Having realised the need to diversify the Nigerian economy in the area of ICT development, the government must come up with policies that will protect and further boost the sector’s growth, writes Emma Okonji
With the current challenges facing the Nigerian economy particularly in the past one year, which have plunged the country into recession, revenues from the oil sector have continued to drop, thus negatively affecting Nigeria’s Gross Domestic Product (GDP).
In order to salvage the situation, the federal government is seriously driving at economic diversification in the areas of agriculture as well as information and communications technology (ICT) as alternative to oil. But experts in the ICT industry have insisted that taxes and levies from the ICT sector could be huge enough to grow the country’s GDP and provide succor to the ailing economy, if there are right policies to protect ICT investments in the country.
Others are, however, of the view that investments in technology startups could also boost small and medium enterprises (SMEs) in the country and give rise to cottage industries that are known to be drivers of economies globally.
Nigeria GDP growth rate
The GDP in Nigeria expanded 8.99 per cent in the third quarter of 2016 over the previous quarter. GDP growth rate in Nigeria averaged 0.77 per cent from 2013 until 2016, reaching an all time high of 9.19 per cent in the third quarter of 2015 and a record low of -13.70 per cent in the first quarter of 2016.
According to recent statistics, the GDP in Nigeria shrank 2.24 per cent year-on-year in the third quarter of 2016, following a 2.06 per cent decline in the previous period and compared to market expectations of a 2.58 per cent decline. Lower oil prices continued to hurt the oil sector which slumped for the fourth straight quarter while the non-oil sector was flat after shrinking in the previous two periods.
Economic diversification
Diversifying the Nigerian economy in the areas such as agriculture and ICT has been topmost on the agenda of the federal government, hence the 22nd Nigerian Economic Summit, organised by the Nigerian Economic Summit, Group (NESG) held in 2016, deliberated so much on growing made-in-Nigeria goods from agriculture and ICT.
Speaking on the state of the economy and the need to diversify the economy in the area of ICT and agriculture, Chairman, NESG Board Committee on Research and Publication, Dr. Adedoyin Salami, said the current state of the Nigerian economy is in bad shape, but that it could be resuscitated if there is full support and patronage for Made-in-Nigeria goods and services.
He went further to state that the ‘Made in Nigeria’ call is a call to create a productive and sustainable economy, and that the Nigerian economy needs to be productive, globally competitive, inclusive and must be able to add value to its citizens.
According to him, “Our economy is far from ideal but offers us opportunity to revitalise. The economy has shrunk in size, capital flows have been poor and generally, the Nigerian economy has been negatively impacted by the external environment, mainly the price of crude oil. On the domestic side, there have been absence of a
development plan for strategic framework, low global competitiveness and poor ease of doing business.”
Current earnings statistics of the Nigerian economy are not ideal, as export earning was $97 billion in 2013, but this year, we will be lucky to earn $40 billion. This scenario presents an opportunity for us to revitalise the economy, Salami said.
He said more than 50 per cent of young people in Nigeria between 15 and 25 years are either unemployed or under-employed, which he said, is not good for economic growth.
Issues with Nigerian economy
Several issues have been identified as militating against the growth of the Nigerian economy, among which, are the unfriendly business environment, high rate of unemployment, high interest rate on importation of equipment by investors, weak implementation of government policies, and the difficulties in accessing land by willing investors.
ICT stakeholders have traced most of the challenges to over-dependence on oil. They have called on the federal government to begin the implementation of policies that will boost ICT development in the country, which they said, remained the sure way to go out of economic recession.
Speaking at the 22nd Nigerian Economic Summit, the Senate President, Bukola Saraki, noted that the enhancement of ease of doing business is very crucial. He talked about the initiative of the Senate known as the National Assembly Business Environment Roundtable (NASSBER) document, which seeks to address 11 key areas where laws governing business activities may need to be reviewed as a result of the country’s harsh business environment.
