"Lazy Commerce" : How it is Cripling the Nigerian Tech Ecosystem

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Yesterday, I was at the Ikeja Computer Village and when I was about leaving I came across some traders offloading hundreds of used and damaged keyboards from a Mercedes Benz 190 saloon car. Instinctively, I stopped by to have a look and my mind began to process all the consequences of their “lazy commerce.”

I define “Lazy Commerce” as the habitual focus of a person or persons in the selling of only finished products without any attempt to manufacture such products or, at least, be involved in some value-chain processes which led to the finished products being sold.

Needless to say, Nigeria is predominantly a consuming nation. We prefer the easy way of making money which involves importing and distributing finished products (electronics, automobiles, fuel, machinery, apparels, fabrics, steel, food, etc) while avoiding the manufacturing, assembling, or growing of such products which creates more value for the people and economy.

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This Lazy Commerce has equally crept into the psyche of the technology industry. Nigerian techies are already taking the easy options. Let’s start from hardware. Till date there is no company which is manufacturing or assembling any computer and mobile phone hardware in Nigeria. The first attempt was Zinox who promised to create assembly lines in Nigeria but now merely brings in Zinox-branded computers from China. Even if manufacturing of chipsets, RAM, disc drives, and motherboards could be regarded as very specialised, can we say keyboards, mouses, computer cases, and screws are too complicated for us to manufacture. In our habitual nature, we are just comfortable with importing and consuming. Even if we couldn’t set up our own Tech manufacturing plants, we are even too complacent to leverage our large market and force any tech giant such as Dell, HP, Samsung, LG or Panasonic to set up their manufacturing plants in Nigeria. This is lazy commerce.

The lazy commerce in the software sector is more subtle but cannot be ignored. Let us forgive ourselves for all the millions of dollars we’ve spent as a nation consuming Microsoft Office applications, CorelDraw, Photoshop, AutoCAD, SAP, and other hundreds of software for business and personal use. The world doesn’t seem to know how to create better alternatives yet. Let’s focus on the recent trends. The world has truly converged and it now be easy for a team of programmers to release web-based applications which can easily be integrated into websites and apps and monetise these applications based on a subscription-based revenue model. Our programmers and internet companies consume such services everyday (examples include Mailchimp, Madmimi, Zopim, Google Apps, Adwords, Google Analytics, Paypal, etc) and have to allocate significant budgets for them. But one fact keeps evading us and it is the fact that those services were created by people and Nigerians can also create the next world-class EdTech, AdTech, Emarketing, HealthTech, AgroTech, or Social Networking application. As usual, we are comfortable with just consuming and integrating these technologies into our websites or applications and continue to expend value instead of create one.

Anytime I step into the Ikeja Computer Village, I always amazed by the thousands of jobs which as been created within that congested space. But I’m equally taken aback when it dawns on me that we could have created hundred times more jobs if we were manufacturing about 30% of all phones, computers, printers, DVD players, TV, radios, telecoms hardware, and other tech hardware consumed by Nigerians.

The time has come for Nigerians to realise that a country creates true value when she can manufacture as much as she can consume. That true value is created when you process raw materials into finished products thereby creating jobs for people working on different levels of the value chain. That true value means minimising the amount money leaving the country through imports and maximising the amount coming in through exports.

I believe in this generation. I believe in Nigerians. And I hope that we will make that necessary 180-degrees turn towards a more sustainable Tech ecosystem.

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@Ndianabasi Excellent points.

  1. We need to force ourselves to manufacture product not to be rich, however for the greater good of society. For example, It is surprising that we don’t manufacture generators in Nigeria particularly one that doesn’t make nosie. Those invention should have come out of necessity. (I know some would say fix electricity problem, but in the meantime, we should honed the substitutes very well)

  2. We still don’t support those that have innovative minds. We have so many stories of innovation from around the country. They get some press and disappear into the innovation archive referenced occasionally. This is slowly changing with various programmes funded by the likes of Tony Elumelu and Dangote etc. We need more…

  3. Utimately we need to do more to get our workforce ready to support our manufacturing sector. We often under-estimate this piece of the puzzle. Not talking of just universities but apprenticeship programmes and andela type programmes. The corporates need to realise that they need to be part of process rather than expect the govt to fix our education systems.

  4. With the naira so weak, no better time to start to start the manfacturing engine

Like you, I remain hopeful and continue to believe

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Ha! Capitalism 101: Nothing is for the greater good.

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@Ndianabasi I feel your pain. Unfortunately, this is not a resource problem, or even a financial one. Its a psychological problem, and those are much harder to solve. I have been surrounded by the concept of “expo” during exams and “dubbing” assignments from primary school up until university. And I went to private schools.

Our psyche has been conditioned from birth to rely on others, or copy them, or steal from them to advance in life. This is why you always hear of things like the “African Facebook” or the “Nigerian Hollywood” or whatever clones we come up with and dress with an African flavour.

Not all of this is bad, obviously, and not everyone is part of the problem, but I think this is at least part of the reason why you don’t see us manufacturing and innovating.

