SIR: Decision makers seem to overlook the fact that businesses, including digital tech enterprises, only thrive under certain conditions. Joe Tidd and John Bessant provide an interesting example in their classic book on innovation management.
According to them, the economy of the state of Massachusetts in the United States is remarkably resilient because it has a strong innovation system. When the state’s traditional industries (textiles and shoes) collapsed in the 1950s, it took the economy down with it. But the early 1980s, a new high-tech industrial district had emerged in the state, a resurgence now known as the ‘Massachusetts miracle.’ Tidd and Bessant associate this miracle with the strong network of specialist skills and high-tech research and training centres.
Specifically, the Boston area where most of the resurgence happened has the highest concentration of colleges, universities, research labs and hospitals in the world. This favourable environment was especially conducive to the rapid establishment of entrepreneurial firms.
In Nigeria today, many small digital tech businesses are springing up daily, but the reality is that most of them are either side hustles or survival strategies of otherwise unemployed young persons. Such firms have an exceptionally small chance of growth. In fact, the vast majority of digital tech businesses in Nigeria today are very small. A 2019 survey by the Centre for Global Development (CGD) and the ONE Centre reported that at least 50 per cent of them have only three employees. In the medium to long term, the country’s digital technology sector could deplete if the country does not create an ecosystem that supports business growth.
Besides, there are too many aspects in which the Nigerian business environment is unfriendly. For one, electricity is viewed by almost 60 per cent of Nigerian tech businesses as a major constraint, according to the CGD survey. Start-ups thrive best in a supportive ecosystem, and this is what the country needs to ensure it creates. Without such an ecosystem, even the few tech businesses that traverse the valley of death – the point where most businesses die – end up becoming footloose. They start here, grow here and then move their corporate identify overseas where the ecosystem is more friendly but leave their operations behind to exploit the market. They end up distorting the labour market by employing very few people and paying very high salaries. This creates an artificial and unsustainable labour market that makes it difficult for local companies to compete and retain talent.
Perhaps the most striking part of the paradox is that almost nothing we use in Nigeria in terms of digital technology is produced here. We rely heavily on imported hardware, software and platforms that are designed and developed elsewhere. This means that we are not only consuming, but also producing, data and knowledge for foreign entities that can use them for their own benefit, without our consent or control.
This also means that we are not developing our own capacity and capability to create and innovate in the field of digital technology. This is why a lot of local development efforts could end up becoming ‘conduits of extraction’. Instead of creating value for the local economy, they end up transferring value elsewhere. This is not to say that Nigeria should isolate itself from the global market, but rather that it should be strategic and selective in how it engages with it. Nigeria should not be a passive and dependent player, but an active and independent one.
The challenges are not insurmountable, but they require careful and deliberate policy interventions that are informed by evidence and guided by vision. Nigeria has a great opportunity to leverage digital technology for its development, but it also has a great responsibility to avoid creating mere conduits of extraction in the name of developing a digital technology sector.
Abiodun Egbetokun, senior lecturer in Business Management, Leicester Castle Business School, De Montfort University, Leicester, United Kingdom.
