Nigeria: Silicon Valley Transplant

A recent Nigerian Newspaper article cited the Nigerian Minister of the Federal Capital Territory (FCT), Nasir El-Rufai, as saying that the Nigerian Government has given the approval for the building of a Technology Village.   Nigeria will be building its own Silicon Valley on a 650 hectare property, located in a suburb of the Federal Capital city, Abuja.

The Newspaper article quoted El-Rufai as saying, “we want to create a city of knowledge in Abuja. And on the way to the airport, we have got about 650 hectares of land we have reserved out of the Abuja master-plan. What we hope to do with the technology village, which is going to cost us between $300 to $400 million is to have the highest quality infrastructure attracting the best brains in information and bio-technology, pharmaceutical and Information Technology (IT) research to work in Abuja” [1]

The decision to build a Technology Village must be the Federal Nigerian Government solution to addressing gaps that exist in Technology growth.    Several studies have noted that Nigeria lags behind in most Technology development.   A formal study conducted in 2003, by the Economist Intelligence Unit and IBM,  concluded that “E-business in Nigeria faces serious obstacles: inadequate telecoms infrastructure, unreliable power supply and authorities who, by and large, lack the means to push e-business forward” [2]    In short, there are two primary reason for Technology Development failures in Nigeria;  A) Lack of  Technology Development supporting Infrastructure, such as Power Supply, Water Supply,  Fiber Optics Telecommunications Network,  Transportation, etc.   B)  Lack of  appropriate Technology Development and Technology Growth Acceleration Policies. .

The proposed Nigerian Silicon Valley sounds impressive at first analysis, given the problem with basic Infrastructure; one can argue that a Technology Village can isolate itself from some of the infrastructural problems.  For example, the Village could have its own Independent Power Plant, Water, supply, and Transportation System.

A  Nigerian Silicon Valley could be an artificial Technology Oasis.  This Technology

Oasis would be home to Nigeria’s Technology Development, Technology Research, and Technology Service Industries.  The Oasis would serve as the nerve center for Nigeria’s Technology research and innovation. Venture Capital entrepreneurs would pour Investment Capital into the Oasis, product development would create jobs, and Nigeria would witness a Technology growth revolution.

The above wishful thinking, has to be the line of thoughts that went into the decision making process, that now has the Minister of the Federal Capital Territory

Wanting to dish out 650 hectares and spend $400 Million on a venture that has key 

Success factors of business clusters like Silicon Valley, California, missing.

Silicon Valley is not just hectares of Land. “Silicon Valley is a special habitat for innovation and entrepreneurship. It consists of dense, flexible networks and relationships among entrepreneurs, investors, university researchers, consultants, skilled employees… connecting people to ideas.”[3]    Abuja and its surrounding satellite towns, do not yet have the supporting underlying Technology readiness capacity, needed to transplant a Silicon Valley clone. 

The first missing element of success, which arguably might be the most important, is that Abuja does not have a major research oriented University.

Outside of governmental affiliated research bodies, such as ; National Space Research and Development Agency (NASRDA),  Sheda Science and Technology Complex (SHESTCO),  National Agency for Science and Engineering Infrastructure (NASENI),  Energy Commission of Nigeria (ECN), National Biotechnology Development Agency (NABDA), and a few others,  Abuja lacks the  Research and Development composition that we see often around California’s Silicon Valley.  For example, Abuja University was founded only in 1988, and has not yet matured into a research oriented academic institution.  On the other hand, Silicon Valley, California, is the home of  University of California, San Francisco, Stanford, and the University of California, Berkeley.

According to an article written by Andrew Issacs, Executive Director, Management of  Technology Program, University of California, Berkeley,  “In Silicon Valley, there were many contributing factors:  A) gradual development of the Venture Capital industry,   B)  gradual improvement in local universities, C) gradual influx of technically strong labour,  D)  gradual growth in government investment in R&D.

These factors reinforce each other, over time making it more difficult for it to happen anywhere else” [4]

It is also shocking, that the recently released, National Economic Empowerment and Development Strategy (NEEDS) did not have a provision for building a Technology Village.  Understandable, the national economic plan, can be revised to include 

“EL-Rufai’s Valley”, it is still rather shocking that the national Economic planning process missed a whole Village.   Furthermore, $400 Million capital investment expenditure allocated to the building of a Technology Village, might be the single most expensive Technology project in the Country, while the impact on other technology projects is yet to be determined, one can begin to speculate, that Technology investments in other areas such as Technology Education, will witness cutbacks.

Creating a “city of knowledge“is not a totally artificial process, if one could uproot Silicon Valley, its people and its business culture and plant it on the 650 hectares of land in the suburb of Abuja, it might not be a successful endeavor.  There are Nigerian specific environmental factors, which could make survivability of the Valley in Nigeria unsustainable.  With problems such as erratic supply of electricity, poor water supply, inadequate Telecommunications access, Abuja is just not high-technology friendly.

Another critical Silicon Valley success factor that is missing in Abuja, is that of a skilled labor force that would be required to provide supporting services for the High-Technology Industry.   The issue here is not that Nigeria does not have a highly educated work force, it does.  The problem is that a majority of the technically educated Nigerians have never spent a day of gainful employment in their respective area of expertise.  Essentially, the work force will have to be re-trained, because many  Nigerians educated in Technical disciplines are becoming obsolete, as they are yet to apply their education to practical hands-on work experience.  For Example, you have Electrical Engineers  and Computer Programmers that have graduated many years ago, but are yet to do a days work in their potential area of expertise.   Unemployment and under employment are just too rampant.

Another lacking success factor missing in Abuja, is that of Venture Capital. 

Simply put, Venture Capital is “a fund raising technique for companies who are willing to exchange equity in the company in return for money to grow or expand the business.” [5]

Again, the type of Venture Capital Funding that we see in California’s Silicon Valley does not yet exist in Nigeria.  At the very best, Nigerian Capital Markets are still at infancy stages. 

Then also, there is the issue of the National Information Technology Development Agency (NITDA).   The planning process of building Nigeria’s Technology process, is now championed by representatives of the office of the Minister of the Federal Territory, and NITDA. .  To his credit, the Office of the Minister Of the Federal Capital, is know for phenomenal success in matters relating to managing the Federal Capital.  NITDA on the other hand, is a Nigerian disappointment.   A none-performing entity.   Furthermore,

NITDA does not have the qualified human resource that will be required to supplement the planning and Implementation of a $400 Million project.  NITDA employees only sixteen full time workers, and has failed woefully in implementing the National Information Technology Policy.  It is almost reckless, that an Agency that is now struggling with taking over the technical management of the .ng domain will be at the forefront of building a whole Technology Village.   NITDA that is yet to produce a Nigerian Keyboard, will spearhead the cloning Nigeria’s Silicon Valley.  What Nigeria needs to do, rather than expend resources on yet another White Elephant project, is to place more emphasis on basics.  Electricity, Water, Transportation, and Science Education, all need to be at acceptable standards before we begin to think of building Technology Villages. 

horizontal rule

[1] See, http://odili.net/news/source/2004/nov/18/9.html

[2] See, http://www-1.ibm.com/services/files/ibv_eiu2003.pdf

[3] Saxenian, The Next Silicon Valley, December, 2001, Joint Venture Silicon Valley

[4] See, http://www.kotef.or.kr/download/pds/session5.pdf

[5] See, http://sbinformation.about.com/library/glossary/bldef-venture.htm