide backing for any efforts to build capacity for research,

design, development, manufacturing and production of hardware,

software, networking and data technologies that will benefit the

local industry

4. Build support for the local information technology industry among

government establishments and MDAs at all levels (Federal, State and

Local government)

5. Achieve the building of adequate human capacity to support the

information technology sector through championing effective

technology transfer

3.1.3 Policy Directives & Strategies: Hardware

a) All tiers of government to mandatorily source and procure all

computer hardware for which there is local capacity for

manufacturing, assembling, testing, deployment and maintenance.

b) In line with the Nigerian Oil and Gas Industry Content

Development Act, 2010, all Oil and Gas companies are required to

actively source hardware from only local OEMs.

c) OEMs are to recapitalize and maintain a minimum capitalization of

Two Billion Naira and develop adequate capacity to meet demands

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for high quality products that will be generated by the Local

Content Policy.

d) NITDA will set a clear timeline for the implementation of the

minimum capitalization requirement for OEMs.

e) NITDA will require OEMs to have and maintain ISO 9001:2008 or any

other relevant quality certification in order to qualify for

recertification and revalidation. Existing OEMs will forfeit

their OEM status two years from the date of the announcement of

this requirement if they fail to obtain said certification

f) No new OEM will be registered or recognized by NITDA without a

quality certification or without the stipulated market

capitalization required.

g) NITDA will encourage and facilitate mergers, acquisitions,

partnerships or other forms of collaboration to strengthen the

capacity of local OEMS and other ICT firms.

h) The Minister will facilitate the grant of a five-year duty waiver

on components procured by local OEMs so as to ensure the

competitiveness of local products.

i) NITDA will work together with the Ministry and The Honourable

Minister to provide incentives for private organizations to

patronize and purchase locally assembled or manufactured hardware

by providing tax deductions for private organizations that

purchase locally assembled products.

j) NITDA will institute stiff sanctions and penalties against OEMs

who fall short of expected service levels and quality

requirements.

k) Dispute resolution between OEMs and NITDA will be settled through

expedited arbitration.

l) NITDA to facilitate and lead Computer Assisted Purchase Programs

by providing zero Interest loans to students, teachers and other

interest groups that might help stimulate innovation and economic

growth.

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m) NITDA together with the Ministry to encourage multinational OEMs

to register Nigerian entities that will have predominant Nigerian

representation in keeping with the local content Act.

n) The Minister will facilitate the provision of tax breaks, duty

waivers and level playing field for MNCs who plan to set up

assembly plants in Nigeria. Special considerations and incentives

to be given to any ODM setting up locally.

3.1.4 Policy Directives & Strategies: Software

a) NITDA will enforce the provisions set forward in the National

Software Policy

b) All tiers of government to mandatorily source software for which

there is local capacity to design, develop, compile, test,

troubleshoot, launch, maintain and improve such software

application.

c) All tiers of government to source and procure software from only

local and indigenous software development companies; where the

capacity for developing such software does not exist locally,

procurement, installation and support will be provided by a Nigerian

company.

d) All tiers of government to use locally developed systems for generic

functions such as finance, HR, inventory management, etc. A waiver

must be obtained from NITDA by any agency requiring an imported

application outside of operating system license and basic office

productivity tools.

e) In accordance with the Nigerian Oil and Gas Industry Content

Development Act, 2010; Oil and Gas companies and Service companies

are to procure local software for their operations and to make

representation to The Nigerian Content Development and Monitoring

Board for software which cannot be procured locally.

f) NITDA will promote and facilitate the creation of specialized

software firms through incubation or funding programs so as to

increase local participation in highly sophisticated systems design

and development.

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g) NITDA will work with industry stakeholders to encourage local

software firms to form international partnerships for research and

product development.

h) NITDA will carry out risk-based due diligence to identify, prevent

and mitigate actual and potential adverse impacts that may arise

from using software, including risks that arise from technical

dependencies on software conceptualized and developed outside

Nigeria.

i) NITDA will promote awareness of the origin, source and workings of

software being used by the government, including adequate access to

ascertain the full security of elements of codes.

j) For off-the-shelf applications such as advanced engineering software

and other sophisticated systems that cannot as yet be developed

locally, NITDA will mandate compliance with the Nigerian Oil and Gas

Industry Content Development Act, 2010 by ensuring that the

implementation of such systems is carried out by duly registered

Nigerian companies.

k) NITDA will work with technology platform companies such as Intel,

Microsoft, Google, Facebook and Apple to help Nigerian companies

develop for such platforms and ensure that the country transitions

from being a consumer to a producer of technology.

l) NITDA will require platform technology companies to submit a Local

Content Development Plan for their platforms to be utilized or

deployed by government agencies. This will include desktop, server,

cloud, social media and mobile platforms companies such as

Microsoft, Google, Facebook, Twitter, Apple, etc.

