Redefining Engineering in a Changing Nigerian Economy July

Redefining Engineering in a Changing Nigerian Economy July 2017

Outline Recent Economic Trends in Nigerian Engineering and Infrastructure Development Scorecard Repositioning Engineering in Nigeria for greater impact Copyright © 2017 Accenture All rights reserved.

Recent Economic Trends in Nigeria 3

Our Economic GDP Trend Tells an Interesting Story…. 2012 4. 21% 6. 22% 2014 2013 5. 49% 2015 2016 N 67. 9 Trillion 2. 79% 1. 51% to GDP 2014 Contracting-oil Economy savings, weak currency and corruption sectors. due It to drop in Oil price and revenues, low sovereign fund (%) • • • - Nigeria economic contraction is fairly broad and includes both oil has been a challenging period and the oil and non sector contracted by 17. 48% while the non oil sectors by 0. 38% over 70% of Govt Heavy reliance on oil revenues (typically its Contribution Agriculture Services Growth (%) diversification program to diversify 3 decades, Agriculture Over the last the Nigerian Economyhas moved from being Agriculture based to service based with minimal growth in Industries industrialization. This has created a manufacturing/ infrastructure gap. There is a need to reverse this trend • the To stimulate economic growth in nonoil sectors, Government is focusing on exports, import substitution and backward integration Copyright © 2017 Accenture All rights reserved. 2013 Industries revenues) has amplified the impact of dwindling oil revenues and has led to the government coming up with a strategic revenue sources 2012 Services 22. 91 2015 2016 23. 11 24. 43 23. 71 22. 02 4. 27 53. 18 53. 55 6. 76 2. 24 2015 2016 24. 93 23. 91 23. 33 25. 61 24. 81 50. 48 51. 86 2012 2013 6. 70 2. 94 3. 72 4. 11 2. 43 2. 16 - 8. 53 0. 82 3. 97 8. 38 52. 16 2014 6. 85 4. 78 Source: Nigerian Bureau of Statistics GDP Q 4 2016 Report 4

In Engineering-related Sectors of the Economy… Engineering underpins key economic sectors, such as construction, power, agriculture, manufacturing and telecommunications, Hence, it plays a prominent role in GDP contribution …in the last 2 years, only Telecommunications and Agriculture sectors have shown growth… …Really not all ‘doom and gloom’ There are notable positive developments in engineering related sectors over the course of the last 10 years which have the potential to scale. • The telecommunications industry has over 150 million subscribers • Privatization of power generation and distribution infrastructure • 3 Automobile assembly plants have commenced operations as at 2015. 30 other car brands have obtained assembly licenses • Nigeria achieved self sufficiency in cement production and has commenced exporting surplus capacity to other African countries • Birth of “Yabacon Valley” as a technology hub for application development software • Growth of E-commerce in the country, with the likes of Jumia and Konga leading the way • Dangote Refinery coming on stream in by Q 1 2019 • Innovative but challenging construction projects like the Eko Atlantic City Copyright © 2017 Accenture All rights reserved. 5

What Does this Really Mean? Changing Economy Implication to the practice of Engineering Implications Opportunities With the drastic drop in revenues from petroleum exports, public revenue has dropped by about USD $20 billion per annum The revenue shortage has reduced the ability to fund and execute critical engineering capital projects High cost of raw materials and machinery has negatively impacted engineering related USD $25 Billion Engineering practice needs to develop innovative solutions and overcome internal challenges to designing technologies, systems to propel national, regional, and international trade. Hence, fostering technological innovation and entrepreneurship 2016 & 2017 budgets have been restructured to deliver 30% of spending on infrastructure projects : Per Annum Capital Investment required over the next 4 years, for Nigeria’s infrastructure deficit to be closed sectors leading to low production capacity and loss of engineering key infrastructural spending in the jobs To reduce the revenue deficit, the Government recently set a diversification goal for the country 2017 budget 133 144 At the core of the diversification drive is the rapid stimulation real sector, particularly in production, agriculture/agro-processing, manufacturing, solid minerals and petrochemicals. Copyright © 2017 Accenture All rights reserved. $3. 4 billion has been proposed for : The country recently floated a World Bank infrastructure $1 billion Eurobond most of which development ranking will be spent on key infrastructure with a score of 2. 7 projects from a scale of The Government’sstrategic diversification 1 to 7 programme will succeed only if there is adequate and reliable infrastructure, Nigeria’s position in the particularly infrastructure for power supply and transportation Source: Address by the Honourable Minister of Finance, Mrs. Kemi Adeosun, at the inaugural Xcellon Infrastructure breakfast series. 6

Nigerian Engineering and Infrastructure Development Scorecard

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Agriculture & Food Security Agriculture Nigeria has placed fresh emphasis on the agriculture sector in its efforts to generate broad-based growth, diversify the economy away from hydrocarbons, create jobs, and achieve food security. A flurry of new policies and programs have been unveiled, aimed at both smallholder farmers and large producers. These efforts have been given more urgency by the slump in global oil prices and the drain on foreign currency reserves caused by the crippling cost of food imports. However, implementation has been uneven, partly because the government’s rhetoric about the importance of agriculture has not been matched by a significantly 90 113 larger budget commitment. Where we are Indicator Agriculture Technology Decline in percentage of working population Dominated by small-scale rural farming using Lack of adequate technology platforms that who take up farming as profession. crude equipment. connects farmers directly to retailers/Consumers Crop production (Genetically Modified Crops) Crop production is almost entirely by farming with simple tools. Genetic engineering of crops is not a known means of seed creation *Source: Global Food Security Index Ranking 2016 Global Trends Country Highly automated farming using machineries with data collecting sensors. Crop sensors tell application equipment how much fertilizers to apply in real time. Optical sensors are able to see how much fertilizer a plant may need based on the amount of light reflected back to the sensor Agriculture machinery (per 100 km arable land) Tunisia 142. 6 Spain 831. 2 Poland 1, 246. 00 The growth of Genetically Modified Crops are widespread. These crops also known as biotech Iceland 921. 9 crops are created by the modification of the seeds Romania 201. 2 DNA using genetic engineering methods. Nigeria 6. 6 *Source: The world bank World Development Indicators Key Recent / Pipeline Projects • Nigerian Incentive-Based Risk Sharing in Agricultural Lending (NIRSAL). • Staple Crops. Processing Zones • The Rural Finance Institution Building Programme (RUFIN) • 2. 5 metric tonne-capacity rice milling plant in Imota, Lagos (LAKE rice project) 8

