Forex crisis overshadows Tinubu’s policies in Nigerian tech industry – Stakeholders

By Techdigest

May 30, 2024

-technology-innovation

Forex crisis overshadows Tinubu’s policies in Nigerian tech industry – Stakeholders

The last one year of the Bola Tinubu administration has seen tough for Nigerian tech companies, especially, with the fall of the Naira value putting the businesses in a tight corner.

This came despite the formulation of several policies aimed at leapfrogging the ICT sector and creating jobs for Nigerians.

While the impacts of these initiatives are yet to be felt, stakeholders say several perennial challenges confronting in the industry remain unaddressed in the ICT sector in the last 12 months.

Stakeholders in the Nigerian tech space have said that the issue of forex overshadowed the various tech policies introduced by Bola Tinubu’s administration in the last one year as they struggled to meet forex obligations.

The stakeholders in their review of the administration’s one year said that though some critical policies were introduced in the period, the forex crisis took the shine for tech business, like other businesses in the economy.

This is against the backdrop of the Central Bank of Nigeria’s floating of the exchange rate, which saw the Naira value plummet to almost N2,000 in February this year before picking up again after the apex bank’s direct intervention in the forex market.

Specifically, the founder of Sycamore, a fintech startup, Mr. Babatunde Akin-Moses also noted that CBN’s forex policy had adversely affected fintechs in the last 12 months.

He noted that this led to a significant increase in forex costs for fintechs which have had to cut their forex exposures to stay afloat.

The Chief Commercial Officer of MTN Nigeria, Mr. Modupe Kadri, also told Nairametrics that the forex issue has eroded the value of its capital spending which is fixed in Naira.

Meanwhile, Nigerian startups saw a slowdown in funding in one year of Tinubu’s administration. Although there was a general slowdown in funding for African startups in 2023, Nigeria’s slide from the position to 4th in Africa in terms of funding raised concerns over the country’s economic status.

According to the analysis of the African startup funding in 2023 released by research outfit, ‘Africa: The Big Deal’, Nigerian startups raised a total of $410 million, less than half of what they raised in 2022 and 2021.

However, a double deal by one of the Nigerian startups, Moove, put Nigeria ahead again in Africa in Q1 2024, although the funding drought continued for most of the country’s startups. Moove secured a total of $110 million in two separate deals to account for 24% of African startup funding in Q1 2024.

On a not-too-palatable development for the Nigerian tech industry, Microsoft shut down its Africa Development Centre in Nigeria earlier this month, which led to the loss of jobs for more than 200 Nigerian Engineers working in the facility.

Although reports suggest that the shutdown was due to the tough conditions in the operating environment, Microsoft said it was part of its “organizational and workforce adjustments.”

The center based in Lagos was opened in 2022 as part of Microsoft’s push to deliver high-end engineering and innovation solutions for the company.

In what could be the silver lining for the tech economy in the first year of the administration, ICT has maintained steady growth in contribution to the country’s Gross Domestic Product (GDP) over the last two quarters.

In Q4 2023, data from the National Bureau of Statistics (NBS) revealed that ICT contributed 16.66% to Nigeria’s real Gross Domestic Product (GDP) in Q4 2023, an increase in contribution over 16.18% recorded in Q3 2023.

Data for Q1 2024 just released also indicated a further growth in ICT contribution to the country’s GDP as the sector added 17.89% in real terms.