CBN, ICT as Economic Stimulant
By Jennifer Michael
The information and communications technology (ICT) sector has in recent times been a major player in solving societal issues and the Covid-19 pandemic made its essence felt even more. Across the globe, technological advancement is being used to proffer solutions and Nigeria is not left behind in the fast changing world of technology.
In 2019, Nigerian tech start-ups had attracted $122 million in seed funding and despite the pandemic that besieged the world in 2020, the industry had been able to attract investments worth over $120.6 million last year.
Tech start-ups in Nigeria have permeated almost all sectors, offering solutions from healthcare to agriculture, finance, trade, commerce amongst others. The sector which is comprised of mainly youths have been a major player in job creation in the country.
With unemployment rate at above 33 per cent, the ICT sector has proven to be not just a succour to the rising unemployment rate in the country but also a foreign currency earner for Nigeria. According to the 2019 African Tech Start-ups Funding report, 311 African tech companies secured $491.6 million worth of investment in 2019 and Nigeria got 24.8 per cent of that fund. The number of investors in African tech start-ups jumped by 61 per cent to reach 261.
Last year, more than 100 investors, both individual and institutions participated in funding rounds of over 50 Nigerian tech start-ups. As with 2019 data, Financial Services providers sector got the biggest share of the total funding for the year and not less than 15 start-ups raised at least a million dollars each in 2020.
The impact of this is not lost on the economy as figures from the National Bureau of Statistics (NBS) reveals that there was an increase in the contribution of the Information and Communications sector to Nigeria’s GDP (Gross Domestic Product) in 2019.
According to the report, Nigeria’s GDP in Q4 2019 stood at N19.53 trillion and the sector contributed N2.57 trillion. This amounts to about 13.12 per cent of the real GDP of the country in Q4.
The sector also recorded the highest growth rate of all the sectors of the Nigerian economy, not only in the last quarter of 2020, but all through the entire year. In fact, the ICT sector grew by 14.70 per cent in the last quarter of 2020 and also posted a 12.90 per cent growth rate in the overall period of assessment. It is currently rated as the only sector to have grown by double digits.
Several tech start-ups abound in the agricultural, educational, healthcare, banking and finance, e-commerce, and transportation sectors of Nigeria’s economy are utilising digital technologies and innovation to deliver creative solutions to different problems in communities.
The ICT sector has also been a growing sector, helping to grow the Gross Domestic Product (GDP) of Nigeria in the past years. But even at these, Nigeria needs a robust economy that will create jobs for its citizen
As part of the federal government efforts to boost job creation in Nigeria, particularly among the youth, the Central Bank of Nigeria (CBN) in conjunction with the Bankers’ Committee had developed a Creative Industry Financing Initiative (CIFI).
This initiative is built on four pillars: fashion, information technology, movie and music. The Initiatives provides single digit interest loans for young Nigerians interested in the fashion, movie production, movie distribution, music, information technology.
The fund is as such that it can be accessed even by students in the tech or software engineering sector where they get funding for training that or start-up from as low as N3 million. The fund is given at a single digit interest rate with no physical collateral.
As at September last year, the CBN had disbursed N2.93 billion through the Creative Industry Financing Initiative and at the January 2021 MPC meeting, the CBN Governor, Godwin Emefiele said it had provided financial support through the Creative Industry Financing Initiative and Nigerian Youth Investment Fund amounting to N3.12 billion with 320 beneficiaries and N268 million with 395 beneficiaries, respectively.
Emefiele recently affirmed the apex bank’s readiness to invest in the Information and Communication Technology (ICT) sector in order to stimulate economic growth and development. According to him, the sector emerged as a significant source of resilience in mitigating the impact of COVID-19 on the economy, by contributing over 17.8 per cent to the GDP growth by the end of 2020.
Represented by the CBN’s Acting Director, Corporate Communications, Mr. Osita Nwanisobi, at the CBN Special Day at the 32nd Enugu International Trade Fair with the theme: ‘Promoting new technologies, business ideas and strategies for rapid economic growth and development in Nigeria’, Emefiele said the growth of start-ups in the fintech and health care space rose in response to the COVID-19 pandemic.
According to him, the CBN is pushing other banks to consider viable IT firms that have the potential to not only serve the needs of the local market but can export ICT-related services to other countries.
“With the ICT start-ups emerging to support SMEs, farmers and providing quality learning to students, it is important that we continue to leverage ICT as an enabler for growth in key sectors of the economy” he added.
Going forward, the Nigerian Economy is bound to grow with a heavy influence not from oil but from the ICT sector which is proving to be a solid foreign currency earner for the economy as well as a job creating sector.
Michael, an IT specialist, wrote from Lagos