Why the Nigerian Government needs to promote local growth of technology.

The rivalry over the last few years has been fierce and the innovations impressive as Microsoft and Amazon have slugged it out like two prizefighters at the top of their game in the Cloud computing space. Combined they control nearly 50% of the market.

Cloud computing itself is said to be the new oil. It is the foundation of other growth areas in technology, namely machine learning and artificial intelligence. It is estimated that cloud computing will exceed 200bn in revenue by next year.

So what is the fuss on Operation Jedi all about? This is seen as a “winner takes all deal”. Theis is the US Defence department cloud contract, which is reputed to be worth $10bn, dubbed the Joint Enterprise Defence Infrastructure (or JEDI for short). The Pentagon wants a single cloud company to build out its enterprise cloud platform. It has been a bitter fight between Amazon, Microsoft, Oracle & IBM to mention a few contenders. Amazon was seen as the front runner since they successfully delivered a private cloud for the government in 2013 worth about $600m. Oracle had complained the loudest even going as far as suing Amazon to court. But the case was thrown out.

To make matters even more muddled, Trump has been a vociferous public critic of Amazon. He has been unrelenting with his criticism of Amazon’s owner Jeff Bezos on Twitter. How much this may have influenced the final decision is not apparent. Microsoft eventually won this long drawn out and complex contract bidding war, where only the first 2 years is guaranteed.

How is this relevant to Nigeria you may ask? The following are a few points that come to mind.

It demonstrates the strategic importance of cloud computing both to government and business. In the near future, there will be no important development in technology that will not involve cloud computing. We have seen that decision making in Nigeria is for the government and enterprises to own it all rather than farm out, in the form of shared services or encourage private enterprise.

Also. the Nigerian government policy has been to increase tax the same companies year in year out rather than create opportunities for enterprises to grow or new private initiatives to flourish.  China‘s growth in artificial intelligence, for example, was largely a result of favourable laws, grants and a government focus on providing an enabling environment.  There is a joke that goes like this – How far is China behind the US in artificial intelligence? The answer is 16 hours – The time difference between the Silicon Valley and its Chinese equivalent – Zhongguancun.  By focusing on creating an enabling environment instead, would achieve the same goal of increased tax revenue as well as provide an improved economic environment.

Due to the lack of an enabling environment, a great number of enterprises are not embarking on new projects thus starving the market of a fresh flow of funds. There is an argument for the border closure and the pressure on banks to give out new loans, but these initiatives are doomed to fail if they are not complemented with an encouragement of private enterprises to flourish and fill the gaps created by the lack of imported goods. The same private enterprises will not be able to pay back the loans if there is not a conducive business environment.

The Nigerian Government needs to focus on the infrastructure, power infrastructure and transport network. Experts have shown that a 25% improvement in these two areas will provide a huge increase in GDP. Subsequently, the government will also see quick returns on their investment.

One of the biggest questions in cloud computing in this part of the world is how safe is it? I do not think that there is a greater endorsement of the safety and security of cloud computing than the largest economy and defence spender endorsing the technology. It is important to add here that cloud computing is made up of the data centre and the cloud providers. Our data centres are internationally benchmarked. At least six of them are certified by Uptime institute and it is no accident that one of our largest banks has also certified its data centre by Uptime institute as well. The cloud providers are supported by international organisations. We are one of five Vmware partners and we will shortly be Vmware verified. This means that our public cloud platform will be certified in meeting international standards.

I have always felt that shared services, which is the bedrock of a public cloud, is an essential component in the economic growth of Nigeria. Unfortunately, we are lagging seriously behind the rest of the world in adopting this strategy. The adoption and migration to the cloud, results in a great reduction of costs, up to 70% of the IT infrastructure TCO as well as providing agility and speed to market for enterprises. Both public and private.

One of the richest states in the last few years talked about building their own data centre. There are data centres with large unused capacity and scope to be partnered by these rich institutions to meet their needs. This would also provide a platform for the cloud ecosystem to flourish.

The under-investment and support of public cloud platforms in Nigeria has led to a large exodus of revenue to the hyper-scalers outside the country and contributed to capital flight. Billions of dollars are spent outside of Nigeria to host applications used within these shores.

There is a lot of talk and publishing of guidelines of protecting the Nigerian market but no legal backing to enforce them. More than 90% of our regulated businesses are hosted outside of our shores. It means in the event of a dispute; the home country has the jurisdiction of resolution. We have seen the warning signs and yet ignored them – PI&D scandal, the dispute between the US and China and the marginalisation of a large Chinese conglomerate overnight. In any dispute about the data repository, Nigeria will be the loser as I cannot imagine any country legislating against its own interest.

In conclusion, the government needs to promote the local growth of technology with favourable legislation and specific funding. 

Businesses need to understand and embrace the advantages of cloud computing with an emphasis on not diminishing the power of local businesses. The relevant authorities that have provided the guidelines and policies need to ensure that there are the laws and statutes to support and enforce them.