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Energy (1/2) Accessibility of Electricity Dependency on Natural Gases *Nigeria Ranks…. . 85% of Nigerian business owners highlighted electricity as their major challenge. 187 189 Business owners have also estimated a 4% decrease in revenue due lack of electricity As oil reserves have begun depleting and oil prices dropping, it is paramount to explore renewable sources of energy as commercial 171 185 alternatives 190 DAYS 84 DAYS 81% 26% For a business in Nigeria to obtain Is the Global Average for a business to obtain electricity Of Nigeria’s electricity comes from Is the Global Average for Natural gas dependence on Natural gases permanent electricity connection Power Generation Refinery Utilization *Nigeria Ranks…. . This takes into account the 50 key states in Nigeria currently has over 11, 000 km transmission lines. However the high losses 105 151 are due to the use of outdated equipment with th for production oil trade. Nigeria comes in 15 volume meaning most of our products are being resold to us as Fuel, Diesel etc. 50 50 many between 40 -50 years old 13% 1. 2% Of Nigeria’s power is lost during Is the Global Average for power Of Nigeria’s production is refined Transmission and Distribution loss from T&D 15% Copyright © 2017 Accenture All rights reserved. in Nigeria 15, 000% Is the global average. This means that most countries refine over a 1000 times more than they produce *Source: 2015 World Bank Data on Energy and Mining 9

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Energy (2/2) Upcoming and Ongoing Key Development Projects 1 NAIJA LIGHT Solar Electrification Program 2 Trans-Nigeria Line In partnership with the Indian In January 2015 the government, the Federal Ministry of Environment has government announced it had begun designs for its planned 3 Dangote Refinery In 2016, Dangote Refinery in begun sourcing and deploying $5 bn, 1200 -km Trans-Nigeria is presently in its project delivery phase. At 650, 000 barrels per day, this alternative and sustainable renewable energy sources to impact positively on the Gas Pipeline aimed at bringing gas to the north and east by reduces the burden on foreign exchange to source to import 2018 fuel, diesel etc. environment as well as create sustainable livelihood for the rural poor and those most affected by the paucity of electricity and energy supply in the Country Copyright © 2017 Accenture All rights reserved. 10

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Transportation (1/2) Road Infrastructure Rail Infrastructure Nigeria has an extensive road network however this coverage is Nigeria’s railway network is dilapidated and vastly under-utilized. Traffic volumes (freight/passengers) have consequently collapsed still inadequate especially in the rural areas Road network conditions are generally patchy and lack of maintenance has been the most important factor contributing to the deterioration its road infrastructure over the years due to deficient performance and erratic service 126 138 National connectivity will see an improvement once numerous projects are completed in the future. (over 200 road projects have *Quality of Road Infrastructure Where we are Road Type and inovation • Motorways (mostly dual Road Quality • Paved (18%), Unpaved carriages) • Few traffic lights (82%) Where we are Indicator • 6 - 8 lane motor ways • Smart traffic mgt. infrastructure Rail track type • Cape Gauge (over Rail Types • Locomotive rail • Over 25% paved • Gravelled roads instead of unpaved roads signage and barriers • Federal (18%), State these projects are successfully executed Global Trends • Poor design, markings Ownership railway modernization, line rehabilitation and completion or upgrading of existing rail lines Ownership • 81% of Federal roads in (15%), Local (67%) 138 Nigeria’s rail density and Qo. RI ranking is expected to improve if been awarded but not completed as at January 2017) Indicator 103 Recent investments projects in the sector will concentrate on 90%) (3984 km) • Light rail (35 km) *Quality of Rail Infrastructure Global Trends • Standard gauge (1 435 mm) • High speed locomotive rail • Concession (Over 70% • Majorly Govt owned in SSA) • 1 active concession • PPP project (Lagos light rail) SA are concessioned +Road Density (between 2010 – 2015) +Rail Density (2014) Key Recent / Pipeline Projects Key Recent / Pipeline. Projects • Second Niger Bridge (in progress) • Lagos – Ibadan express (in progress) • Abuja – Lokoja • Abuja-Kaduna passenger rail(completed) • Lagos–Ibadan leg of the Lagos – Kano project (Awarded) • Calabar - Port Harcourt leg of the Calabar – Lagos railway project (Awarded) • • • Lagos – Shagamu – Ibadan express (in progress) Benin – Sagamu (in progress) – Mokwa Project (In Progress) Ilorin • Kano – Maiduguri express (in progress) National Integrated Infrastructure Copyright © 2017 +Source: Accenture All rights reserved. Master plan; World Bank; CIA World Fact book • Lagos Light Rail Mass Transit(In Progress) • Abuja Light Rail Project (In Progress) *Source: 2016 -17 World Economic Forum Global Competitor Ranking 11

