Despite the huge challenges in the telecoms sector since independence in 1960, stakeholders are of the view that the industry has impacted on the Nigerian economy in several ways, writes Emma Okonji
Although the Nigerian economy is still grappling to catch-up with the rest of the world in the area of technology development that is currently driving global economies, the Nigerian telecoms industry is one industry that has greatly impacted on the Nigerian economy.
The sector has contributed to the economy positively through job creation, infrastructural development and contributing over $70 billion to gross domestic product (GDP) since the inception of Global System for Mobile Communication (GSM) in 2001.
The sector has equally changed the personal and business lifestyles of Nigerians in a most suitable way, through voice and data communications.
Taking a retrospect of the growth trajectory of the Nigerian economy from 1960, when the country gained independence from the British colonial government, to 2001, when GSM was introduced by the government of former President Olusegun Obasanjo, and compared with the present growth rate of the telecoms industry, it becomes absolutely clear that telecoms industry has tremendously impacted on the Nigerian economy in several ways.
In 1960 when the country gained her independence, Nigeria had 18,724 fixed telephone lines. But between 1960 and the year 2000, the active subscriber base grew to 400,000 fixed lines. Between 2001 when GSM was introduced and 2017, telecoms subscriber number jumped to over 150 million, with a teledensity of 102 per cent and contributing over $70 billion to GDP, driving mobile internet connectivity in the country to over 92 million, and became the fastest growing telecoms market in Africa and the entire globe.
Telecoms growth after Independence
Before Nigeria gained independence, communication was mainly through the telegraphic wire initiated by the colonial masters. But after independence in 1960, the Nigeria Telecommunications Limited (NITEL), was established in 1985, following the separation of postal services from telecommunication services. As at that time, telecommunication was the exclusive right of the affluent in the society as only few people had access to telephony. People had to queue for hours and days, just to make international and sometimes local calls with the 090 NITEL line.
However, the advent of GSM in 2001 eventually demystified telecommunications, and gave every Nigerian the access and right to communicate.
Following the coming of GSM, Nigerians could sit at the comfort of their homes and offices to make instant calls within and outside Nigeria, through their personal hand-held devices called the mobile phones. Banking activities are now transacted on the mobile phones without the customers visiting the banks.
From 2001, Nigeria witnessed quantum growth in telecommunications, as subscription moved from 400,000 lines to several millions of lines within a short period of time. Today telecoms subscription has reached over 150 million active lines, with a teledensity of 102 per cent.
Based on the growth trajectory, industry stakeholders are proud that the telecoms sector has impacted lives, businesses and the Nigerian economy, since independence in 1960, despite the late entry and its attendant challenges in service quality, broadband penetration and weak infrastructure rollout.
Sakeholders in the telecoms industry are of the strong view that the sector has impacted immensely on the Nigerian economy through job creation, several communications channels, infrastructural development and contribution to GDP. Although between 1960 and 1990, there was little economic impact from telecommunications activities but from 1991 to 2000, Nigeria witnessed the advent of some Code Division Multiple Access (CDMA) operators like Intercellular, MultiLinks, Reltel, Starcomms, Visafone. However, all the CDMA operators have gone under as a result of their weak technology model, which slowed down growth while competing with stronger technology like GSM technology, Long Term Evolution (LTE) technology, and Over the Top Technology (OTT) among others. Intercellular, however bounced back last year, while concentrating on data communication service delivery in some targeted markets in the country.
The most eventful period was between 2001 and 2015 when the telecoms sector was liberalised. In 2001, the first set of GSM operators were licensed. They are: Econet Wireless (now Airtel), MTN and NITEL. In 2003, Globacom was licensed and in 2008, Etisalat was licensed, while ntel was licensed in 2014, but rolled out services in 2016, after its successful privatisation process through a guided liquidation exercise.
Following the inability of NITEL to cope with competition from GSM operators, it folded up its operations and was eventually sold to NATCOM in 2014, which currently trades as ntel.
Although the deregulation of the sector began in 1993 when the Nigerian Communications Commission (NCC) was established by Decree 75 of 1992, the full deregulation was in 2006, after the five years exclusivity period given to telecoms operators by the NCC elapsed and the market has been opened up more operators.
The struggle since Independence
Having attained the status of an independent nation since 1960, precisely 57 years ago, one will be quick to say that Nigeria is still backward in the area of technology development, given what developed countries of the world have achieved through technology.
Today, developed nations of the world are driving their economies through emerging technologies and governance is highly driven by technology. Systems are automated both in the public and private sectors and technology is used to tame corruption, reduce fraud and to fight insurgencies that threaten the unity of their collective existence. However, such is not the case with Nigeria as the country still struggles to play up the catch-up role in the area of technology development.
Although Nigeria has the market for speedy technology development based on the large size her population that is over 170 million people, the will power and commitment from the previous government have failed the county technology wise because past governments deliberately did not invest in technology, probably because they were overwhelmed by the country’s oil wealth.
But counting the struggles and gains from 1960 to 2001, industry stakeholders felt that governments that existed within that period did not invest in technology, a situation that kept Nigeria far from countries that actually invested in technology. Adebayo, however, said Nigeria later realised the error and commenced actual investment in Information and Communications Technology (ICT) in 2001. He explained that from 2001 to 2017 the telecoms industry significantly impacted on the Nigerian economy in the area of GDP growth, infrastructure development and job creation, despite being a late starter in technology investments.
He said the progress made by the Nigerian economy since 1960 largely depended on ICT investments.
