Whilst watching a Bloomberg piece on Tencent’s emergence as China’s largest company, this Top Ten chart popped up on my TV and I just had to grab it.
If technology firms are dwarfing giants such as Exxon, Johnson & Johnson, and GE, and if China, the bastion of manufacturing, has in its vanguard, a technology firm, Nigerian policy makers need to reclassify urgently the portfolio of the Ministry of ICT as a first class government function similar to Fashola’s brief.
Thoughts?
Why choose one over the other? We can benefit greatly from manufacturing in the short term, while using gains from that as investment in a more sophisticated work force to tackle the technology challenges of the future
I’m not sure we can. We have almost no competitive advantage with a lot of manufactured goods and pouring money into it might be futile. Automobile manufacturing and assembly comes to mind and it’s no surprise that Innoson, ANAMMCO, and PAN aren’t doing very well. Ironically, giving the substatial iron ore deposits, steel production would have been one segment we could have competed effectively in, but alas the rest they say is history.
Tech on the other hand, is something we have or can easily build a sustainable competitive advantage in, regionally and globally. I’m basing my argument on the undeniable Nigerian flair for entreneurship, hacking, and academic excellence.
lol. You think all this tech companies would get here without manufacturing and industrialization paving the way?
Technology flourishes when manufacturing is robust.
You have facebook because you have mobile phones. You use mobile phone because “you get light for house”. You get the idea.
Right now, in Nigeria, we need to prioritize manufacturing, and we need better electricity. Tech will evolve by itself when these other variables have been fixed.
Interesting observation. The only thing you’re missing is the fact that many of the technology companies are leveraging infrastructure built by other people. Electricity distribution companies are not big today because their “technology” has become a high-volume, low-value commodity. You couldn’t say the same 100 years ago. Same with Railway companies. Same with manufacturing companies.
Example. Steelmaking is not a sexy process. But without steel manufacturing, you cannot design and build a car. Without bitumen, there’d be no roads for the cars to drive on. Okay. Car making is no longer sexy. Autonomous cars are. The intelligent software written for cars cannot run unless someone made those cars beforehand, the roads they’ll drive on before that, etc.
In any case, what’s a “technology company”? If a hospitality industry did not exist, AirBnB wouldn’t either. Is AirBnB a tech company or a hospitality company? If commerce did not exist, Amazon would not exist either. Is Amazon (the e-commerce store, at least) a tech company or a retail company?
Also relevant: When Technology is adopted, it disappears.
Right on the money!
Manufacturing is the bedrock of technology. Any technological strides we make will continue to be shaky ones without a good manufacturing foundation.
As a matter of fact Op, what you call tech is actually a larger percentage of manufacturing than tech. Apple and Microsoft are not just ‘tech’ but also manufacturers of computers and phones.
I’m not saying we don’t need physical infrastructure. Of course we do, we need houses, roads, etc. They are basic needs.
However in order to build physical infrastructure, we need capital. Lots of it. The easiest way for us to earn dollars is by selling oil which is no longer a sure bet. What are the alternatives for the future? Agriculture? Tourism? With 50% of the population younger than 35, I’ll place my bet on technology.
The Bloomberg report is a glimpse into the future. If policy makers fail to plan, they plan to fail.
I know. My central point is that in the grand global quest to attract dollar flows, policy makers need to place more emphasis on areas where we have comparative advantage.
We once had it with oil when we were one of the few producers of a highly demanded commodity. The highly demanded commodity of the future is software. A gift mined from the brain, not the ground. Call it “Nigerian exceptionalism” if you like but we have a concentration of cerebral talent in Nigeria, which has been largely unharnessed.
Furthermore, with open-source software and cloud technology, it is easier to build a global platform that serves hundreds of millions of customers around the world in a way that’s largely decoupled from the quality of the infrastructure in your immediate environment . Case in point, Whatsapp.
Yes, I believe so. We are not living in huts and trees and we have adequate industrialization in our major cities. You don’t need underground train infrastructure to deploy your code on AWS, promote your service online, and build a sales organisation. The lack of electricity thing has been oversold because to be frank, if you can charge your phone or laptop and post on Radar and browse Nairaland etc, you have enough electtricity and Internet to build your software and ship it.
I’m afraid I don’t get the idea. You may be able to sell it to the Indians who built their global technological powerhouse in the midst of ancient, cracking-at-the-seams infrastructure. Or you may be able to sell it to the Chileans, whose software and processes were the model upon which what is arguably Nigeria’s greatest public policy success, Pension Reform Act 2004, was implemented. Or for a closer-to-home, ground level anecdote, you may be able to sell it to my friend in Lekki who rakes in over million dollars in a year selling software consulting services to US companies. All in the midst of the unindustrialized Nigeria. Meanwhile the South-East Asians are moving the goal posts of manufacturing state-of-the-art even further than our reach.
Niyi great point here. To help augment your observation i’d like to make a few points here:
As most folks have concurred to, companies like exxon mobil and johnson&johnson are viewed as utility infrastructures and consequently will be foundations on which newer technologies are built on. This is very true, but does not adhere to the marxist view of creative destruction. With the rate Elon Musk is pushing tesla, minus future competitors, do you really think Oil would be ‘as valuable’ in 3 decades? or even non existent? Theres a positive feedback loop of value between these industries and in time it would be a competition of who has the smartest algorithms.
Technology is eating the world, and it is very existent in manufacturing. First robots bounced folks from the assembly line, and now with the advent of AI, design is being absorbed. Furthermore AI technologies are already expanding benefits in economic development: for instance, in education through personalised learning; in health through deep diagnostics; and in agriculture through precision farming.
