TECH HUBS IN NIGERIA: IMPACTS ON EMPLOYMENT CREATION AND KNOWLEDGE DEVELOPMENT

 

ABSTRACT

 

Technology has been identified as a propeller for changes in the society. The creative power of technology has made it a major decider of the nature of work and knowledge. The recent development that have seen the world experience a geometric rise of innovative products have brought to the front burner, the role of hubs, which have been identified as the breeding ground for these disruptors. From Palo Alto in California to Yaba in Lagos, hubs are now emerging as an industrial cluster, building innovations that are transforming the nations.

 

Nigeria has embraced hubs, and many start-ups have emerged from them. Despite the increase in the study of the impacts of hubs around the world, same cannot be said about Africa, most especially Nigeria. This write up examine the contributions of hubs to job creation and knowledge development. We examine the issue with focus on its impacts and challenges. The effort of private sectors, government and other major stakeholders were examined in respect of the identified impact that this special sector can made on the development of the country. In order to fully optimise the sector recommendations were made on what needed to be done to achieve optimal utilization of the sector.

INTRODUCTION  

The growth in technological innovation of the last few decades has proven that technology, most especially in telecommunication, is the influential factor that is transforming every sphere of human lives. Many Africa countries have leapfrogged into modern day IT driven economy through the liberalization of the telecommunication sector of the economies. This adoption is propelling a new wave of innovative entrepreneurial outlets and individuals.¹ it has also been identified as a vehicle for bridging the lag between the rural and urban areas (Choudrie et al, 2017).  

The entrepreneurial ideas emanating from these emerging innovators have positioned them as a source of employment for many unemployed youths. Their roles in economic transformation do not start with job creation as there is a need for training and retraining for many of the working population. The near to nothing presence of IT education in the education curriculum or the persistence closure of educational institution have seen the hub taken up the role of developing new technological education.

Although there have been series of views saying there is danger in digitalization and employment. Should nations who have not perfected manufacturing be fearful of automation of jobs? Or are there opportunities for the nations to leapfrog to the fourth industrial revolution? The hubs that are springing up in all corners of the country have become the breeding ground for these innovative outfits and it's essential to examine their roles in employment creation. 

One of the many areas where technology is having tremendous impacts is in the areas of emerging start-ups. Start-ups are one of the aspects of the Do-It-Yourself (DIY) business models that have become popular around the globe. (Kolade, Atiase, Murithi, & Mwila, 2021)^[1] Entrance into this type of entrepreneurial activity comes with little financial and professional requirements, which is propelling the tremendous growth that is taking place within the sector. The hubs are the incubator centres for these start-ups. Nigeria has been identified as the number one destination of VC investment in Africa in 2020, earning over $300M out over $1,258M generated on the continent (Statista, 2022)^[2]. This shows that the sector has a significant financial power to make its impact fell in the nation, creating new jobs, improving existing once and encouraging learning of new skills. The hubs are the breeding growth for these innovative enterprises, offering mentorship and training. This created a dual role for them as they are not only knowledge development outlets, as some of them can also be classified as EdTech, they are also start-ups using their technological power to bring about social goods. This implies that they contribute to the reduction of the unemployment and underemployment issue facing the country, either directly or indirectly through the start-ups that appear from them. 

  

CONCEPTS AND THEORETICAL LINKAGE TECHNOLOGY AND EMPLOYMENT 

There have been many bodies of work where the issue of technology and employment knowledge has been discussed. For us to have clear direction and linkage between these concepts, a little dive into their conceptualization before having a bit of theoretical linkage. 

  

CONCEPT OF TECHNOLOGY  

Technology is a constantly changing concept, which has different layers of meanings. Scholars have not been able to have a precise concept to describe based on the evolving nature of his scope and meaning. It stands at the crucial point of the human system as it's related to every aspect of human existence. It has been identified as the major propeller of the evolving nature of human society. Hence changing man’s social reality. For an engineer, this concept is around the artefacts of man that lies in material substances (That have changed to the present-day information and communication tools), and educationist will view it from the sum of the scientific knowledge that exist, while a social scientist definition will always include the materials and non-materials (knowledge) aspect of the human life. This implies that technology has always been part of human existence as it has always been a major part of his existence. In this work we will limit our coverage to the activities with information and communication technology (ICT).  