5 international airports and 21 local airports. Concession plans for four major airports in Lagos, Abuja, Port Harcourt and Kano to the Nigeria has 6 major ports and has concessioned 24 terminals to private operators. Despite significant progress since 2000, much private sector remains to be done to improve the productivity of Nigeria’s main ports 119 Need for infrastructure upgrade such as modern navigational aids, runways, and adequate airport facilities such as warehousing and storage houses to promote increased commerce 138 Renewed interest in setting up a national carrier using a PP model 14 local airlines operate in Nigeria but the local airlines are undercapitalized and face difficulties in mobilizing credit *Quality of Air Infrastructure Indicator World Bank (2014) asserts that processing times in Nigerian ports are longer than anywhere else in Africa. The port continues to face acute Global Trends Indicator • Mono/Dual terminals • Multi terminal • 24 hr operation Cargo Clearance • Majority 12 hr operation Airport Quality • Inadequate and outdated facilities Ownership • Govt owned / managed • 1 Concessioned for local flights • No MRO facilities • MRO Hubs & technical training facilities Port • Over 25% paved Where we are • 5 to 14 days • Gravelled roads instead *Quality of Infrastructure Key Yearly TEUs volume • 1 -2 days and single Window Model of cargo signatures clearance • E Payments and E (ESEN) of unpaved roads Global Trends • 18 agencies and 23 Ships Entry Notification • Fully Privatised • Concessioned 138 lack of modern or functional technology infrastructures such as process automation, valuation database, surveillance equipment tracking systems and integrated process systems. This places the Nigerian ports at a backward position in global ranking Where we are Airport Operation/ Facilities 117 • 1. 1 million (4 th in Africa • High automation for logistics, clearance and payments • Truck call-up systems • 10 million TEUs behind Morocco, South Africa and Egypt) *Quality of Infrastructure Key Recent Projects (to be updated) • New Terminalat Murtala Mohammed International Airport Runway upgrade/maintenance at Abuja • International Airport • Upgrade of navigational Kaduna Airport facilities at in Port • Rehabilitation of rail Harcourt Port • Dredge 1, 000 km of inland waterways • Escravos- • • facilities developmentat Onne Port Complex. facilities at Bullnose, of port Lagos Port Complex, Apapa Deep Sea Port • 12 Copyright © 2017 Accenture All rights reserved. Recent Projects (to be updated) networks Koko access Dredging of channel Phase 4 B port Lekki Warri Development

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Manufacturing Over the last three decades, Nigeria has relied heavily on the export of oil as its main revenue source, allowing manufacturing to remain in perpetual decline 114 Firms stopped being export-oriented, and lacked efficiency. In addition, the manufacturing sector was characterized by increasing cost of production which emanated from high tariff, increased cost of energy input, reliance on poor and inadequate public sector infrastructures and rising cost of import, causing competitive companies to relocate factories abroad A few key industries, such as beverages, textiles, cement and tobacco kept the sector afloat, but even these operated at under half of their capacity Indicator Productivity Where we are • Low levels of output per hour which results in low labor rates. Global Trends • Increased investment into innovation and R&D in to secure a competitive advantage in the future. • Poor scalability - lack size/scale to build sizeable factories that can compete with import flows from Asia or even Europe • Insufficient and underperforming supporting infrastructure and logistical • Leveraging data and analytics for new business model facilities (roads, rail, and ports). Skills Developments • Insufficient skills base, • Significant number of young unemployed youth but most have very limited education or training • Skilled workforce • Advanced strategies for talent development, acquisition and retention • Additionally, artisan skills and craftsmanship are insufficiently available at the right levels. 141 *2013 Competitive Industrial Performance (CIP) Index Ranking Country Ranking CIP Score Germany 1 0. 576 Japan 2 0. 466 China 5 0. 366 South Africa 41 0. 088 India 43 0. 083 Egypt 71 0. 037 Nigeria 114 0. 011 Key Recent/ Pipeline Projects • 120, 000 metrictonnes Wacott integrated rice milling and power generation plant in Argungu, Kebbi • Scrap and Nigeria Billet manufacturing plantby Hong. Xing Steel Company Limited in Aba, • 2. 5 metrictonne-capacity rice milling plant in Imota, Lagos (LAKE rice project) Copyright © 2017 Accenture All rights reserved. • Phone manufacturing plantsplanned by. Tecno and Injoo • 200 million capacity. Secure ID SIM card manufacturing plant in Lagos *Source: United Nations Industrial Development Organisation Industrial Development Report 2016 13

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Information Technology Information technology has transformed the way organizations, businesses, and even individual coordinate and work. With positive impacts on the global economy and across various industries, it is evident in increased innovations, technical progress, enhanced workforce productivity Information Technology Nigeria's information technology industry needs to evolve into solving local challenges to make the required impact. The country injects over $1 billion annually to the Asian and European software industry Nigeria’s hardware industry was estimated at $39. 7 billion in 2014, and forecast to grow to $144 billion by 2020. However, foreign brands 105 dominates ~70% of the market share with a few struggling local brands using their phones to make in-store payments compared to 20% Country 112 105 69 0. 14 Nigeria 130 Netherlands • About 47% of emerging market consumers reported 135 Japan very high in demand • Nigeria is the most mobilized country in the world ahead of India and South Africa. However, about 70% on online transactions are done via desktop • Enterprise apps are moving to public cloud and emerging markets are surpassing developed markets in device ownership and usage 147 France • Cloud adoption rate is low. On-premise is still *Technological Readiness 193 South Korea Sophistication innovative technology • Charting experiences where digital meets physical 600 500 400 300 200 100 0 Singap ore companies. education through development and deployment of 560 United States • 3 Indigenous IT hardware manufacturing High-Tech Exports • Transformation of government, health care, and German y • Few Indigenous packaged application companies. Global Trends China Productivity Where we are Amount ($Billion) Indicator 138 Key Projects • Andela – Technology outsourcing company • Main One – Cloud hosting and Data Centre provider • Remita – e-Payments and e-Collections solution on a single multi- bank platform Copyright © 2017 Accenture All rights reserved. • Tecno in– developed A mobile phone of consumers markets company • Zinox Computers – Manufacturers of Computers and Tablets • Paga – Online Payment Platform *Source: 2016 -17 World Economic Forum Global Competitor Ranking 14

