Experts delve on import of currency devaluation on ICT Industry, others

With the recent Central Bank of Nigeria (CBN) move with the Naira against the dollar, some experts said it been liberalized in the market and that has caused significant increase in confidence even as international potential clients that they were coming but held back have re-engaged to that wind of change to boost local content.

Speaking to Daily Times in an exclusive interview Ayotunde Coker, MD Rack Centre, Lagos cited that his company international potential clients for instance have finally re-engaged in two or three day of that change, while the Naira has actually appreciated because the parallel market now is moving closer to the official market.

It is like the real currency is being actually devalued for sometimes now if you listen to the industry commentators in the parallel markets because the official market was being reserved for more specific things. With the recent CBN move what has actually happened by and large is the Naira has been liberalized in the market and that has caused significant increase in confidence even with our international potential clients.

The Naira has actually appreciated because the parallel market now is moving closer to the official market. If it finds its own market value then we can get on with business understanding what the market value is. As long as it is creating the level of confidence with investors and other international players that want to consume our services, we bring them here and that is positive for us. That means we will be bringing in foreign exchange.

It helps us also because in the core infrastructure we provide dollar related commitment as we develop the level of our IT. By and large, the changes that have happened are significantly positive for us in terms of how we move forward because it generates confidence and if you continue to imbed that confidence in terms of how people see doing business with Nigeria companies, the best for everyone.

So we are seeing a change and a positive change even in Nigeria in terms of sentiments in the market,” he said.
Coker explained that it has been affecting the issue of importing infrastructure because they ensure that at the Naira point of view they make the dollar commitments because the company import a lot of the core infrastructure that they have.

One of the things we do here is that we have a significant amount of Nigerian content value add because we have the infrastructure we put it together and we deliver it to consumers both locally and internationally. That values add is part of the total value package, so we are full of exposure. Any economy will import the components of its finished product.

Even BMW in Germany doesn’t make everything in Germany; some BMW components are made in UK. They assemble it in Germany as German IP (intellectual property) to sell and that is the same thing we are doing here. We have a combination of input prices that are dollar related.

We add the Nigerian intellectual property on top of it plus cost scale that we add and we are able to sell into the economy. Increasingly you will find that with the location of the Rack Centre and as we are establishing our business here, we will export our services elsewhere, but we already have some international players here, who are buying our services internationally.
I don’t want to be a purveyor of doom that naira has devalued. Look at what happened to the pound it has come down to I40 to 132 dollar to the pound. In actual fact over the last two years the pound has gone down from about 160, 165 to the dollar to 132 to the dollar now. Let’s see every aspect of it as opportunity; the UK imports more than it exports, actually similar to Nigeria. But the way they see it is this, with the value of the currency now it makes it a market where people are more likely to manufacture in because it is cheaper so that they can export.

So net-net you will find that the economy will be shifting from net import to net export. So why can’t we see that in the same light. The dollar was comparatively weak, last year it strengthened. When dollar is weak Americas stay at home to do staycation, they don’t go abroad. So there isn’t anything so hugely unique about Nigeria that we will say it is doom as long as the currency is very well managed and there is confident and we have the instruments that can be used for people to hedge their dollar commitment or Naira commitments, then its fine. People also hedge their prices to oil, like the airlines.

The reason some airlines don’t want to reduce price was because they were hedged to a certain price. As soon as they came out of their hedges they could reduce price of flight because of cheaper oil. We need to put the valuation of the naira in perspective, let’s do the right thing. Let’s have right confidence, just to do it at the same international standard and that will give us a diversified economy and we will be fine.

On his part, Prof Adesola Aderounmu, President Nigerian Computer Society (NCS) informed Daily Times that the CBN policy is very good now for the ICT industry since stakeholders in the sector have been talking of local content. You will be forced to look inward and make use of what you have to solve local problems,” he added.