The Information and Communications Technology (ICT) sector in Nigeria has demonstrated remarkable stability in recent years, significantly contributing to the nation’s Gross Domestic Product (GDP) despite adverse economic conditions.
However, the sector, particularly the telecommunications sub-sector, is now showing signs of weakness, causing concern among industry operators.
The weak signals include unexpected dips in the revenue of sector players, declining average revenue per user (ARPU), reduced GDP contributions, and a significant decrease in the purchasing power of consumers.
These issues have been linked to harsh government policies, such as the removal of fuel subsidies and the devaluation and floating of the naira.
Notable experts, including Bismarck Rewane, Managing Director of Financial Derivatives, Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators in Nigeria (ALTON), and Deolu Ogubanjo, Chairman of the National Association of Telecom Subscribers of Nigeria (NATCOMS), have voiced their concerns.
Top officials from the General System for Mobile Communications Association (GSMA) have also expressed worry.
These professionals warn that without intervention, the broader economy could face more severe impacts than currently observed.
Sector’s Growth Trajectory
Over the past decade, the ICT sector has maintained steady growth, becoming a major contributor to Nigeria’s GDP.
According to statistics from the Nigerian Communications Commission (NCC), telecoms’ contribution to GDP was 7.7 percent in 2012, doubling to 14.3 percent by the second quarter of 2020, representing a growth of N2.3 trillion. The total ICT contribution to GDP reached 17.5 percent in the same period.
In 2012, telecoms contributed 7.7 percent to GDP, dropping slightly to 7.4 percent in 2013 but rebounding to 7.6 percent in 2014.
The contribution increased to 8.5 percent in 2015 and 9.13 percent in 2016. In 2017, it was 8.7 percent, rising to 9.9 percent in 2018 and 10.6 percent in 2019. By the second quarter of 2020, telecoms contributed 14.3 percent to GDP.
The ICT sector’s growth trajectory continued, with a 17.92 percent contribution to GDP in 2021, according to an NBC report. This figure was 20.54 percent higher than in 2020 and marked the highest contribution of ICT to GDP at that time.
In 2022, ICT added 16.20 percent to GDP growth in Q1, 18.44 percent in Q2, and 16.22 percent in Q4. By Q4 2023, ICT contributed 16.66 percent to GDP.
Decline and Losses
Despite these significant contributions, the sector is experiencing a steady decline in growth rate, which experts fear could lead to an implosion if not addressed.
Bismarck Rewane emphasized, “The sector’s current trajectory is unsustainable without proactive measures. We must address the underlying issues to prevent a potential crisis.”
Gbenga Adebayo added, “Harsh government policies are stifling the sector. Immediate action is required to ensure the ICT sector remains a pillar of the Nigerian economy.”