“Governments at all levels and the private sectors, all depend on ICT for their growth and development. This is true because ICT has since become the fundamental and most reliable public infrastructure that we have in the country today,” Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said.
In 2010, MainOne and Glo 1, landed their submarine cables from Europe through the western coast to Nigeria, and this was closely followed by the landing of MTN West African Cable System (WACS) in Nigeria, which were addition to the Nigerian SAT-3 Cable System that was resuscitated by ntel. All these were submarine cables, also known as fibre optic cables, designed to drive broadband penetration.
“Despite the avalanche of submarine cables at the sea shores of the country since 2010, Nigeria cannot boast of nationwide broadband access because of lack of investment on the part of government to build a national backbone infrastructure that will carry broadband capacities from the shores of the country to the hinterlands, where the services of internet broadband providers are heavily needed. The situation has contributed to the high cost of internet bandwidth in the country,” Adebayo said.
Today Nigeria has 22 per cent broadband penetration with a plan to attain 30 per cent broadband by 2018, as enshrined in the National Broadband Plan of the country.
Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said: “Broadband penetration in Nigeria is largely mobile, which makes it necessary for government to provide backbone infrastructure.” He however said government has refused to invest in broadband infrastructure, thus compelling telecoms and internet service providers to rollout their own broadband infrastructure in order to provide broadband services for Nigeria, with over 92 per cent mobile internet connectivity.”
Since independence, Nigeria has been battling with service quality, but it became more prominent after the licensing of GSM operators in 2001.
Since the rollout of GSM services, subscribers have been experiencing poor service quality offerings across networks. It is either subscribers are unable to effect calls, unable to recharge their phones or they are burdened with intermittent drop calls and non-delivery of text messages, as well as unsolicited text messages.
To address the challenges, NCC came up with several measures, which included the introduction of Key Performance Indicators (KPIs) and fines, as well as ban on telecoms promotions, yet the mobile network challenges continue to bite hard on telecoms subscribers.
But considering different measures put in place by the regulator and the telecoms operators, Adebayo said there has been significant improvement in service quality delivery. He said right of way permit from various governments has been a barrier to broadband penetration and better service quality. He called on the various state governments in the country to consider removing right of way barrier in telecommunications to enable faster broadband penetration and better service quality delivery in data and voice communications.
ICT growth and disruptive technologies
Addressing the issue of ICT growth and disruptive technologies, the President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola said: “ICT is the bedrock of any society and the tremendous growth in the application of ICT has helped many countries in the world to solve poverty and create new industries. Right now we are moving to the Industry 4.0 era. Lots of opportunities exist in training our burgeoning youth and creating an ecosystem that will act as a supplement to our extractive industry’s ecosystem.”
He said since independence, disruptive technologies like Over the Top Technology (OTT) and Artificial Intelligence (AI), have been evolving, causing some forms of disruptions in the industry, occasioned by the convergence of Information Technology (IT) and Telecommunications.
The convergence in technologies, he said, was all as a result of the power of the Central Processing Unit (CPU) and the advent of the World Wide Web (www). The internet technology has disrupted the classical plain old telephony services that have controlled the telecoms industry for more than a century.
“Now we can render universal services over Internet Protocol (IP) technology much better than we deemed possible in 1960. With this reality, it opens up many exciting areas for the rendering of applications and productive tools that makes the introduction of new voice applications relevant. Instant messaging and other OTT unified messaging platforms especially on smart phones and other portable devices, create a new paradigm that telecom operators will have to contend with,” Teniola said.
“The challenge is that OTT business models are based on advertising revenue and not on minutes of usage. The advent of OTT players offering free telecoms services, while riding on the network of legacy telecoms operators, is an interesting development that the regulators around the world will have to manage. Proffering solution as to how Internet of Things (IoT) and Artificial Intelligence (AI) will further advance technology development in Nigeria,” he said.
He said machine learning and AI are very powerful technologies that would determine the way and manner Nigerian companies can service their customers. According to him, the social media activities and the speed at which news travels, is digital in nature, virtual in reality and massive in data science.
“IoT is the enabler for all these and requires significant investments in low latency networks to connect and properly process the volumes of transactions and events from these devices,” Teniola added.
The rise of technology startups
Teniola, who commended the recent rise in technology startups in Nigeria, explained that it would boost technology development, if given the adequate attention. Nigeria had in the past, missed out in several global evolutions, but insisted that should Nigeria invest in startups and get the initiative right, the country shall be on the cusp of great things.
“We however still need to create an enabling environment that promotes a true startup ecosystem and our financial system needs to change to include more risk friendly criteria to allow failures to happen to find the big winners, otherwise, Nigeria might suffer another brain drain of youth talent to more friendly countries,” he added, stressing the need for government to restructure the education needs of the country, in order to address science technology deficit that exists in the Nigerian society.
Speaking from the perspective of a regulator, the Executive Vice Chairman of NCC, Professor Umar Garba Danbatta, has said the telecoms sector has contributed immensely to Nigeria’s economic growth, despite the challenges.
Speaking at the Nigerian Investment Forum during the just concluded ITU Telecom World Conference in Busan, South Korea, Danbatta said investments in the telecoms sector had grown from a mere $50 million in 2001 to about $70 billion, and reassured foreign investors of safety in their investments, since most of the investments were Foreign Direct Investments (FDIs), that needed full protection.
According to Danbatta, “The NCC is assuring the investors that our doors are open and that we will do whatever we can within the regulatory mandate assigned to us to ensure that their investment is safe and secure.”