3.1.5 Policy Directives & Strategies: Telecommunications, Network &

Internet Services

a) All tiers of government will source telecommunications, network and

Internet services for which there are local capacity to setup up,

maintain, monitor, optimize and access mandatorily from local

service providers with capacity to deploy such.

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b) All tiers of government and all agencies under them will host their

websites and other web services mandatorily on the.gov.ng domain as

the only approved domain.

c) All tiers of educational institutions will mandatorily host their

websites and other web services on the.edu.ng as their primary

domain.

d) NITDA in partnership with NIRA will promote the .ng TLD and advocate

for businesses and private organizations to migrate to the .ng

domain.

e) NITDA will work in partnership with CBN, Financial Institutions and

Payment platform companies such as PayPal, Google Wallet, VISA,

MasterCard, Interswitch, Verve, etc. to ensure that Nigerian

merchants and consumers are able to transact and receive payments on

the internet from anywhere in the world.

f) NITDA will promote awareness of the origin, source, paths and

workings of telecommunications, network and internet services being

used by the government, including adequate access to ascertain the

full security of communications being sent through such platforms.

3.1.6 Policy Directives & Strategies: Data & Information Management

a) NITDA and other arms of government will support efforts to improve

local capacity to setup up, maintain, monitor, optimize and access

government data and information as well as meet potential future

information management needs

b) NITDA will promote awareness of appropriate data formats, database

technologies, computer security and other data and information

technologies that will be used by the government and the civil

service in order to achieve the right degree of security

c) NITDA will promote as mandatory the presence of system logs and

other computer data logging technologies to aid in the effective

troubleshooting and forensic investigation of events in government

and civil service systems

d) The Heads of each and every government MDA shall be responsible for

ensuring that reasonable care is taken to adequately secure the data

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and information of government and civil service that is created,

transferred and stored in digital formats

e) NITDA will ensure that all government data is hosted locally within

the country and all government agencies without exemptions will

comply with this directive.

f) NITDA will promote and support local data hosting firms and set

appropriate service level requirements and standards for data

service provisioning for such firms.

3.1.7 Policy Directives & Strategies: Professional Services

a) All tiers of government will mandatorily source implementation,

integration and maintenance services from local professionals/

professional service firms who possess the required technical

knowledge and capacity to setup up, maintain, monitor, optimize and

access hardware, software, telecommunications, network and internet

systems, data and information management systems, etc.

b) NITDA will promote awareness of the origin, source, paths and

workings of implementation, integration and maintenance services

being used by the government, including ascertain the full

legitimacy of companies and organizations that will be privy to data

and systems owned by the government and the civil service.

3.2 Policy on Intellectual Property Regulation and Protection

3.2.1 Policy Statement

To establish an appropriate regulatory regime and work with

existing agencies to oversee issues regarding the ownership of IT

including the protection of intellectual properties, copyrights

and derivative works.

3.2.2 Policy Objectives

1. Promote the enforcement of appropriate intellectual property

protection for content creators in order to maintain reasonable

incentive to constant innovation and production

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2. Promote the recognition of traditional safety valves and other

mechanisms that protect the general public and indigenous content

creators from overreaching intellectual property and copyright

mechanisms

3. Ensure decent limitations on the intervention by government or

companies into the private lives of Nigerians, except for lawful and

necessary purposes

4. Collaborate with other government agencies to promote the

recognition and adherence of applicable regulations within Nigeria

on all digital platforms

5. Champion the passage of legislation that promotes the best interest

of consumers as well as creators of IT products and services.

3.2.3 Policy Strategies & Directives

1. NITDA to work with the National Copyright Commission towards the

implementation of the treaties of the WIPO, as well as drive the

local adaptation of specific provisions

2. NITDA to work with the National Copyright Commission, Copyright

Reform Expert Working Group; National Office for Technology

Promotion and Acquisition, as well as with non-governmental and

civil organizations like Intellectual Property Institute, Nigerian

Chapter of the World Intellectual Property Organization, Copyright

Society of Nigeria, etc. to achieve the harmonization of

intellectual property rights so as to provide an incentive for

innovators and creators.