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Telecommunication Nigeria telecommunication GSM industry has 4 major players. The GSM technology has a 98. 33% market share of the Nigeria telecommunication market making it the most widely used technology in the Nigeria telecommunication industry System Capacity – inadequate network capacity both in terms of the number of base stations, network switching capacity and reliability/availability of transmission The infrastructure underlying this technology is still quite limited in Nigeria as network compared other country and it is mostly built and implemented by foreign companies Indicator Where we are Some Factors hindering the growth of the Nigeria Telecommunication industry Power supply to base stations – Telecoms companies largely depend on stable availability of power to function optimally. Currently telecom operators depend on Global Trends alternative power supply to run their Base Transceivers Stations. • Foreign companies dominate the building of the base stations technology and the deployment of the embedded technology infrastructure Technology • 2 G, 3 G consumption of GSM technology and currently moving to 4 G Mobile Phones • Making low cost phones either as subsidiaries of foreign firms or with foreign input in the building process • Local capacity for the building and deployment of the embedded technology as related to countries GSM-licensed frequencies • 5 D is currently being developed while there is a larger coverage of 4 G network • Mobile phones sophistication with phones with superb multimedia services and high end graphical capabilities being built Key Projects Solar power energy initiative by MTN Nigeria to boost its off-grid energy requirement (in progress) 4 G technology deployment in Base Stations across the country (in progress) Copyright © 2017 Accenture All rights reserved. *Yearly growth in active users of GSM technology 180 Number of subscribers ('million) Base station 160 140 120 100 +Telecommunication (GSM active users) 2010 -2016 80 60 40 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year *Source: NCC Database 15

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Building Construction The building construction sector has grown over the years, as a result of increasing demand for real estate and housing 700, 000 Nigeria currently builds around 100, 000 homes annually. The National Bureau of Statistics estimates that Nigeria needs an additional 17 million housing units and at least five million new homes are needed in Lagos alone. To cater to this gap, there is a need to increase access to mortgage financing options for the average Nigerian The number of homes per annum required to cater to With numerous government and private sector led projects currently underway, Nigeria’s building construction sector is poised for considerable expansion in the coming years Nigeria’s growing population However Nigeria suffers from some of the highest construction costs in the world due to a number of factors including the need to import quality building materials, insufficient number of qualified/ skilled local professionals and inadequate infrastructure and power Where we are Indicator Building technology • Generally of a similar kind, mostly made from cement, concrete and iron rod • Skill gap in modern building technology Building materials and methods • High cost affects availability and usability Global Trends Challenging Building Construction Landscape Different materials are commonly used. There are *Nigeria Ranks…. . Container houses (made from ISO shipping containers, glass houses, 3 D printed houses • Use of different materials allows for flexibility in the choice of building materials of high quality local sourced raw materials • Sustainable design and building practices as a result of environmental, geographical and infrastructure factors For the ease of permits obtaining construction 174 190 75% 55% Percentage of building construction costs constituted Global Average for the percentage of building by material costs construction cost constituted *Source: by material costs World Bank 2017 Doing Business Report Key Recent / Pipeline Projects • cost houses Private Partnership in three states through Public Construction of 360 FG low (PPP) “Rent to Own” housing • Proposed annual construction of 100, 000 houses from the FG “Family Home Fund”, for mortgage • in Nigeria as at 2020 Plans are in the pipeline to spend US$3. 5 billion on 25 destination malls • • Eko Atlantic Project Free Trade Zone Lekki Housing Scheme. The Abuja Centenary Green City. Energy Efficient 16

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Mining Nigeria mining industry is largely informal and is fraught with the use of crude equipment and extremely dangerous working practices. It is estimated that about 80% to 85% of current mining activities in Nigeria is via artisanal and small scale mining. With several issues affecting the Ajaokuta Steel Company which was built to provide raw materials to other similar industries like the Jos, Katsina, Osogbo and Delta steel rolling mills, the productivity of these rolling mills have also been hampered. The Government had recently reclaimed the Ajaokuta Steel Company after an initial concessional agreement with investors failed to kick start the company’s steel production while also giving a concession of the Nigerian Iron Ore Mining Company to private investors The ministry of mining recently launched a roadmap that would catapult Nigeria from a mineral rich nation to a mineral mining and - processing country; adding up to $27 billion to Nigeria’s gross domestic product (GDP) by 2025. The Federal Government anticipates that these steps will increase the productivity of the different Steel Mining Firms. Percentage of Mineral Resources Savings *Nigeria Ranks…. . This measures the percentage of the total value of mineral resources that will Where we are Technology for extraction • 80 – 85 % artisanal with the use of crude equipment's Technology for Ores processing • Small scale conversion and processing • Largely manual mining proecdures Global Trends 164 be left after 25 years based on our current consumptions 2% 1% Of our current resources Is the Global Average for the to be left percentage of resources would be left after 25 years Indicator 142 Percentage Export of Minerals • Robotics, 3 D laser scanning, Automated *Nigeria Ranks…. . drilling are currently being used Although Nigeria is a mineral -rich country, only 0. 4% of its minerals are exported to other countries • Large scale conversion of ores into finished goods • Use of advanced and automated technology 131 148 0. 4% 9% Of Nigeria’s merchandise Is the Global Average for Ores and mineral’s exports are minerals and ores Key Recent Projects • The construction of a large-scale Steel Melt Shop in Ilorin, Kwara state. • Thor Explorations Ltd, a Canadian firm acquisition of a 100% interest in the Segilola gold project located in Osun State, Nigeria to boost the exploration of • Gold Agbaja Iron Ore Kogi, Nigeria Project, Copyright © 2017 Accenture All rights reserved. • The Federal Government negotiating a $500 million investment fund with the Nigerian Sovereign Investment Authority (NSIA), to support a long-term development plan for the country’s mining sector. • The Federal Executive Council (FEC) had also recently approved a N 30 billion intervention fund for mining exploration in the country. *Source: 2015 World Bank Data on Energy and Mining 17

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Services (Financial Services) Percentage Growth Spend on IT Spend in Banks In this digital age, banks have had to change the way they interact with their customers. As Fintech and mobile network operators disrupt the market, banks are aggressively investing in digital capabilities to stay ahead of the competition. This is particularly important in sub-Saharan Africa that has been experiencing exponential growth in the digital adoption of customers. The use of Mobile Payment Solutions According to Ovum, global growth on IT Spend Banking spending is seen to be the highest in the Middle East and Africa which would give rise to a total spend on 2. 4 billion dollars 5. 2% 4% Growth in the spend on digital banking as a percentage of IT Is the Global Average for Growth in the spend on digital banking as budgets a percentage of IT budgets The Rise of Digital Banking *Nigeria Ranks…. . Payment methods have been moving from Cash to electronic and Nigeria currently ranks high in the use of mobile phones to transfer money and pay bills. 15 mobile transfers for the past five years. This growth in digital banking 168 is forecasted to an additional 100% in the next five years Interestingly, this list is topped by another African country, Kenya. 5. 6% 3. 6% 200% Of individuals above 15 years, use Is the Global Average for people mobile solutions for bank transactions above 15 years using mobile solutions for bank transactions Increase in the use of electronic banking for e-Commerce and P 2 P Payments in the last year *Source: 2015 World Bank Data on Financial Development 37% Mobile internet penetration in West Africa is expected by 2020