Nigeria NEEDS to have a concrete ICT strategy to tackle these trends. Hydraulic fracking was a boutique term in 2013 until the US began tapping into new oil deposits thus causing the global oil supply glut we find ourselves in today. AI’s impact might be slow, but don’t underestimate a 10 year change with year-by-year increments. The South Korean government, being the IT futurists they are, have begun already:
If this trend of automation continues, it will widen the gap of economic inequality, ESPECIALLY in the developing worlds. Embracing technology could help developing economies leap-frog the need for an industrial evolution.
Only Tencent and Facebook are Core tech companies here that are also involved now in manufacturing via Facebooks’ Express Wifi and Tencents Investment in Ecommerce firs who have manufacturing process, 8 out of 10 are Manufacturing and Tech hybrids, you should change your topic to Manufacturing-Tech hybrids.
Apple: Phones, Tablets, Dockets, TV, Routers, Headphones
Alphabet: Googles Self Driving Cars, Submarine Cable and Internet Lab, Google X Labs, Nest Thermo regulators, Smart blenders etc.
Microsoft: Tablets, Phones, Laptops, Servers etc.
Amazon: Echo and other Smart AI products.
Berkshire Hathaway; GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, FlightSafety International, and NetJets, and also owns 26% of the Kraft Heinz Company,[ an undisclosed percentage of Mars, Incorporated, and significant minority holdings in American Express, The Coca-Cola Company, Wells Fargo, IBM and Restaurant Brands International.
Exxon Mobil: Oil and Oil Technologies including Seismic 3D Radars who Geologist and Geophysicist have adapted for other uses than oil.
Johnson and Johnson: Baby Care, Skin & Hair Care, Wound Care and Topicals, Oral Health Care,Women’s Health
McNeil Consumer Healthcare, Over-The-Counter Medicines, Nutritionals
Tencent: Media, Games, Entertainment, Ecommerce, Tech.
General Electric: Multi divisions.
Sure, you don’t. But you need the underground tech infrastructure. You could write better code in less time if your internet connection is on point. A lot more people might be interested in your service if they have better jobs and income.
loooool. Come on. This is like saying it takes same effort to post on Radar and Nairaland as it does to build a functional software.
[quote=“niyi, post:10, topic:8284, full:true”]
You may be able to sell it to the Indians who built their global technological powerhouse in the midst of ancient, cracking-at-the-seams infrastructure. [/quote]
cracking-at-the-seams infrastructure…say waahhh? I’m pretty sure indians have been building robust, space worthy tech before Nigeria gained it’s independence.
And as for your guy in Lekki making over a millie a year, that’s good. It’s good for him and it’s good for his US clients…but not so much for your average Naija guy. Mr Lekki, “Who U Epp?”
Now, don’t get me wrong, I’m not saying we don’t need serious intervention in the tech industry, we do, but we must crawl before we walk. Manufacturing over tech is what we need right now. Tech will be fine. Tech guys will survive just like our Mr. Lekki.
We are quick to forget that before the Oil discovery, we were still surviving on something. Pa Awolowo financed free education, healthcare and Oduduwa group with money from Cocoa.
That’s it! This is what we should be doing.
what you don’t understand is that those industries you want our government to prioritize tech over, form them consumer base for the technology startups. if the manufacturing sector doesn’t provide jobs to give the consumers buying power who will patronize your startup?.
Thanks for the good point. The fallacy in the assumption is that the market for Nigerian technology is only (or even largely) in Nigeria. From Sydney to San Jose, Cape Town to Hertfordshire, there exists all around the world, many companies that will exchange their dollars for software driven solutions, regardless of the nationality of the developer. I’ve seen it first hand.
The country is in desperate need of dollars in order to fund its budget i.e. the same budget that is meant to spur Keynesian growth. Local purchasing power has taken a nosedive. If we want real incomes to rise, we need to export something of value quickly. Some people believe we’ll be exporting manufactured tyres, engines, furniture, and construction expertise sometime soon. I unfortunately do not share that belief.
Thanks for making your point but permit me to provide a different perspective because if we don’t look closer, we’ll miss the forest for the trees.
The chart is not trying to say all ten are “core technology” companies. It is saying 7 (excluding Berkshire, Exxon, and J&J) are “technology services driven” companies, not product manufacturers.
Consider this QZ article on Apple’s recent earnings mix
Apple’s big surprise in its quarterly numbers isn’t the end of 13 years of go-go growth but the emergence of Services as a very large revenue category.
Revenue: $50.6 billion (–13%).
Net profit: $10.5 billion (– 22.5%).
iPhone: 51.2 million units (–16%).
iPad: 10.3 million units (– 19%).
Mac: 4 million units (–12%).
Services: $5.99 billion (+ 20%)︎.
With one exception—Services—everything went down.
I don’t think I need to discuss Microsoft’s ill-advised foray in tablets, phones, etc. Short of the software driven Xbox category, everything has been a sinkhole.
I could go on and dissect each one but I think you already get my point.
To underscore my original point, please compare that initial chart dated September 2016 to this one dated May 2010.
(Chart courtesy: http://ycharts.com/calculations/rankings/market_cap)
I agree with you there is a lot of potential in the approach you stated.but i don’t think world class software can be done “quickly”.none of the tech companies you listed got there “quickly”.
True talk. We’ve been on the power thing since before OBJ came in 17 years ago. 4 presidents later, inumerable billions of dollars later, it still feels like nothing’s changed since you were in primary school. Perhaps world class software cannot be created overnight, but it certainly doesn’t take 17 years.
Google and Facebook got there whilst we were still debating over how to divide PHCN and NITEL. A lot of what their MIT and Stanford-educated employees learnt in school is now available online for free.