3. NITDA to support and effect the rights of authors, including

mandating cooperation of hosting companies, internet service

providers (ISPs) and other intermediaries to take down materials

that infringe copyrights, trademark or other forms of intellectual

property

4. NITDA to champion the establishment of legislation that discourages

digital piracy, phishing, identity theft and other forms of illegal

activity perpetrated on digital platforms.

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5. ISPs and other service providers must provide the rights to

consumers to delete their personal information, data and other

records on any service on which they are subscribed

6. NITDA to establish programs that increase awareness of consumer

rights and appropriate expectations from content creators among the

general public

3.3 Policy on Indigenous Innovation

3.3.1 Policy Statement

Government shall deploy political will and national resources

with support of the private sector to prioritize the sourcing of

Information Technology products and services first from

indigenous providers and then from global providers with

significant local presence in order to stimulate growth of the

nation’s emerging digital economy and provide jobs and encourage

entrepreneurship.

3.3.2 Policy Objectives

1. Create an environment highly supportive of innovation by indigenous

companies

2. Offer incentives to promote the growth, development and expansion of

indigenous creators of IT products and services

3. Build local capacity in Information Technology product and service

creation through patronage and paying closer attention to the origin

of IT goods and services being procured by government MDAs

4. Demand and support the improvement of quality standards of IT goods

and services available locally

5. Support the Nigerian IT industry by contributing to build the

perception of quality among local consumers and regional and global

markets

6. Leverage locally available IT goods and services to contribute

towards the preservation of Nigerian culture and indigenous way of

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doing things in order to strengthen the peoples’ identity as

Nigerians

7. Enable adequate contextualization and localization of foreign

Information Technologies, systems and platforms being used by

Nigerians regularly

8. Support the development of platforms that give improve the

visibility of participants in the local IT industry locally and

internationally

3.3.3 Policy Strategies & Directives

1. NITDA will work with other arms of government, private organizations

and multinational companies to establish technology incubation

programs, start-up communities, ICT clusters and other IT

development networks to stimulate the growth of the sector

2. NITDA will work with other arms of government to fund and support

university based programs to drive innovation and invention in

information technology using existing funds set aside for the

purpose and by setting up of special intervention funds as may be

necessary

3. NITDA will work with other arms of government and the legislature to

support the enactment of other related policies to reduce

bureaucracies associated with doing business in Nigeria as well as

other efforts required to make Nigeria desirable as a location for

innovation and growth

4. NITDA will work with other arms of government to provide and support

platforms that foster the growth and development of participants in

the local IT industry and provide visibility for their products and

services

5. NITDA will work with other arms of government, private organizations

and multinational companies to specifically support social

entrepreneurship start-up companies that are created to address

special needs and critical concerns of society

6. NITDA will hold conferences, tradeshows, exhibitions and other

platforms that will enable local companies to export locally created

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IT products and services across the economic sub-region, the

continent and the globe

7. NITDA will collaborate with SON to develop a quality certification

for IT goods and services that meet the local content requirements

of this this policy

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3.4 Guidelines for Local Content Development in IT

3.4.1 Overview

The guidelines set below are recommendations addressed by NITDA to all

branches of government & all industry participants. Adherence to these

guidelines will ensure that the operations of government and all other

stakeholders are in harmony with this policy document in order to

contribute to the attainment of the objectives set forth. The

guidelines set forward provide principles and standards for dealing

with IT local content development. They are consistent with this

policy as well as applicable laws and best practice. Furthermore,

matters covered by the guidelines may become the subject of further

legislation, national law and other international commitments.

3.4.2 Indigenous Firm Recognition

Companies must fulfil certain criteria to benefit fully from the local

content development policy and compliance with these guidelines is

essential for on-going recognition by NITDA and other agencies.

1. A Nigerian company is one formed and registered in Nigeria under

the Companies and Allied Matters Act 1990 with not less than 51%

equity shares owned by Nigerians.

2. NITDA encourages MNCs to register their organizations within

Nigeria at the Corporate Affairs Commission and maintain actively

operating entities in Nigeria.

3. The operating entities for MNCs are required to be more than

sales divisions, management of sales agents and channels. They

are to carry out value adding activities in country that

contribute to job creation and the empowerment of Nigerians who

comprise their market.