Another psychological problem we have is we like to wear and brandish foreign items because we believe they are “cooler” than our homemade items. It’s weird.

The ideal solution would involve a massive mental shift in the way we do things. Government would have to set up facilities and grants that support and encourage innovative ideas. They could also encourage locally made products by restricting the amount of importation that occurs. The locally made products will have to be produced with high quality and passion for the craft. We would also need to support the locally made products by choosing them over foreign ones.

Of course, this is just wishful thinking. It might take more than a generation before any of this could take effect.

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One of the main reasons we don’t manufacture or create much is because our education system is a mess. Outdated curriculums, inept teachers, lack of standard facilities and so on.

How much money is being pumped into educational research? Even organization that manufacture, how much of their budget is goes into R &D?
How can we create if we are not researching?
UNESCO says 25% of a country’s budget should be appropriated to education, last time I checked, Nigeria was devoting between 12- 15%.

Like @Bisong said, there has to be a major psychological shift.

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Nigeria/Africa missed the industrial age by a couple of miles.

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Disclaimer: I’m a manufacturer of electronics. Not assembler: but real manufacturer: I design PCBs; order microcontrollers, transistors, and passive components; place them with our equipment; test; get casing fabricated; etc. I think that you have very valid points and I wish Nigeria would really do manufacturing; however, I’m going to come to the defense of these “lazy commercialists.”

  1. We don’t have a technical capacity to make anything. Not the plastic pellets to mold keyboard keys from; not the springs or plastic that give them their click response; not the silicon ingots to fabricate controller chips with; not the chemicals to process with; not the fiberglass to make PCBs with; not the magnets to make motors with; not the flat steel to make machine tools with. Anybody planning to manufacture is going to have to import everything: first the heavy equipment, then the supporting tools/clean room, then the raw and intermediate materials. Add paying for training, maintenance and replacement parts.

  2. These are critical industries that are laid down by governments. It is extremely rare for the private sector to (startup) any of these critical spaces (machine tools; mining; heavy industry; heavy chemicals; heavy transport) without significant or outright government support; most large companies that operate in these sectors are beneficiaries of one form of privatization, taxpayer funded research, and/or government-backed and extremely cheap (e.g. 0.01% interest) loans. Without government support, this is a non-starter.[1]

  3. Without cheap and plentiful electricity, nobody will make any kind of profit from manufacturing. No way I can create a gadget for NGN 4k when the energy costs me 1k, parts and duties cost upwards of 2k, labor is 500, and tax is 500.[2] Add to the fact that the market is flooded with 4k products that have been made elsewhere with cheap electricity and government support; a public that won’t patronize your “proudly made in Nigeria” products; and an unstable currency that can wipe away any margins in a given month; why would any sane person take that personal risk?

I’ve had occasion to speak with a number of large and small scale companies and gov’t agencies[3] who share a similar desire to manufacture, but have been hampered by the lack of technological capacity and support from the one entity whose duty is to support it (government). I too, along with other Nigerians abroad, have sought to move/duplicate our respective companies to Nigeria, but the barriers are enormous, and could be fatal for the business. I’m still hopeful, but it will be a long, perilous, journey, though ultimately deeply satisfying and very profitable.

I wish it wasn’t so, and wish we could effect change in our politicians and moneyed elite, but I hope you can at least start to sympathize with those who decide that the best way forward is trading. We do hope that more people would follow the path of folks like Dangote or Ibeto[4] who have made the transition from trading to manufacturing with varying levels of success.

[1] Of course are exceptions to the rule, but pointing out exceptions while ignoring the general trend is merely being disingenuous. There are encouraging signs from the government by way of “local content” reform, but as usual, it is not a coherent or comprehensive effort.

[2] I just made these numbers up, but I imagine they’re close to reality, based on my experience.

[3] The annual budgets of some government agencies charged with developing technical capacity barely covers staff salary. No serious government would starve its technical agencies.

[4] Among many others before us, whose names I can’t recall just now.

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You lost me with this claim. What? Capitalism gave birth to all these industries. Last time I checked private interests drive capitalism. You can’t expect the Government to begin something, it will never happen. The best the government does is support an industry when it is already big enough and has a solid business model.

Not trying to dismiss your hustle, but do you own a factory? Because factories give rise to economies of scale that help you develop a product that costs 4k. Hell, even American manufacturers have it hard with their 24/7 power.

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Alright, I’ll bite: the following industries, in different developed countries, received significant/outright government support; either in sponsorship, granting exclusive rights/charters, help in securing loans, government bonds, the occasional war, incubating research, defense contracts, protectionsm/tarrif, outright spying/stealing and giving to industry

heavy steel industry
shipbuilding/seafaring
aviation
silicon/electronics
aerospace
Internet

Behind any huge company or operation in capital-intensive industries, is government (public funded) backing, in one form or another. There’s no such thing as a “capitalist” economy anywhere in the world. The day companies start to feel the bite of capitalism, they run to government for support (“lower our taxes, build our roads, regulate/reduce energy prices, subsidize/protect our industry, we’re too big to fail, give us a defense contract.”)