Nigerian Engineering and Infrastructure Development Scorecard The Basics | Services (Entertainment and Tourism) Deployment of Digital Television Digitization of Media The rise of Nigeria digital solutions for entertainment such as iroko. TV, spinlet music platform, pulse etc have been on the rise in the last decade. The expected revenue by 2019 is $8. 1 billion comprising of TV advertising and subscriptions. Nigeria has rapidly become the leader on the African continent in Music and Movie entertainment thanks to digital Nigeria is set to migrate all if it TV frequency from analog to Digital. The deadline for this migration was June, 2017. platforms that has enhanced the spread of Nigerian content 11% 11. 5% 5. 1% Television in Africa. The first Is the global average Growth in media consumer country to do it was Botswana media spending Africa have made digital TV deployments *Nigeria Ranks…. . The entertainment industry currently accounts for over 1. 4% of Nigeria’s GDP. A Pw. C report forecasted that revenue from entertainment are likely to double in the next five years. Technology has played a crucial role in getting Nollywood to where it is today. With the invention of the VHS cassette, Nigerian film content was made readily available to consumers in the early 2000 s. In the past decade however, there has been a drastic change in how the Nigerian consumer consumes content and the sort of content being demanded. The rise of digital media has forced media houses to look to other channels to distribute their content while also increasing the quality of their pictures and content. There is a lot of work to do here in Africa. Companies like Iroko. TV are Copyright © 2017 Accenture All rights reserved. Of countries all over the world The State of Tourism Technology in Nollywood combating this challenge. 41% Countries have deployed digital in the share of people coming to Africa for Tourism. This translates to 1. 2% of all African tourists. Interestingly, Nigeria has increased significantly in the number of tourists coming to 47 58 the country in recent times. However there are still a lot of infrastructure and modernization works required to make tourism sites across the country more attractive and competitive 23. 5% 5% Increase in the number of tourists coming to Nigeria in the past 5 Is the Global Average for the increase of tourists globally years *Source: Pw. C entertainment industry report, UNWTO Tourism Report 2016

Repositioning Engineering in Nigeria for greater impact

Consolidation of engineering organizations to increase financial and technical capability The main limitation for Nigerian engineering firms is their relatively low scale of operations. Scale drives capacity hence this has resulted in a shortage of capacity required to execute projects. This is further compounded by the increasing pressure on engineering firms to accelerate product time-todelivery time, deliver more high-quality products to market orproject customers and reduce overall costs This has led to a situation where most of the large and complex projects are executed bymultinational companies. The current efforts to bridge the infrastructure gap is an opportunity to create more sophisticated and highly capable engineering firms. Thrusts Adopt Consolidation Seek Corporate Financing for scaling up Create large state owned engineering firms 71% Number of global engineering firm CEOs think the pace of consolidation in the engineering industry will increase over the next decade >50% 59% Number of global engineering firm CEOs that expect consolidation to increase in the construction industry Number of global engineering firm CEOS that see consolidation as the most significant force affecting the engineering and construction industry over the next 10 years Smaller engineering firms should consider merging their business with larger entities (locally or internationally) which have more substantial systems and resources in place. Strategically, consolidation allows companies to shift engineering capacity more readily to meet the engineering resources requirements across their business Nigerian construction firms need to consider corporate financing options to build the required capacity and remain competitive. The increasing interest of private equity firms and corporate buyers in the sector will seem to support this view and create the required access to funds required to build the required capacity The Nigeria government can encourage the consolidation or the creation of state-owned Giant Local Engineering companies. This is currently done in China under the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) which performs investor's responsibilities, supervises and manages the state-owned assets of enterprises under the supervision of the Chinese Central Government. Currently, the top 12 Chinese companies in the Global Fortune 500 companies list are state-owned *Source: CEO survey published in 2010 by Farkas Berkowitz & Company 21

Participation of Engineers in Policy Development and Execution… Case for Change Its no no longer safe longer to to sit on on thethe sidelines! that engineers and engineering play in national development Thrusts Technocrat Representation in Government Involvement of Engineers in policy Execution Ownership of Quality and Operational Standards Well Rounded Engineering Curriculum Key issue impacting the growth of the engineering profession in Nigeria (and indeed in many sub-Saharan African countries) is the lack of involvement of engineers in policy matters. Political leaders, it seems, hardly take into consideration the key role It is indeed sad that African engineers have little or no voice in their governments; they hardly influence decisions, particularly on development plans. Consequently, engineering is overlooked and development is stalled even when huge resources are either available or committed. Engineering can only take rootif engineers are involved in policy matters Participation meets Results! >50% of the 20 government ministries that form the Chinese State Council are headed by persons who have engineering degrees or engineering work = China today is living through a heroic stage of engineering in its urbanization and infrastructure development. experience. Technical government positions related to Engineering should be limited to qualified engineers. Positions such as the offices of the ministers and commissioners of energy, works and housing, Environment and transport should be specially for engineers. Establish presidential and ministerial councils made up of respected engineers/scientists for a dedicated science, technology and innovation Offices of the Ministers and Commissioners of Energy, Works and Housing, Environment and Transport should be specially for engineers just as the practice for other specialized field like Health Set up joint task force in conjunction with Engineering bodies to assist in the formulation of new policies related to infrastructure and innovation, monitor the execution of existing policies and plans like the local content act, the Economic Recovery and Growth Plan (ERGP) and the Nigerian Infrastructure Recovery Plan (NIRP) Consult engineers in performing constant review of the Nigeria Industrial Standards to keep up with the dynamic growth in Engineering and particularly the Technology industries The Engineering curriculum (especially at the Post Graduate level) should be expanded to include economics, politics, social development to make the engineers better rounded for Policy work 22