4. OEMs certified by NITDA will be required to recertify every four

years. Recertification will be based on the following conditions:

a. OEM must hold and maintain a minimum market capitalization

base of two billion Naira only

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b. OEMs must maintain local capacity for the production of

multiple form factors – desktops, laptops, tablets, and

smartphones either directly or through a local ODM.

c. OEM must hold and maintain product and possess quality

certifications such as ISO 14001, ISO 9001 at local

facilities and for scope including design, manufacturing,

sales and maintenance of various products being sold in the

Nigerian market.

d. OEMs will be given a grace period of two years from the

effective date of this policy to comply with the

recertification criteria herein stated.

5. NITDA will also create an ODM status for computer assembly

plants. The criteria for certifying an ODM will be as follows:

a. ODMs must hold and maintain a minimum market capitalization

base of five billion Naira only

b. ODMs must maintain local capacity to assemble and install

minimum of one million devices per annum for multiple form

factors – desktops, laptops, tablets, and smartphones

either directly or through a local ODM.

c. ODMs must hold and maintain product and possess quality

certifications such as ISO 14001, ISO 9001 at local

facilities and for scope including design, manufacturing,

sales and maintenance of various products being sold in the

Nigerian market.

6. Software development companies would be required to hold and

maintain CMM or ISO 9001 or any other standard certification that

may be required by NITDA for them to qualify for large scale

(enterprise) software development bids.

7. Systems Integrators and Software consulting firms will also be

required to meet minimum certifications as will be determined by

NITDA for them to qualify to bid on large scale e-government

deployments.

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3.4.2 IT Capacity Development

The availability of the necessary skill set required for local content

value creation is critical to the success of this policy. Educational

institutions, entrepreneurs and companies must be empowered to become

productive. The guidelines aims at creative means of building

skillsets for Nigerians to be active participants in the sector by

creating environments that nurtures and aids the adoption of

information, knowledge and technology at a fast rate whilst at the

same time encouraging investments in the sector:

1. NITDA to encourage specialization in different areas and provide

funding for the setup of centres of excellence in select

universities and higher institutions. e.g. Software Development

Centre of Excellence; Network Infrastructure Centre of

Excellence; Web Development Centre of Excellence; Mobile

Computing Centre of Excellence; etc

2. NITDA to champion the setup of the University of Information

Technology to lead the study of and research in IT.

3. NITDA to set up a special task force on commercialization of

university research activities in order to facilitate and

encourage entrepreneurship and skills development out of Nigerian

universities

4. NITDA to engage NUC and NERDC on extensive curriculum review

efforts to equip students with skills that are sought after by

the industry

5. NITDA to work with and partner with MNCs to establish research

and training institutes for key aspects of the IT sector

6. NITDA to partner with a Nigerian university to establish a

Journal of Information Technology in Sub-Saharan Africa and

establish 100 million naira annual grant and research fund to

sponsor academic research projects being conducted by Nigerian

scholars and educational institutions across the world which

focus on developing the IT sector in the country.

7. NITDA to work with the Nigerian Immigrations Service and Ministry

of Foreign Affairs to facilitate the issuance of visas for

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businesses, entrepreneurs and investors wishing to explore

opportunities within the country.

8. NITDA to work with the FIRS to prepare a gazette that provides

easy to distil knowledge and information about local taxation

policies, specifically for prospective investors in the ICT

industry

9. NITDA to establish a working group on eLearning in partnership

with the Open University of Nigeria with the objective of

expanding offerings of online classes within Nigeria as well as

to take advantage of the wealth of free online education classes

available across the globe.

3.4.3 Funding and Capital Sourcing

The lack of adequate funding is the most common stumbling block for

start-ups in general. In Nigeria, we have not established the culture

of funding ideas and concepts and bank loans are prohibitive for

technology start-ups. The role of the government and its associated

agencies cannot be overemphasized for us to become a start-up friendly

nation. We need to consciously craft pro-business and supportive

environments conducive to entrepreneurs who want to start technology

businesses here. The government will provide multiple initiatives to

enable start-ups to gain access to funding:

1. NITDA to properly constitute the administration of the NITDEF

with a Director acting as Secretary of the fund to oversee the

day-to-day administration of the funds.

2. In accordance with the NITDA act, the board of the NITDEF to be

constituted as follows:

a. The Minister of Communication Technology as the Chairman of

Board

b. The Chairman of NITDA as the Vice Chairman of Board

c. The DG of NITDA as a Member of Board

d. Representative of National Planning Commission as a Member

of Board

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e. Representative of Ministry of Finance as a Member of Board

f. Representative of Nigerian Investment Promotion Commission

as a Member of Board

g. Four credible and knowledgeable individuals from the

Private Sector to be selected as Members of the Board

3. At least 80% of the fund to be focused on Software and Mobile

development as well as direct IT Capacity building initiatives.

