September 1, 2021

Why ICT will remain Nigeria’s top GDP earner

Why ICT will remain Nigeria’s top GDP earner

By Prince Osuagwu,  Hi-Tech Editor

At the weekend, the National Bureau of Statistics, NBC announced that  Nigeria’s Gross Domestic Product, GDP grew by 5.01 percent, year-on-years, in real terms in the second quarter of 2021. That makes three consecutive quarters of growth after the negative growth rates recorded in the second and third quarters of 2020.  

Although the growth recovery since the end of 2020, is attributed to the gradual return of commercial activities as well as local and international travels after the lockdown occasioned by the outbreak of CoronaVirus pandemic early 2019, it is also noteworthy that Information and Communications Technology has spearheaded the improvements.

Since the past ten years, ICT has maintained a steady growth and a major boost to the country’s GDP, overtaking the mainstay of the economy, Oil at some point and had remained the top earner till date.

According to statistics obtained from NCC’s website, telecoms contribution to GDP in 2012 was 7.7 per cent, but the figure doubled to 14.3 percent as at the second quarter of 2020. This represented a N2.3 trillion growth, whereas the total contribution of Information and Communications Technology (ICT) to GDP was 17.5 percent.

Except for 2013, when there was a slight drop, ICT contribution to GDP had maintained a steady growth rate between 2012 and 2020.

In 2012, telecoms contribution to GDP was 7.7 percent and in 2013, the contribution dropped slightly to 7.4 per cent, but it picked up again in 2014, contributing 7.6 per cent to GDP. In 2015, it increased contribution to 8.5 per cent and hit 9.13 percent in 2016. In 2017, it contributed 8.7 per cent and 9.9 percent in 2018.

In 2019, telecoms contribution to GDP grew again to 10.6 percent and as at second quarter of 2020 it has skyrocketed to 14.3 percent, representing N2.3 trillion. It continued in that trajectory, to hit 17.5 percent at the end of 2020. It helped in not only taking the economy out of recession but also ensuring the economy does not relapse.

In the latest NBC report,  ICT sector contributed 17.92 percent to the GDP. The figure is 20.54 percent higher than its contribution last year and in the preceding quarter, in which it accounted for 14.91 percent. This is unprecedented and, in fact, the highest contribution of ICT to the GDP.

This is when Oil sector, the supposed mainstay of the economy, only added 7.42 percent in the same quarter, and more interestingly, a drop from figures recorded in the preceding quarter, where it contributed 9.25 percent.

According to ICT industry players, this shouldn’t come as a surprise, considering that world over ICT has provided recovery support to key economic sectors post-pandemic. In dire situations, ICT has always provided the bail-out option and that is why stakeholders believe that  the performance of the ICT sector is expected to continue on an upward trajectory.

The pandemic saw ICT fortunes plummeted as several  businesses relocate online, Churches and schools, government institutions and other private concerns adjusted to the new normal.

The attendant disruptions, restrictions and lockdown also brought home the need for deeper broadband penetration. Although internet penetration gained some ground prior to the pandemic, it however saw a huge surge with the pandemic in full swing. From less than 17 percent, penetration jumped to about 33 percent at the end of 2019 and grew by 10 percent to about 43.3 percent by end of 2020.

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In 2021, there are an estimated  101.72 million  mobile internet users in Nigeria. This figure is projected to grow to 142.73 million by the end of 2026.

This figure implies a huge density in a population estimated at 200 million and strongly indicates that the people have adjusted to the new normal. Traditional brick and mortar in-person financial services are giving way to digital banking and online delivery of financial services, which stakeholders say are strong building blocks to healthy sectoral contribution to GDP.

However, the minister of Communications and digital economy Dr Isa Pantami is upbeat that should the people keep faith with the industry policies his ministry has put in place, the GDP will continue to be stronger with the contributions of ICT.

He said: “The unprecedented contribution of ICT to Nigeria’s GDP is expected. It is as a result of the developments in the digital economy.   The 16 National Policies developed by the Ministry, the 1,667 projects and programmes, the large scale digital skills and general capacity building efforts, stakeholder engagement and creation of an enabling environment. They have all played an important role in this achievement.

“ Also, the dynamic and result-oriented leadership of the sector, which has been acknowledged and appreciated by a wide spectrum of the stakeholders in the sector, both locally and internationally, played a role.  For example, Mr Houlin Zhao, the Secretary General of the International Telecommunications Union (ITU) commended our accelerated digital transformation. Similarly, the Chairman of the United States-Nigeria Council (USNC) also commended our commitment to diversifying Nigeria’s great economy through digital technology and innovation.”

He however, added that “the GDP report has shown how critical the ICT sector is to the growth of the country’s digital economy and, by extension, the general economy.  We call on all sectors to take advantage of the Federal Government’s new focus on the digital economy to enable and improve their processes through the use of ICTs”

He argued that would be a faster way of enhancing the output of all the sectors of the economy and boost Nigeria’s GDP further.

Corroborating him, the Chairman of Association of  Licensed Telecom Operators of Nigeria, ALTON, Engr Gbenga Adebayo admitted that despite prevailing inflationary pressures and the adverse impact of regulatory changes, the Industry’s outlook remains stable on the premise that telecommunications will provide recovery support to key economic sectors. 

He believes that the anticipated business diversification efforts of operators will also support the outlook and keep contributing handsomely to the GDP.

However, he lamented that telecoms services are being seen as a source of internal revenue for all tiers of government, making the operating environment very high and costly.

He said: “The operating environment in some number of states remain as hostile as anything we have had in the past. That trend needs to be reversed” he stated.

He is optimistic that when the operating environment is made to be conducive for the operators, they will create more values  which will result to increase in contribution to the GDP.

Vanguard News Nigeria