I do own a small company that manufactures electronics, like many such in many parts of the world. It does not escape me that our tasks are made much easier by standing on the shoulders and innovations of government-backed companies going back 100 years. With or without economies of scale, a widget would cost 2x-5x more to make in Nigeria. Period.

American manufacturers may have it hard, but it’s a lot easier than in Nigeria. America ranks 7, Nigeria ranks 170 on the ease of doing business index for 2015, and I’m arguing that the Nigerian Government (as a sum of its leaders and us, the citizens) is directly responsible for this disparity, as demonstrated in its lack of willingness to support local, heavy industry using the same tried and true ways that have help the US, UK, Russia, Japan, Brazil, South Korea, and most recently, China.

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But you’re talking about consumer products, which probably aren’t ships and planes. And you’re describing the military-industrial industry (aerospace, internet, shipbuilding, heavy steel) in your comment. The military-industrial complex only exists in America because they have cash to blow on the military, this is irrelevant everywhere else in the world, save China. That is government backed. I know there are some government subsidies here and there, but that only comes after the industry is established and is a vital part of the country’s economy.

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[quote=“sop_DDy, post:10, topic:1452, full:true”]
But you’re talking about consumer products, which probably aren’t ships and planes. And you’re describing the military-industrial industry (aerospace, internet, shipbuilding, heavy steel) in your comment. [/quote]

Historically, it’s the groundwork laid by supporting these industries that transfer to consumer products.

Steel: ships -> trains -> cars -> washing machines -> toaster
Aerospace: rockets -> spy satellites -> gps -> directions to ice cream
Wireless: military radios -> industrial radios -> cellphones
Internet: military command -> TCP/IP-> WWW

I’m not saying government should directly support keyboard (and other consumer-product) manufacturers, though most have done so indirectly via import tarrifs, low interest rates, trade wars, diplomatic missions, and propaganda.

What I am claiming is that there is a direct correlation between government’s financial and psychological support for nascent and strategic industries, and economic prosperity.

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I can agree with you on import tariffs and slight support. But there is nothing the government will do that’ll dramatically change the fortunes of Nigerian manufacturers. The individual effort is still imperative.

Automobile: Horse carriages -> Ford Model-T (first car) -> Military Tanks
Aerospace: Wright brothers plane -> personal planes -> fighter jets
Wireless: Gugliemo Marconi (inventor of the radio) -> military radio
Electricity: Thomas Edison -> J.P Morgan (General Electric) -> Public power production

I could list way more.

Capitalism = Individual effort.

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You’re absolutely right about individual effort, but I’ve yet to see any country develop without significant support from government.

One does not just find steel laying around, there was an existing industry (spurred by government spending).

Horse carriages were (if you were to go back far enough), the result of government funding (only the Roman empire could afford to mine and smelt all that iron).

Neither Edison, Ford, nor the Wrights could have achieved what they did without preexisting conditions. Nigeria has little of those preexisting conditions.

Meta: like most arguments, we probably are converging, as we see things from the other’s perspective.

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We could talk all day about pre-existing conditions. It doesn’t take away the individual effort. Those conditions were in place due to individuals.

Yeah maybe we are.

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you nailed the wood on the head.The way to go is R&D,R&D and R&D.Even top organisation in Nigeria are not interested in R&D simply because they re relentlessly pursing sales.

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That is true reflection of our country.No single industry/ecosystem in Nigeria that we can boost of being truly Nigerian without influence of outsider.think about it,oil sector is married to oyibos,agricultural sector is been raped by Indians,Lebanese, etc,steel and mineral sector is gang raped by Chinese,telecoms and cable tv kidnap by south africa etc.
Until Nigerian people and government begin to see herself as the main stakeholder in her affair and equal participants in global matters, we will only be playing to the gallery.No country will help develop another without first overdeveloping theirs.We need take drastic actions to help ourselves and forget all dis western and world banks grants and loans.Grants and loans will only continue to be follow follow of the world banks and their cronies.

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This fact cannot be overemphasised. It also brings to mind the resourcefulness and commercial ingenuity of our South Eastern brothers. They have contributed tremendously towards Nigeria’s development, however, time has come for them to redirect their energy into manufacturing instead of importing goods from China, Japan, Malaysia, Taiwan, etc.

Gladly, Innoson Motors is leading the way in this regards with the first indigenous vehicle manufacturing plant in Nigeria. I saw one of their luxury buses along Lekki-Epe expressway and was proud. We need similar initiatives in other sectors like aviation, fuel, agroprocessing, mining, computer hardware, etc.

Edit: This reply was created over 24 hours ago, and is just being submitted. I really love the debate between @nextstep and @sop_DDy. Well done guys!

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Designed by Apple in California. Manufactured in China.

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What’s your point?
This business model is currently affecting the American economy.

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With all the seemingly available resources in the American economy, Apple still couldn’t manufacture there. Actually, I think trying to be emotional will cripple the Nigerian Tech Sector more in the long term.

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