4. At least 60% of the fund would be channelled towards start-ups

and new product developments, this may be in form of seed capital

or grant for start-ups or through incubation programs or other

forms of government-backed equity schemes.

5. NITDEF to provide fund through a Seed Capital / Cash Grant

Program for start-ups to provide funding for the pilot of ideas /

concepts in order to enable start up develop prototype products

that can subsequently generate investor interest. This will be

for amounts not exceeding 5 million naira. The leadership of

NITDEF will develop the modality for the administration of the

Seed Capital program.

6. NITDEF will lead a Government Backed Equity Financing Scheme to

allow established IT businesses and products requiring huge

capital investment to scale. The criteria for qualifying firms

will be decided by NITDEF before the scheme becomes functional.

7. NITDA will champion and encourage the set-up of Business

Incubator Schemes to accelerate the growth of the IT industry.

8. NITDA will partner with financial institutions, venture capital

firms, MNCs with venture capital divisions as well Angels

investors to create a vibrant Venture Capital ecosystem for the

IT sector

9. NITDA will catalyse the capital growth of the industry by

stimulating, fostering and encouraging mergers and acquisitions

as well as foreign direct investments in the IT sector.

3.4.4 Product Development

The process of IT product development for both hardware and software

is one that must be focused on to ensure quality, safety and security.

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To consistently generate demands for local products, building quality

into products and verifying the achieved quality level becomes a

necessity:

1. NITDA will work with leading global quality organizations such

as ISO, American Society for Quality, Lean Enterprise

Institute, etc with the involvement of the Standards

Organization of Nigeria (SON) and local industry groups (ITAN,

NCS, ISPON etc.) to hold conferences and trainings to assist

organizations to improve quality standards

2. NITDA will work towards the creation of a special fund in

partnership with leading financial institutions to finance

expansion efforts of any existing certified OEM or groups of

OEMs who desire to grow their company into ODM status

3. NITDA will work with NOTAP and other stakeholders towards

establishing an annual conference for the growth of small and

medium scale manufacturing in the Information Technology

industry.

3.4.5 Demand Generation

The perception of local products is quite weak in the market, more so

in the IT sector where our processes are not as yet mature. To

generate demand for local products, both government and industry

players have a duty to drive awareness and interest in local products.

Incentives will also have to be provided to private firms and

individuals who buy Nigerian products:

1. Government IT based procurement to have a local content focus.

All hardware products such as servers and computers must be

purchased locally.

2. NITDA will certify all government based IT procurement for

local content compliance before a certificate of no objection

is issued by the BPP.

3. NITDA to lead and facilitate product demand generation

initiatives such as Assisted PC purchase programs

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4. NITDA to reach out and collaborate with similar IT development

agencies in neighbouring West African states in order to

establish regional Information Technology tradeshows that will

provide a platform to grow the local industry

5. NITDA to facilitate and promote the use of digital

technologies as well as local development of software

solutions for Education by facilitating Computer purchase

programs, provide funding for software solutions in education

and drive technology adoption initiatives in education.

6. NITDA to facilitate and promote the use of digital

technologies as well as local development of software

solutions for the Health industry.

7. NITDA will work with the Federal Ministry of Health to design

and determine data formats for a National Electronic Health

Record System and thereafter, encourage the adoption of EHR

across all tiers of health systems in Nigeria.

3.4.6 Support and Maintenance

A key aspect of this policy initiative is the need to grow local

capacity to support and maintain existing technology at all levels of

complexity and involvement.

1. Preference to be given to companies with existing hardware

support facilities and functional service stations with

impressive customer service metrics measured frequently

2. Government procurement contract – support and maintenance to

be included as a cost item in BOQ for government deployments.

3. Software development firms will be required by regulation to

provide on-going support and continued development and

maintenance of software sold or deployed.

4. Technology deployment will be considered as turnkey

deployments and not mere supply of components and systems

integration capability must be demonstrable for a vendor to

qualify for large-scale deployments.

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3.4.7 Fiscal and Regulatory Support

1. NITDA to work with NIPC to make IT companies eligible for

existing tax relief for Research and Development activities for

multinational companies, a fiscal incentive which allows up to

120 per-cent of qualifying expenses on R&D to be tax deductible

2. NITDA to work with NIPC to make IT companies eligible for tax

relief for long term R&D on Local raw materials, a fiscal

incentive which allows up to 140 per-cent of expenses on

patentable research to be tax deductible. Also, minimum local raw

material usage quotas and other details necessary for the

enactment of the policy in the IT industry should be determined.