Local Content and Skills Transfer Major projects led by large multinational companies there is a need to review indigenous engineering participation and skills transfer and clearly define and monitor opportunities for engineers. Nigerian engineers now wait an average of four years after graduation before getting their first jobs Import Preference Foreign Company Preference More than 300 textile Mills have closed + down and Nigeria now relies upon massive importation of finished textile products Major firms in the rubber/tyre industry have moved to S. Africa, Ghana etc. and car assembly plants have either closed or a working at low installed capacity ratio = many young people are no longer interested in joining the engineering profession Thrusts Increase Project engineering/consultancy works and enhance knowledge transfer and partnership between the local and foreign companies and build the required local capacity. The Nigerian railway rehabilitation/expansion projects and the airport terminal projects should provide learning and partnering access to Indigenous Companies Increased Import Limitation/ Substitution Local content act should be reviewed to include additional sectors and industries. This will ensure that Nigerian companies participate in strategic platforms for the Nigerian engineers There is a need for Government formulation and implementation of national infrastructure maintenance strategy for government assets The success of import substitution in the cement industry should provide a platform for other industrial sectors to increase local production and For goods currently manufactured in Nigeria should compete favourably with their imported counterparts in order to limit consumption of imported reduce over-reliance of imported products. goods while boosting local manufacturing Copyright © 2017 Accenture All rights reserved. 23

Remodel Engineering Education Budgetary Allocation (FY 17) Human capital shortfall in Nigeria requires immediate attention. Nigeria today produces an annual average of 3, 500 engineers from universities and polytechnics. For a country of 170 million people, the number is exceedingly small, and such engineering graduates cannot find jobs to hone their skills Leverage Exchange Programs Increase Specialized Technical Schools Grants/ Scholarships Promote study and 6% impact on innovation and competitiveness. UNESCO recommended that the government should allocate about 25 per cent of annual budgets to education Redefine the Nigeria Engineering curriculum to focus on relevant and modern industry skills and topics There is a need to devote more time to practical knowledge, internship, professional mentorship for Engineers in Nigeria Universities. This will expose the engineer early enough to the industry realities and ensure a better rounded engineer with industry relevant skills on graduation from the university. For instance, internship can be 3 months per year of the 5 years spent in school instead of only during year 3 or year 4 of undergraduate studies Encourage Universities to setup exchange programs (for both students and lecturer) and teaching & research relationships with more advanced Universities abroad to enable exchange of ideologies and provide access to learning assets from more advanced countries. Promote private participation in setting up technical schools and hubs. e. g. The Samsung Engineering Academy which is pioneered by Samsung is focused on developing young skilled technicians across Africa, Nigeria inclusive. More partnership of this nature will be required to close the technology/engineering skill gap Increase Funding Increase Student Nigeria, so far does not invest sufficiently in vital 21 st century skills and this has a serious 25% Thrusts Redefine the Engineering curriculum Nigeria Way Behind… Increase education budget funding especially for science and engineering schools Encourage private sector participation in setting up grants and donations towards colleges and universities. The federal government of Nigeria has 3 scholarship schemes currently (PTDF scholarships program, Bilateral Educational Agreement Oversea Scholarships and the Scholarships Tenable in Nigeria Tertiary Institutions). These schemes can be expanded and recipients should be mandated to return and take up engineering jobs in the public/ private sector. Reengineering education should also be use of local cassava instead of imported wheat resources Copyright © 2017 Accenture All rights reserved. about looking at using our local resources/minerals e. g. cassava instead of imported wheat for flour, for beer 24

Develop capability in modern engineering practices and technology - Increase investment in research and development (1/3) The Lisbon Strategy, the EU’s manifesto for maintaining the region’s economic competitiveness and growth, recommends that a total of 3% of GDP be invested in R&D. To meet the Lisbon Strategy proposals, the Nigerian government will have to budget N 2. 04 trillion. This implies a direct correlation between R&D funding and economic development Expenditures for R&D (% of GDP) 2005 -15 2013 2005 -15 Nigeria 39 3654 0. 22 USA 4019 412, 542 2. 73 S. Africa 405 9, 679 0. 73 Ghana 39 583 0. 38 Leading countries like China (expenditure for R&D – 2. 05% of GDP), Germany (2. 87% of GDP), France (2. 26% of GDP) and USA (2. 73% OF GDP) have almost attained this target. Country Scientific Full-time and equivalent per technical million people journal (Researchers) articles Source: World Development Indicators: Science and technology 2015 Thrusts Government Led Special Interventions to Government can make R&D spend to be tax deductible. Government can create a faster invention registration process Government can provide better IP protection/enforcement for the inventions from R&D. Boost R&D Encourage Private Sector R& D Funding Encourage private companies to provide grants and funding to research institutions which can in turn be used for their product development and intelligence lifecycle Copyright © 2017 Accenture All rights reserved. 25

Develop Capability in Modern Engineering Practices and Technology - Promote Innovation (2/3) Innovation willnot happen accidentally! *Nigeria is currently ranked 114/ 126 in the Global Innovative Index Ranking (with a global innovative index of 23. 1) of much of the global Technology innovation has been the stimulus and catalyst 20 years economic advances over the last and India that have put technology squarely at the Countries such as the US, Nordics, have been outstandingly successful center of their strategy for progress innovation capabilities to be able to challenges, increaseitscompetitiveness and create future welfare Nigeria will need to spend more to improve address global societal Thrusts *Source: 2016 Global Innovation Index Develop strategy to promote innovation and use of new technology in all sectors of the economy including government (Automation/ Put technology at the heart of economic development Encourage closer working relationships between business and universities computerization of government processes) Create grants to promote innovative ventures Attract Young Innovative Companies (YICs) to setup shop in Nigeria by improving the ease of doing business through streamlined registration and regulation processes and tax incentives Encourage closer ties between academia and industry and allowing universities to commercialize the results of research projects. This will significantly boost the number and quality of innovative ideas and products entering the local economy. Like we have seen done in Israel, most of the Security firms came from the Military and the University system Encourage businesses to sponsor university students and provide vocational education, the levels of employability and skills in Nigeria. This will increase significantly. Harnessed in this way, the expertise of foreign multinational companies (MNCs) can be more easily transferred to the local workforce. Protect innovation & Lawmakers can improve the image and prospects of local companies by passing legislation that enforces high standards of quality and safety, and that protects the intellectual property of those who develop innovative products and services from those who seek to intellectual property produce inferior imitations through rule of law 26