In the view of UNESCO institute for statistics, ICT is “Diverse set of technological tools and resources used to transmit, store, create, share, or exchange information. These technological tools and resources include computers, the Internet (websites, blogs, and emails), live broadcasting technologies (radio, television, and webcasting), recorded broadcasting technologies (podcasting, audio and video players and storage devices) and telephony (fixed or mobile, satellite, visio/videoconferencing, etc.)” (UNESCO, 2022)^[3]. This definition sees ICT as a combination of software and hardware, interactive interact together for achievement of a predetermined outcome. This outcome can be targeted as achieving cost reduction, increased efficiency, improved service delivery or satisfaction of service beneficiaries. Pratt also aligned with this same thought when he described it as, “both the internet-enabled sphere as well as the mobile one powered by wireless networks. It also includes antiquated technologies, such as landline telephones, radio, and television broadcast -- all of which are still widely used today alongside innovative ICT pieces such as artificial intelligence and robotics” (Pratt, 2022)^[4]. This view has expanded our scope to include technological activities that are mobile-based, robotics, as well as artificial intelligence centred. 

  

EMPLOYMENT, UNEMPLOYMENT AND UNDEREMPLOYMENT  

The first demand to make from everyone, that is of working age, is about their contribution to society through employment. Employment as concept described the class of people who are either taking part in productive activities or had taken part in the past. It can also be applied to those for whom their productivity is fully used or those who are partially used. These participants exchanged their work for wages or salary, in cash or in kind, and it might be in self-employment, where profit is the reward. (Luebker, 2008)^[5]  The position of participant in employment is subject to many factors. In a capitalist economy, the market situation plays a key role in deciding individuals’ positions. When issues of unemployment and underemployment are prevalent in any country, it means the market system of such a country is not efficient. Issues of uncertainty, externality and indivisibilities are factors responsible for this market failure, as well as failure of government. Thereby preventing or reducing private sector investment.  

Unemployment on the other side has been defined as “the number of the economically active population who are without work but available for and seeking work, including people who have lost their jobs and those who have voluntarily left work” (Obadan & Odusola, 2022)^[6]. The inability to secure work that can make them productive despite the desire to work means that someone can only be categorised as unemployed when the readiness to do the work is there and the situation is not his fault. 

Underemployment in the same vein, is the situation whereby someone is employed in a job below the ability or his/her skillset. In the view of Kayode et al (2014), this situation can lead to ineffectiveness and unproductiveness, with a small reward that might not meet the needs of the person. (Kayode, Arome, & Anyio, 2014)^[7] This definition of International Labour organisation reference by Obadan and Odusola (2020) and the description of underemployment confirmed that systemic failure is what handles employment situation of this class of citizens, with loss of efficiency and productivity as their end points.  

In Nigeria, the employment report of Q4 2020 shows that 33.3% of the of the working age has been identified as unemployed. There has been a consistent increase in the percent of the country’s joblessness rate since Q1 2017, with youth unemployment been the highest at 42.5% (National Bureau of Statistics, 2021). This is estimated to increase to an estimated figure of 40 to 50 million by 2030 (The World Bank, 2015)^[8] 

During this period, the economy has not experienced a major growth in nominal Gross Domestic product, having miraculously come out of in the fourth quarter of 2020. This situation is in contrast with the growth in these hubs. Many of the start-ups incubated in them have scaled up, Flutterwave which was incubated in Lagos now worth over $3 billion after its series D funding round, with correspondence impacts on jobs and knowledge development. The entire sector (ICT) now stood at 10% of the GDP in 2018 from less than 1.5% in 2001 (Ramachandran, Obado-Joel, Fatai, Masood, & Omakwu, 2019)^[9], and grew to 15% in 2020 (Adhikari, Clemens, Dempster, & Ekeator, 2021)^[10]. The problem of unemployment is a multifaceted issue. As a capitalist-oriented economy, the private sector ought to lead the way for innovative ideas that will bring about new jobs, many of them are being hindered by the failure of government. Basically, a result of inefficiency in allocation of resources of the state.  

 

THEORETICAL LINKAGE BETWEEN TECHNOLOGY, EMPLOYMENT/UNEMPLOYMENT AND KNOWLEDGE DEVELOPMENT

 

As alluded to in the conceptualisation technology has been at the fore front of many of the changes in human society. It has continuously redefined how we interact, work and live. Its evolving nature is the major crux behind the phases that man work has continuously experienced. It is also pertinent to note that society has also been deliberate by developing these technologies. This might be done deliberately to solve some of the many challenges.  