3. NITDA to work with NIPC and other bodies to propose additional

tax credits specifically for the IT industry, including declaring

the software industry and other IT related fields at the cusp of

explosion (Artificial Intelligence, Robotics, etc) of ‘pioneer

status’ and align the industry with existing tax codes.

4. NITDA to work with FIRS to ensure effective implementation of

these fiscal policies in tax reporting practice to the benefit of

multinational companies and local companies in the IT industry

within Nigeria.

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4.0 Policy Performance Measurement

It is recommended that impact of this policy is evaluated regularly to

ensure that the objectives laid out are being achieved and to inform

further changes in strategy to support the morphing interests of all

stakeholders. This policy measurement should be done using

qualitative, quantitative and mixed methods in order to carry out

analysis of progress being made. This section of the draft policy

presents some guidelines for monitoring and evaluating the impact of

this policy as well as recommended metrics to be used.

4.1 Guidelines for Monitoring and Evaluation of the Policy

The following general guidelines are to be followed when monitoring

and evaluating the impact of this policy on the IT industry in

Nigeria. Efforts to evaluate the impact of this policy:

1. Should address the question of whether a cause and effect

relationship can be established between the recommendations of the

policy and both intended/ unintended outcomes

2. Should have clearly defined participants and non-participants

(treatment and control group) and a sufficiently large sample size

to improve the validity of any inferences made to the IT industry at

large

3. Should employ a mixed method approach as much as possible i.e. a

combination of both qualitative and quantitative methods.

4. Should leverage and have synergy with existing globally recognizable

databases for data sources, such as the World Bank, UNDP, ITU, etc.

4.2 Metrics for Measuring this Policy

There are four areas of impact that can be easily identified, in line

with the objectives of this policy document and previously identified

performance goals. They are as follows:

1. Impact on the Nation’s economy

2. Impact on the well-being of society

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3. Impact on public sector and governance

4. Impact on the ICT industry and its participants

The following table captures metrics for measurement of the impact of

this policy, distributed into the four categories of impact.

Impact Category Performance

Goals

Metric for measurement

Impact on the

Nation’s Economy

Contribution to

GDP

• Contribution of Information

Technology sector to GDP

• Contribution of IT Hardware

and Manufacturing to GDP

• Contribution of IT Service

Industry to GDP

Job Creation • Number of jobs created in

the IT industry

Innovation • Number of ICT related

patents and copyrights

issued

• Evidence of quality

collaboration between

educational institutions

and industry

• Ranking and recognition of

researchers and research

institutes within Nigeria

Self-Sufficiency • Ratio of ICT Goods Exports

to ICT Goods Imports

• Ratio of local ICT

investment to Foreign ICT

investment

• Activities in ICT value

chains of local firms

migrated in-country

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Impact on the

well-being of

Society

Network Access • Coverage of fixed

broadband, internet and

network access nationwide

(percentage area)

• Internet users (per 100

people)

• International Internet

bandwidth per capita (bits

per person)

• Secure internet servers

(per 1 million people)

Affordability • Fixed broadband internet

access tariff per month

• Fixed-broadband sub-basket

as a % of GNI per capita

IT Literacy and

Adoption

• Personal computers (per

100)

Cybercrime • Number of reported cases of

cybercrime

• Number of prosecuted

cybercriminals

Impact on Public

Sector and

Governance

Service Delivery • Range of services offered

by government supported by

IT

• Government IT Capability

Maturity Assessment

E-Government • Number of successful e-

government initiatives

Justice &

Transparency

• Citizens’ perception of

transparency

• Freedom of Information Act

Compliance rates of

government agencies

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Impact on ICT

Industry and

Participants

Standards and

Quality

• Measurements of Consumer

Perception of quality

• Total amount of ICT exports

• Ratio of private market

purchase of local ICT goods

to public sector market

purchase of local ICT goods

Local Capacity • Total OEM production

capacity

• Total number of individuals

with software application

design and development

capability

• Total number of individuals

with database management

capabilities

• Total number of individuals

with information system

security management

capabilities

• Total number of individuals

with computer networking

capability

• Total number of individuals

with web design and web

application development

capability

• Total number of individuals

with graphic and multimedia

design and development

capability

• Total number of companies

with systems integration

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capabilities

• Total number of companies

with network and data

center management

capabilities

• Total number of companies

with ICT training and

practice capabilities

Funding/ Support

for New and

Existing

Ventures

• Total amount of private

sector venture capital

funding

• Total amount of public

sector venture support

funding

• Utilization Ratio of

venture capital funding

(Ratio of funding available

to funding issued)