Develop Capability in Modern Engineering Practices and Technology - Promote use of new technology (3/3) Global Trends The adoption of new existing technology is one way the Nigerian Engineering Industry can continue to grow at a similar pace with its more advanced foreign counterparts. - Intelligent Plants: The use of Internet of Things (Io. T) to develop smart plants has been used increasingly globally to reduce response times to issues and predict failures in equipment. Current new technologies are able to harness the expanding power of the web to link different machines using sensors and computers. - 3 D Printing: This technology has significantly reduced cost and time of production. Recently, a 400 sq. feet house was built in 24 hours using 3 D printing. The cost of this was only $10, 000. These devices provide more precision and can translate collected data into insights that help create better outputs. - Automation: Repetitive jobs as well as some specialized jobs have been taken over by machines in the manufacturing industry. This reduces cost, eliminates human error and speeds up the production process by close to 30% Thrusts Funding for New Technology Procurement Import Tariff Rationalization Tax Concessions A special low interest loan fund can be created specifically for companies looking to shore up their technology/ machinery capabilities through procurement of these capabilities. These companies would display the required competence and capacity in the use of the technology/machine. This fund can be in the form of a subsidy Low import tariffs should be set for new technology/ machinery brought into the country by engineering/ manufacturing companies. Companies should be encouraged to upgrade their machinery and technology through tax holidays/ lower taxes. These tax concessions would help these companies to recover from their investments faster. 27

Increase Funding for Infrastructural Development Infrastructure funding by Government, relative to the country's infrastructure needs is rather small. Therefore, the private sector has a prominent role to play in financing infrastructure development particularly, through Public Private Partnership (PPP). Involving the private sector will not only bring about financing opportunities, but also human capacity development, leveraging modern technology and global best practices to deliver value to society. Thrusts Leverage Special funds Encourage more PPP partnership financial closure since 1990 824 41 India Nigeria *PPP projects either under construction or in operation 797 37 India Nigeria The Nigeria Government has recently launched an Eurobond as part of a funding strategy for infrastructure. Other bonds of this nature can be promoted to generate funds specifically for critical large infrastructure projects. Purpose Bonds Leverage Pension *PPP projects that have reached Pension assets in Nigeria was valued at N 5. 8 trillion as at July 2016. A substantial part of this funds can be used for infrastructure projects to grow infrastructure assets Infrastructure projects in Nigeria can be funded by Public Private Partnership (PPP) using any of the different PPP model. Currently from the Nigeria 2017 budget, infrastructure projects are funded by government generated revenues (taxes, export revenues, external borrowing) Create specialized Bank for Engineering and Infrastructure Development Consider creating a specialized Bank to support Engineering, just like in China with China Construction Bank (CCB) Corporation which is one of the "big four" banks in the People's Republic of China (In 2015 CCB was the 2 nd largest bank in the world by market capitalization and 6 th largest company in the world). *Source: World Bank PPP Knowledge Lab 28

Appendices 1. Industry Trends & Adaptation 2. References

Industry Trends and Adaptation: Oil and Gas Trend 1: Platform-less Trend 2: Trend 3: Advanced Robotics Cloud Solutions • This can take the heavy lifting • As a vast amount of data is Drilling • With the phasing out of above- surface rigs, this technology could increase oil yield by up to 6% out of oil rigs, and in the process speed up routine jobs by 25 percent. being collected at the Exploration stage of fields, the industry has turned to the Cloud for faster, cheaper and more reliable option for storing and analyzing data Trend 1: Platform-less Trend 2: Advanced Robotics Trend 3: Cloud Solutions Drilling • This technologyis yet to be adapted to Nigeria’s current drilling practices. This opens up an opportunity for the country to increase its revenues in this 70% for sector which accounts revenues of our Nigeria’s Adaptation Legend Full adaptation of trend Partial adaptation of trend • Some automation has been introduced into this sector. There’s room for improvement which would also reduce the risk of exposing workers to dangerous work conditions • This has become more widely accepted in the Oil and Gas Industry in Nigeria. More companies are beginning to move from hosting servers locally to Cloud solutions Little or no adaptation

Industry Trends and Adaptation: Construction Trend 1: Engineered Wood • These products are stable, reliable, eco-friendly and high functional. Treated as one of a supreme technology, it provides less time-consuming and economical as compared to the walls in any new home Trend 1: Engineered Wood Trend 2: Smart Helmet Trend 3: Transparent Solar Panels • The smart helmet facilitates the • This technology uses workers to get visual instructions for accomplishing tasks as well as notifying them of hazards in real-time technology stable option to mainstream walls electricity Nigeria’s Adaptation Trend 2: Advanced Robotics made significant • Nigeria this hasprogress in the adaption of as more reliable and translucent solar panels to transform ambient light to • This is yet to gain commercial traction in the construction industry. This sort of technology will significantly reduce the risk of incidents while on-site. Trend 3: Transparent Solar Panels • This is slowly gaining traction in Nigeria. There is an opportunity to create this locally as well as reduce the carbon footprint of the country Legend Full adaptation of trend Partial adaptation of trend Little or no adaptation