There have been divergent views on the type of linkage between technological innovation and employment, as well as unemployment. Referencing Mokyr et al (2017), (Domini, Grazzi, Moschella, & TaniaTreibich, 2020) posited that, “Assessing how innovation affects employment has long been at the centre of economic debates, both in terms of the effects on the single person, i.e., how the changing working conditions affect the life of people, as well as on employment at a more aggregate level”^[11]. This argument is not new because of the usage of humanoid robot worker in the late 1920 as cartoon and the introduction of cybernetics, where machines and human are fundamentally equivalent^[12], there have been strong divides about the contribution of technology/automation to job creation and job loss. This division is much more pronounced along political party lines, and workers with business owners. The business owners and the reformist (those with left political outlook) have always argued in support of the benefit of automation and technology for job creation. On the other hand, the labour leaders and politicians with ‘right’ political view have always been demanding for cautious approach to adoption of technology. This can be seen in the submission of the British labour Leaders at the congressional testimony to the JEC in 1957^[13]. 

In the academic world, the view of Schumpeter is one of the earliest and prominent views on the benefits of technology to society. To Schumpeter, Technology is a ‘creative destruction’^[14]. This means technology is at the centre stage of the new economic order in society. Hence, naming technology as the superstructure (borrowing from the word of Karl Marx) that dictates changes in society – destroying the past and bringing about in ones. 

While it is important to mentioned that new economic system always requires new skill sets to thrive a responsible for the loss of job among those who cannot adapt to the new economic requirement, measuring using aggregate job will shows that technology net job provision is always more than the lost job. Examination of the work of Kane (2010) on start-ups in USA shows that between 1977 and 2005 start-ups in US supplied the most net jobs (Kane, 2010)^[15]. 

 This shows that technological change always comes with displacement effect and productivity effect. “This process is both challenging and indispensable. Inventing new ways of carrying out existing work, new business models, and entirely new industries drives rising productivity and new jobs. Such innovations bring new occupations to life, generate demands for new forms of ability, and create opportunities for rewarding work” (Autor, Mindell, & Reynolds, 2020)^[16]. The displacement effect though in most case affects the people with low skill set and those with high skill set benefits more. The technological hubs serve the purpose of bridging the gap through knowledge development in the form of training and retraining of this class of people. Hence creating opportunity for active participation in the new technological order, and ‘creating relevance for the future’ (Akanle, Ademuson, & Abraham, 2019)^[17]. 

  

IMPACTS OF INNOVATION HUBS IN NIGERIA  

Started like a seed planted in the middle-class area of Lagos called ‘Yaba,’ tech hubs have now become the order of the day, with over a hundred of them scattered across the length of the country. With the likes of CC_HUB and Andela as the earliest starters, many more have joined and to the extent of getting the attention of international players like Facebook, who launched his first hub, NG_Hub. (Adepetun, 2018)^[18] . The contribution of innovative hubs in Nigeria cannot be overemphasised. They have been identified as sources of many benefits which include but not limited to job creation^[19]. According to the World Bank, ‘It is vital to examine the role that this specialised and newly emerging sector has been playing in skilling up this important population and how impactful their effort has been in reducing unemployment and underemployment’. (World Bank, 2020)^[20] 

According to a 2009 report from the US department of Commerce Economic Development and Administration, hubs provided jobs 20 times less cost than any public infrastructural projects.^[21] This was recognised by the Nigeria government and stated development of digital skills with the aim of making the youth ready for global digital market^[22], as well using it to build a digital ecosystem. (Federal Republic of Nigeria, 2017)^[23]. One of such hubs that is providing this skill is Data Science Network. The hub has trained over 500,000 Nigeria on digital skills. Just as Facebook has set out to make use of NG_HUB to revolutionize digital knowledge by training 50,000 students, Andela set out to training Africans to bridge the gap in global technological skill shortage. In the last seven years, it has not only proven itself in Lagos, but spread across 6 continents. The company is now known for training and placement of young people in tech jobs. 

This has helped the country and its people. As Rouwmaat et al (2003) as posited, “Incubators help society and create the opportunity for societies to evolve such that each society can create jobs and remain relevant in the future (Rouwmaat et al. 2003). They help the government, the community, and the tenants in the hub”^[24]. Some of the graduates of these hubs tend to stay back within the locality of the hubs, affecting the businesses and the community. It is estimated that over $2billion investment has been attracted to Lagos alone through the activities of these start-ups. In 2020 VC investment report, Nigeria is estimated to have attracted the highest funding on the continent, getting over $300M.  

The main reason for the development of this new knowledge is to ensure provision of jobs for over 43% of the unemployed young Nigeria. The hubs have played this role successfully through two distinct parts. The first being a direct effort in job placement either through training and job placement as we have in the case of Andela; and Data Science Network (DSN), who train the young once but help employment through relationship with the private sector. The booth camps of DSN have continuously served as ground for employment for many good talents.  