• Estimated capitalization of

top 50 indigenous ICT

companies

Foreign Direct

Investments

• Number of foreign ICT

companies with local

presence

• Number of foreign ICT

companies with appreciable

local content (cannot be

just marketing and sales)

Innovation /

Centers of

Excellence

• Number of innovation

centers, business

incubation centers and

other centers of excellence

Global • Number of partnerships with

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partnerships for

growth

global ICT advocacy and

promotion groups

4.3 Recommendations for Policy Review

It is recommended that this policy be reviewed every four years in

order to improve it constantly, enable responsiveness to the rapidly

changing Information Technology landscape and continuously improve

national strategy. The primary purpose of policy review activities

include the following:

A. Responsiveness to emerging trends in the global ICT industry:

given the rapidly changing landscape of this sector, it may be

necessary to take into consideration particular trends and

occurrences in the global ICT industry that may have significant

implications for the achievement of the objectives.

B. Responsiveness to changes in local IT industry: as the gains of

this policy are realized, further changes may be made to increase

the opportunities available to indigenous companies and support

further growth of the industry.

C. Review of policy performance: the development of any policy is an

organic process. It is imperative that insights from periodic

reviews of the impact of the policy are captured and form inputs

to inform future revisions of this policy document.

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Appendix 1: Government & Civil Service Guidelines

Overview

The guidelines set below are recommendations addressed by NITDA to all

branches of government & the civil service at all tiers. Adherence to

these guidelines will ensure that the operations of government and the

civil service are in harmony with this policy document in order to

contribute to the attainment of the objectives set forth. The

guidelines set forward provide voluntary principles and standards for

dealing with IT during the carrying out of the regular business of the

government and civil service. They are consistent with this policy as

well as applicable laws and best practice. Furthermore, matters

covered by the Guidelines may become the subject of further

legislation, national law and other international commitments.

e-Government

One of the greatest impact areas of technology yet to be fully

harnessed in Nigeria is the opportunity to improve the quality of

service delivery by government using online service offerings. As MDAs

across the country move to implement this on varying scales, the

following objectives should be shared:

A. Leverage Information Technology to make government services

accessible to more people

B. Adopt a citizen focused approach to current government wide IT

policies and programs

C. Define and deliver performance increases that matter to citizens

D. Communicate policies within and across agencies

E. Participate actively in the development of standards that can be

replicated at all levels of government

e-Education

Education is critical to the success of this policy. First, it

provides the only way of building skillsets for Nigerians to be active

participants in the sector, it is an environment nurtured to aid the

adoption of information, knowledge and technology at a fast rate and

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also there have been manifold investments in the sector over the past

decade. E-Education forms one of the pillars of this policy with the

following objectives:

A. Leverage Information Technology to make high quality education

accessible to more people

B. Include teachers and administrators as partners in the design of

e-learning projects in order to achieve the needed level of buy

in

e-Health

One of the more recent interventions of ICTs in critical sectors is

the impact on health service delivery. The potential to replace

physical presence of trained medical personnel with information in

less severe and life threatening situations, with a view to improving

the efficiency of the health care system as a whole is often

classified as e-health. The following objectives must exist for e-

health efforts:

A. Leverage Information Technology to make health services

accessible to more people

B. Define and deliver performance increases that matter to patients

and citizens

C. Leverage Information Technology to make timely health data

available to health practitioners

Guidelines for IT Project Implementation in e-Government, e-

Education and e-Health

Justifying Projects

Justifying the selection of projects is often a challenging task to

do, more so in the public sector and government. The following have

been identified as useful guidelines to include as part of project

justification in order to enhance harmonization with this policy

document.