The Minister of Mines and Steel Development, Dr. Kayode Fayemi, who also spoke at the policy dialogue forum of the summit, revealed why Nigeria has not been successful in the areas of solid minerals and mining. According to him, the country has good policies for the mining sector, but lacks proper implementation of those policies that should drive the economy. While faulting the legal and regulatory environment of the mining sector, Fayemi said several people are involved in illegal mining in the country and that they see nothing wrong in it, since the mineral resources are located within their farmlands.
Promoting local content with tech startups
Stakeholders in ICT industry have also identified the need to grow local content by supporting more technology startups in accessing funds to grow their businesses, which they said, would boost ICT contribution to GDP growth.
According to them, Nigerian youths are beginning to maximise the power of technology to grow businesses that will contribute to GDP growth, but lacked access to funding.
Chairman, Signal Alliance, an information technology (IT) expert, who is member of the Lagos Angel Network, Mr. Collins Onuegbu, told THISDAY that the best way to develop local content in ICT, is for government to invest in technology startups and make funds available for them to boost technology innovation and creativity.
“Aside funding the startups, government must also consider giving tax rebate to investors who may have invested in startups that could not break even,” Onuegbu said.
He explained that one major drawback about investing in startups, is that nine out of every 10 startups sponsored by Angel Investors or any other investor, may end up not being successful. He therefore said that government must begin to think of how to compensate investors by way of exempting them from taxes, until they recoup their investment on the failed startups.
“If such palliatives are offered by government for investors who invest in technology startups, it will encourage them to invest the more and create opportunity for growth in the ICT sector,” Onuegbu said.
ICT contribution to GDP
Citing the current statistics in telecoms contribution to GDP, as released by the National Bureau of Statistics (NBS) in June last year, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta said telecoms contribution to GDP moved from $18 billion in private sector investments, including Direct Foreign Investment (FDI) in 2009, to $30 billion in 2014, to $32 billion in July 2015, and currently to N1.58 trillion as at June 2016, which represents an increase of 1.0 per cent, relative to the first quarter in 2016.
Danbatta quoted the NBS, as saying: “This is the largest contribution to GDP made from the telecoms sector in the rebased period, which emphasises that growth in telecommunications has remained robust when compared to total GDP.”
Since 2001 when the first GSM licences were issued, telecommunications operators have continued to invest in telecoms infrastructure.
The Chief Executive Officer of MTN Nigeria, Mr. Ferdinard Moolman, while speaking on MTN’s investment in telecoms, said the company had contributed over N1.8 trillion to the Nigeria government, by ways of telecoms investments, taxes, levies and sundry regulation payments, since it commenced operations in Nigeria in 2001.
Part of the N1.8 trillion investment details show that MTN has paid duties on equipment of over N87 billion; duties on stock of over N12 billion; VAT on revenue of over N299 billion; VAT on operating expenses of over N48 billion; employee tax of over N31 billion; company income tax of over N486 billion, among other taxes and investments, which include building of telecoms networks and expansion, totaling over N1.8 trillion, since it commenced operations in Nigeria in 2001.
Aside the N1.8 trillion investments, MTN also invested over N18 billion in MTN Foundation in executing corporate social responsibility (CSR) projects across 771 local governments in the country, in the areas of education, health and economic empowerment in the six geo-political zones of the country, and over N10 billion has been invested to date to support SIM card registration exercise in the country, thus helping to build a national identity database for Nigeria.
Protecting ICT investments
Looking at the huge investments of ICT to the Nigerian economy, of which telecoms operators have played a major role, especially in growing the country’s GDP, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, has called on the National Assembly to expedite action in passing the bill before it, which seeks government intervention to protect telecoms infrastructure as critical national infrastructure.
Adebayo, who spoke against the background of ICT contributions to GDP, said the telecoms sector, which is an integral part of ICT, has proved itself as a strong factor for enabling GDP growth in the country. He said government must therefore do everything possible to protect telecoms investments in the country. Should government heed to the call to protect telecoms investments in the country, the telecoms sector will continue to grow and sustain the country’s GDP in several years to come.