The second route for employment provision is through mentoring and serving as breeding ground for many new start-ups. Referencing African Tech Start-ups Funding Report 2021, about 161 start-ups in Nigeria have raised around US$900M since 2015 (Jackson, 2022)^[25]. Many of these funds have ended up in training and employment of the ever-growing tech experts that are emerging. According to Matt Warman, UK undersecretary for Digital, Culture, Media and Sport, Nigeria tech space has the capacity to create about 3 million new jobs and generate GBP67.4Billion. (Adepetun, Technology, 2020)^[26]. Within the e-commerce sector, Jumia who is the leading firm have created over 3000 direct jobs and 100000 indirect Jobs (Ramachandran, Obado-Joel, Fatai, Masood, & Omakwu, 2019)^[27].  

The growing activities of these innovation centre have not gone unnoticed by the tech giants, national government, and international communities. Many of them have developed programs and policies to tap into the skills coming from the country. For instant, the first visit of Jack Dorsey, Parag Agrawal, Mark Zuckerberg to these hubs have not only resulted into employments of some of these talents, but it has also led to collaboration that resulted in the support for them to enhance their training capacity. It has also prompted Google and Microsoft to set up their development centre in Lagos. Many developed countries have also proven specialized Visa program to tap into the growing tech skills in Nigeria. The aim of Microsoft is to use the platform for recruitment of world-class Nigeria talent to create innovative solutions for global impact. The implication for this is that the population will become a source of remittances to the country in the nearest future.  A House of common committee of the United Kingdom recognises the importance of this creative population in his report about the state of Tech in Lagos state. The committee found science and technology as the first of its four priority areas of collaboration (House of Commons, 2022)^[28]. This has led to the establishment of “Go Global Africa”, which include iNONO Accelerator program called UK-Nigeria Tech Hub. (UK government, 2021) 

 

CHALLENGES WITH INNOVATION HUB IN NIGERIA 

Despite the tremendous impacts that the innovation hubs have made in Nigeria, there remains a lot of challenges prevent them from effectively deploying the power of technology for the benefit of the nation.  

In a 2021 report by “Financial Times” and “Briter Bridge” on the tech space in Nigeria, despite having the highest numbers of hub and start-ups in Nigeria, the tech space in the country is seen as less business friendly when compare with other nations on the continent. (Olasoji, 2021)^[29]. The Nigerian state in recent times have been known to have introduced policy that inhibit the growth of the technology sector. In February 2021, the Central Bank of Nigeria introduced a circular banning facilitation of exchange of cryptocurrency through the banking sector (Central Bank of Nigeria, 2021)^[30]. This situation led to the relocation of cryptocurrency start-ups. For instance, Patricia Technologies Limited incubated and developed in Nigeria was forced to move its head office to Estonia, because of his cryptocurrency product. The implication of policies like this do not end with job creation and knowledge development but affects the entire structure of the tech ecosystem. 

The perennial power problem has continued to affect the cost of operation of these hubs. Most businesses are known to be the source of their own electricity. The fund that ought to be invested in the business ends up as running cost. This is also applicable to Internet services that are at the forefront of the technology business. However, the effort been put into internet service by the big technology outfit like google can solve this problem.  

Despite all the pronouncement of the government, there has been much support from government in terms of funding and laws. The government needs to support restructuring the existing loan system to make it fit into the business cycle of the innovators. The issue around rate, documentation and moratorium must be addressed to get the ecosystem to blossom. 

 

 

 

CONCLUSION 

It has been proved that technology hubs could aid the country bridge the issue of employment and unskilled young population, through many of their activities. This they have been doing through various online and offline training, as well as recruitment and job placement, within and outside the country. This will only help the country to achieve the needed development and become a player in the fourth Industrial Revolution. 

 There are many challenges that require attention, many of whom can be solved by rethinking some of the policies of government. This will also improve the local economy and improve the quality of life of Nigerians. The government and private developers need to work in tandem to ensure that hubs of the future supply the full range of facilities. While this integration is essential, it is not enough on its own. There is a need for effective collaboration between all the players with the government playing a leading role through provision of amenities and effective policies that will stimulate the sector. The pending start-ups bill at the national assembly must be passed and assented to, to assure investors of the reediness of government to support the sector. Now there is a weak relationship between the private hubs and the government, strengthening this tie would help the community to grow and the government would make policies that would help build and sustain it." 

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