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1. Ensure that the voices of key stakeholders are captured early in the

project selection stage

2. Ensure that the project holds significant tangible and intangible

benefits for stakeholders

3. Ensure that the project targets stakeholders that have been

chronically underserved by previous investments

4. Ensure that the investment increases public protection, health,

education, environment, and safety

5. Ensure that the project holds the potential for not only short term

benefits but significant mid-term and long-term benefits for all

stakeholders

6. Ensure that the project is in line with mid to long range strategic

targets of the government, including relevant transformation agendas

such as Vision 20:2020 and international development goals such as

the Millennium Development Goals

In-House projects vs. Outsourcing

The decision to outsource projects to external parties must be made

carefully considering the loss of control and decline in autonomy that

arises from relying on external expertise from private for-profit

organizations. Government has a responsibility to build the needed

capacity – technical, human resource, financial, etc - within the

service to deliver on critical services required at all levels. Some

useful guidelines are as follows:

1. Adequate controls should be put in place to protect the success of

the project and ensure that priorities and objectives of

stakeholders, sponsors and implementing partners are shared

2. Efforts should be made to take into account direct and indirect

costs when preparing financial estimates for a project using Total

Cost of Ownership measurements as well as working with multiple

sources to confirm the expediency of taking a particular approach

(making i.e. in-house projects or buying i.e.

outsourcing/contracting)

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Project Management Guidelines

Project Initiation

1. A suitable project sponsor should be identified during the

initiation phase of the project

2. All stakeholders should be identified during initiation and key

stakeholders contacted and co-opted into the planning of the project

early in the initiation phase

3. Communications requirements, information security policies and

required authorizations should be defined at the project initiation

phase

4. Effective data and information management practices should commence

during the initiation phase

Project Planning

1. Extensive definition of roles should be carried out in order to

create room for involvement of all stakeholders

2. There should be a clear definition of needed controls, checks and

balances commensurate with the degree of sensitivity of the project

to aid in a hitch free implementation of project phases

3. In planning the project, implementing partners must be vetted in

accordance with the requirements of this policy document, government

seculars and other applicable regulations as stipulated by the

Bureau for Public Procurement (BPP)

4. Metrics, KPIs and measures to be monitored and controlled should be

determined during the planning phase of the project in line with the

project objectives and scope

Project Monitoring and Controlling

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1. Project monitoring and controlling should be done to track the

progression of the project, deal with deviations from the project

plan and bring potential challenges to light as soon as they emerge

2. Related projects should be continuously benchmarked against each

other to provide meaningful input that can improve the quality of

project delivery

Project Closing

1. A project should not be deemed as closed until an official hand off

has been done to the relevant stakeholder and a reflection process

is carried out. The reflection process may include measuring

implementation success, archiving relevant documentation, reflecting

on future activities and sharing lessons learned for future

reference

2. Project success must be measured against the objectives which were

meant to be achieved and not merely against achievement of project

milestones or completion of work packages and deliverables

3. The performance of implementing partners should be captured and

recorded to inform future decisions to involve them in other

projects

Project Implementation Guidelines

Selection of implementation companies

1. The selection of implementation companies for projects should be in

line with the policy and strategies stated in section other sections

of this policy document.

Knowledge Transfer

1. It is the responsibility of organizations sponsoring projects to

institute mechanisms for effective knowledge transfer into their

organizations during and as a result of the execution of projects

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Project Sustainability Guidelines

Pre-project

The time spent preparing and planning for a project yields more

successful outcomes for complex projects. As part of the initiatives

to entrench sustainability in the design and implementation of

projects, it is essential to carry out key steps in the time leading

up to the commencement of the project.

Stakeholder participation and engagement

1. Achieving stakeholder participation and engagement before the

commencement of any project is critical to uncovering key insights

and refining approaches that can improve the chances of project

success. Project sustainability, on the other hand, is impossible

without the active cooperation of willing and interested stakeholder

groups.

2. Attempts must be made to lead projects by emphasizing a shared

vision and making efforts at creating value for all stakeholders

involved

3. As much as possible, solutions should be arrived at from bottom-up

collaboration and mutual cooperation between affected parties

4. Coalition building is critical to successful stakeholder

collaboration through engendering trust between multiple parties and

nurturing agreement on plans of action

5. Efforts should be made to forge powerful individuals, the talented

few, interest groups, companies and organizations and trade

associations into cross-sector coalitions and networks with a shared

common agenda that can champion mutually beneficial causes through

mutually reinforcing actions and peer support

Post-project

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At the close of project implementation, efforts should be made to

disseminate important lessons learned across coalitions and networks

in order to improve the entire system and support the advancement of

the economy. Through such efforts, the seeds of cooperation can be

sewn, even among competitors, further advancing the entire group. More

opportunities should be created for these mutually beneficial

exchanges to occur.

Maintenance and support

1. Maintenance and support contracts should include service level

expectations and other measurable goals by which performance can be

measured

2. Maintenance and support contracts should be subjected to periodic

review to ensure that laid out goals are being met and the provider

is improving in its quality of delivery and support

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