Are Nigerian Developers Greedy?

Nigerian developers have become more expensive. The question on everyone’s mind is: How did we get here? Devcenter carried out a survey with developers in our community in September 2016 and we found that 41% of Nigerian developers earned between N100,000 and N200,000 monthly.

Source: blog.devcenter.co/discovery-finding-the-bes.. Between September 2016 and now, we have seen more developers in our community and on our platform quit full-time roles and move into freelancing roles. While we have enabled freelancing through gigs on our platform, we are still shocked at the rate developers are looking for more. We think a couple of factors are the reasons for this price hike and carried out an investigation. Could it be the value of the Naira against the Dollar, the recent spotlight on the Nigerian tech industry or are Nigerian developers being plain greedy? History — The Naira’s Fall Oil prices worldwide started to fall in 2015 and Nigeria’s currency as a major oil exporter was affected. By February 2016, Oil prices had gone below $35 a barrel. The Naira almost immediately began to feel this impact and drop in value. By the end of the year, the CBN’s monetary policies had driven the cost of the dollar to about N500 on the black market. Banks moved to these forex restrictions by reducing card use abroad(ATMs, POS and websites) and some banks blocked them out totally, alienating Nigerians and its software developers from the global economy. In 2015, if a developer earned N150,000, they made roughly $1000 a month. Compared to September 2016 where their earnings became $300 a month. Depending on where they acquired forex. Prices of gadgets, other electronics and generally imported goods also skyrocketed at this time. This dealt a mighty blow to the cost of living. History — Mark Zuckerberg’s visit Last year was was a hallmark year for the Nigerian tech ecosystem. The Founder and CEO of Facebook, Mark Zuckerberg visited Lagos and Abuja after announcing a $24 million investment in Andela. Zuckerberg’s visit gave credibility to an industry that was trying to prove itself in the eyes of Nigerians. By year end, Nigerian startups had raised more funding from foreign investors than any other year and became the most valuable startup ecosystem in Africa. The Nigerian scene is said to be worth $2 billion according to Startup Genome. Work Compensation Based on our survey in 2016, we put the median Nigerian dev at a salary of N120,000. Which is now about $300 a month according to black market and bank rates. At CBN rates it is $380 monthly. Payscale puts the average pay for a US Software Engineer at $80,825 a year. Almost 18 times more than their Nigerian counterparts. We decided to take a look at living expenses in areas where US Software Engineers live and match them with Lagos. 67% of developers in our survey live in Lagos. It’s important to note that of 133 most expensive cities in the world, Lagos is the only Nigerian city on that list at number 132.

The Economist’s Intelligence Unit bases its calculation on the price of at least 160 products and services in these cities. Depending on how a ‘city’ is measured there are between 450 and over 2000 cities in the world. For developers earning US Dollars and living in Nigeria. Does it even make sense? This is a graph of Nigeria’s inflation rate for the last 10 years. It peaked in 2016.

Source: TradingEconomics We can conclude that though Lagos is an expensive city, it is not as expensive as US cities like San Francisco and New York. But the fall of the Naira made the US dollar a more attractive currency in 2016 and 2017 compared to the years before it. For more context, a part-time Lagos designer on Toptal earns a minimum of $30 an hour and could work on a 20 hour project in a week. That’s almost twice the average Lagos monthly salary for designers. A remote job placement on Stack Overflow for a developer starts out at $50,000 a year. The question on everyone’s mind is Are these developers greedy by comparing the US technology market to the Nigerian market? In the next section, we will look at how global developer supply and demand affect the cost of a developer in Lagos. Market Forces Technology companies in the US and Europe raise more funds than their African counterparts. They’re also larger in terms of revenue. Some of the most valuable companies in the world come from Silicon Valley and can well afford to pay $100,000 a year to 1000 developers. Apple’s fourth quarter revenue for the fiscal year of 2016 was $46.9 billion. This means companies that have more cash(revenue or funding) can afford to pay premium price for developers. They can also afford to pay for health, feeding and other allowances and benefits. Despite all the cash in US and Europe, these companies struggle to find enough developers locally to fill their positions. In June 2016, there were 223000 unfilled Software developer jobs in the US. In the Netherlands for example, an average of 13.6% of vacancies for all industries were unfilled in 2014. In the Information and Communications Industry however, that number stood at 21.9%. There is a demand for developers all around the world and companies will have to fill it. They will do this either by encouraging more young people to take up IT related STEM degrees and courses in their localities or look offshore to hire talent. In today’s world where the Internet is the dominant player in conversations, commerce and knowledge transactions, it is difficult to call this a ‘brain drain’. Anybody in the right sector and with the right set of skills can work from wherever they want and achieve impact. Regardless of their age and location. These market forces have opened up Nigerian startups to global pricing and increased pressure to pay developers. Companies will have to find more money to afford skilled workers. This isn’t limited to developers only. The pressure will spread to digital marketers, graphic designers, customer support agents and content creators. All of these people possess unique skills that allow them plug into the global economy easily and meet employer demands. Another question is “Does it make financial sense for a startup in Lagos to match Toptal’s pay?” Back to the Startup Genome report, “Lagos startups have one of the lowest rates of Foreign customers at 6%, suggesting challenges to Go Global(overall average at 23%). Only 11% of startups plan to Go Global” It’s pretty clear that Nigerian startups will have to step up. In terms of raising funds and earning revenue. This is the only way they can match their peers globally and afford good developers. The future of work in the Information Technology sector is remote. Devcenter wants Nigerian software developers, and designers to plug into the global economy. We want to enable the remote lifestyle of work and at the same time build necessary skills for Nigerians to plug into the globally and locally available market.