Manufacturing Global Trends - Intelligent Plants: The use of Io. T to develop smart plants has been used increasingly globally to reduce response - 3 D Printing: This technology has significantly reduced cost and time of production. Recently, a 400 sq feet house - Automation: Repetitive jobs as well as some specialized jobs have been taken over by machines in the times to issues and predict failures in equipment. was built in 24 hours using 3 D printing. The cost of this was only $10, 000. manufacturing industry. This reduces cost, eliminates human error and speeds up the production process by close to 30% Nigeria’s Adaptation - Intelligent Plants : Some real-time monitoring has been implemented in plants across Nigeria but there is - 3 D Printing : There are some startups in Nigeria working on making 3 D printing commercially available. - Automation : Nigerian manufacturing companies have begun to make significant investment into automation of their production process. There is still a lot of opportunity to increase this as most manufacturing companies still opportunity for growth in this area to fully harness the potential of the Internet of Things rely on the manual labour for things like Loading and packaging of goods Sources: https: //www. enotrans. org/wp-content/uploads/Emerging. Tech. v 13. pdf

Agriculture Global Trends - Air & soil sensors: Fundamental additions to the automated farm, these sensors would enable a real time understanding of current farm, forest or body of water conditions. (Scientifically viable in 2013; mainstream and financially viable in 2015) - Equipment Telematics: Allows mechanical devices such as tractors to warn mechanics that a failure is likely to - Rapid iteration selective breeding: The next generation of selective breeding where the end-result is analyzed quantitatively and improvements are suggested algorithmically (Scientifically viable in 2014; mainstream and occur soon (Scientifically viable in 2013; mainstream in 2016; and financially viable in 2017) Nigeria’s Adaptation - Air & soil sensors: There has been some progress to this largely in Sub-Saharan Africa as IBM is investing in a - Equipment Telematics: This is a growing field in Nigeria within other industries with solutions like Novatrack which - Rapid iteration selective breeding: This approach to breeding is yet to be commercially accepted in Nigeria project called Precision Farming. This is however yet to be mainstream in Nigeria. allow real-time geolocation of equipment using sensors. However, this is yet to gain ground in Agriculture. Sources: http: //www. businessinsider. com/15 -emerging-agriculture-technologies-2014 -4? IR=T , http: //focusafrica. gov. in/sector_profile_nigeria. html

References Address by Honourable Minister of Finance http: //www. financialnigeria. com/outlook-of-infrastructure-investment-in-nigeriainterview-49. html#sthash. B 7 yy. JTj. U. dpuf PWC Africa Infrastructure Report https: //www. pwc. com/gx/en/transportation-logistics/publications/africa-infrastructure- Providing Enabling Port Infrastructure to enhance trade by Mallam Habib Abdullahi https: //www. nigerianports. org/dynamicdata/uploads/Providing-Enabling-Port-Infrastructure-to. Enhance-Trade. pdf Framework for improving Railway Sector Performance in Sub Saharan Africa by Vasile Nicolae Olievschi investment/assets/nigeria. pdf https: //www. ssatp. org/sites/ssatp/files/publications/SSATPWP 94 -Railway-Performance. pdf World Economic Forum Global Competitiveness Report http: //www 3. weforum. org/docs/GCR 20162017/05 Full. Report/The. Global. Competitiveness. Report 2016 -2017_FINAL. pdf The Report: Nigeria 2013 by Oxford Business Group Nigerian Economic Recovery Growth Plan https: //loudng. files. wordpress. com/2017/03/nigeria-ergplan. pdf Mergers & Acquisitions in the Nigerian Construction Industry: Some Key Nigeria’s economy and ression: outlook for 2017 https: //www. proshareng. com/admin/upload/reports/ATT 00297. pdf Wikipedia https: //en. wikipedia. org/wiki/Lagos_Rail_Mass_Transit Infrastructure Action Plan for Nigeria Africa Summary Report by Development Bank Group https: //www. afdb. org/fileadmin/uploads/afdb/Documents/Project-and Operations/An_Infrastructure_Action_Plan_for_Nigeria__Closing_the_Infrastructure_Gap_and_Accelerating_Economic_Transformation. pdf https: //books. google. com. ng/books? id=Q 9 g. VBg. AAQBAJ&printsec=frontcover#v=onepage&q &f=false Considerations https: //www. linkedin. com/pulse/mergers-acquisitions-nigerian-construction-industry-some- ogunkunle United Nations Industrial Development Organisation Industrial Development Report 2016 https: //www. unido. org/fileadmin/user_media_upgrade/Resources/Publications/EBOOK_IDR 2 016_FULLREPORT. pdf UNESCO Report on Engineering, Issues, Challenges and Opportunities for Development 2010 http: //unesdoc. unesco. org/images/001897/189753 e. pdf Perspective: The Benefits of Technocracy in China by Liu Yongmou Nigerian Investment Promotion Council Opportunity by Sectors Report http: //www. nipc. gov. ng/index. php/opportunities-by-sectors/transport. html http: //issues. org/33 -1/perspective-the-benefits-of-technocracy-in-china/ Reforming the Maritime Port by Lagos Chamber of Commerce and Industry http: //wdi. worldbank. org/table/5. 13 ; https: //pppknowledgelab. org/countries/Nigeria ; http: //lagoschamber. com/wp-content/uploads/2016/10/Reforming-the-Maritime-Port- New. pdf Copyright © 2017 Accenture All rights reserved. World Bank Data Global Innovation Index https: //www. globalinnovationindex. org/analysis-indicator) 34

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Accenture Global STRATEGY DIGITAL TECHNOLOGY OPERATIONS Our Company “Almost all of the Fortune 100 use the services of this gilt-edged consultancy, making it an intellectually challenging environment. The company has done extensive research into people management as a strategic tool to boost performance. ” (America’s Most Admired Companies Fortune 2008) Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. We are one of the world’s premier management consulting, technology services and outsourcing organisations Accenture gained a 6% increase in Revenue to US$32. 9 Bln in FY 2016 Accenture’s broad range of services cuts across industry groups including Financial Services, Communications, Media & Technology, Resources, Health & Public Service and Products. Accenture operates 50+ Global Delivery Centres in 40 cities to provide a full range of application maintenance services Our Vision To become one of the world's leading companies, bringing innovations to improve the way the world works and lives Our Mission To help our clients become high-performance businesses and governments

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