Emma Okonji examines the impact of the activities of the Information and Communications Technology (ICT) sector on the Nigerian economy in 2021
As the year 2021 winds down and comes to an end by tomorrow, industry players across all sectors of the Nigerian economy are already counting their gains and losses for the year, but those in the ICT sector are confident that the sector contributed immensely to the sustainability of the Nigerian economy, despite the many challenges that the sector faced in 2021.
In a quick retrospect of some of the activities that played up in the ICT sector in 2021, industry players were of the view that ICT played a prominent role in all sectors of the Nigerian economy in 2021, and contributed to GDP growth, telecommunications, e-commerce, banking, agriculture, health, manufacturing, among other sectors of the economy.
The Chief Executive Officer of MTN Nigeria, Mr. Karl Tortola, told THISDAY that telecommunications remained the only sector where consumer prices have dropped consistently year-on-year since 2001. He wondered how the Nigerian economy and the global economies would have been without telecommunications, insisting that no other sector in Nigeria and the world has impacted the economy the way telecoms did.
He gave instances of food items, manufacturing products, including building materials, whose prices have continued to increase without dropping, and compared them with the cost of telecoms services, which he said, had continued to drop since the rollout of GSM in Nigeria in 2001.
GDP Growth
From the inception of GSM services rollout in 2001 up till 2021, telecoms contribution to GDP is put at over $70 billion. The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, said the figure had even gone beyond $70 billion in 2021, given the continuous growth rate of telecoms operations in the country.
The contribution of the telecommunications sector to Nigeria’s Gross Domestic Product (GDP), doubled in the last eight years, according to data obtained from the website of the Nigerian Communications Commission (NCC).
According to the statistics, telecoms contribution to GDP in 2012 was 7.7 per cent, but the figure doubled to 14.3 per cent as at the second quarter in 2020.
The statistics indicated that telecoms contribution to GDP had maintained a steady growth rate between 2012 and 2020, excerpt for 2013, when there was a slight drop in the contribution, compared to the contribution in 2012.
The statistics showed that in 2012, telecoms contribution to GDP was 7.7 per cent 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, telecoms contribution to GDP further increased to 8.5 per cent and it had another increase in 2016, contributing 9.13 per cent. In 2017, it contributed 8.7 per cent to GDP and in 2018, telecoms contribution to GDP grew to 9.9 per cent.
In 2019, telecoms contribution to GDP grew again to 10.6 per cent and in 2020, as at second quarter, telecoms contribution to GDP, reached 14.3 per cent, representing N2.3 trillion, whereas the entire contribution of ICT to GDP within the same period was 17.5 per cent.
Impressed by the contribution of telecoms to GDP, Danbatta said NCC would continue to rollout initiatives and implement government policies in such a way that the sector would continue to grow the country’s GDP.
ICT sector and COVID-19
Speaking about the impact of ICT on the economy during COVID-19, the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, told THISDAY that the ICT sector has done very well for the Nigerian economy. According to him, Nigeria and the rest of the world experienced COVID-19 pandemic in 2019 and we are still living with the pandemic till date, which has posed serious economic challenges to the entire world, but telecoms came to the rescue.
“As of today, socio-economic activities, religious activities, including networking, are all dependent on the use of telecoms facilities and infrastructure. Telecoms has made life in the ‘New Normal’ less cumbersome for everyone. People are able to work from home and observe social distances and avoid crowd that could spread the virus much faster. Applications for financial transactions now run on telecoms infrastructure, thereby making it easier for people to carry out financial transactions on their mobile phones, without their physical presence in any banking hall,” Adebayo said.
He further explained that government now run on telecoms infrastructure to communicate with the people, through the e-government platform and that government activities are now being accessed online, using the telecoms infrastructure. He said e-commerce would continue to thrive as people now shop online while maintaining social distance and avoiding crowd. The telecoms sector, he added, became a dependable sector for all other sectors to thrive. “Telecoms has become a lifesaver for many other industries and sectors, which could have collapsed without telecoms infrastructure in place,” Adebayo further said.
MTN’s Public Offer
MTN Nigeria Communications Plc (MTN Nigeria), in November this year, got the nod of the Securities and Exchange Commission (SEC), which approved offer for sale of up to 575 million ordinary shares in MTN Nigeria, held by MTN International (Mauritius) Limited, by way of a bookbuild to qualified investors. It is also konwn as Institutional Offer and a fixed price to retail investors (Retail Offer).
MTN disclosed this in a statement it issued, which was signed by the Company’s Secretary, Uto Ukpanah.
In December, MTN pegged its public offer to retail investors for the sale of up to 575 million shares at N169.00 per share. The opportunity to open its share for sales to retail investors, raised the hope and confidence of intending investors in MTN Nigeria. The Offer includes an incentive in the form of one free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor. The incentive is open to retail investors who buy and hold the shares allotted to them for at least 12 months, post the allotment date.
The Retail Offer is the first in Nigeria to be delivered via a digital platform. By using the power of technology, it aims to facilitate the maximum possible participation by Nigerian investors.
Commenting on the price, MTN Nigeria Chief Executive Officer, Karl Toriola, said: “The success and growth of MTN Nigeria is intrinsically linked to that of Nigeria and Nigerians. Therefore, we are very excited to offer Nigerians the opportunity to own shares in MTN Nigeria.”
MTN Group President and Chief Executive Officer, Ralph Mupita, said the Offer would align with MTN Group’s strategic priority to create shared value.
He explained that ivestors would be able to submit applications through the Issuing Houses, Receiving Agents (authorised Stockbrokers and Nigerian banks) and online via a unique digital application platform, PrimaryOffer, administered by the Nigerian Exchange Limited.
Following the pegging of its share price at N169.00 per share, MTN quickly commenced a nationwide roadshow to engage interested retail investors in the on-going offer for sale of shares in MTN Nigeria, by the MTN Group.
The first roadshow was held at the Transcorp Hilton in Abuja, along the sidelines of the South African President, Cyril Ramaphosa’s State visit to Nigeria where the two countries hosted a bi-national commission.
The road show was flagged off by MTN Group CEO, Ralph Mupita, on behalf of the MTN Group, whose shares are being made available for sale. After the Abuja roadshow, subsequent roadshows were carried out in Sokoto, and other parts of Nigeria.
Broadband Penetration
Broadband penetration, which is the backbone for internet connectivity, is another area through which the telecoms sector impacted the Nigerian economy in 2021.
Having surpassed the 30 per cent broadband target in December 2018, the federal government came up with a second National Broadband Plan (2020-2025), with a target to achieve 70 per cent broadband penetration by 2025. As at October 2021, broadband penetration was 39.89 per cent, with a subscription figure of 76,146,156, but industry players said the penetration and subscription level must have increased in December 2021, based on the implementation plan of the second National Broadband Plan, which seeks to deliver data download speeds across Nigeria at a minimum of 25Mbps in urban areas, and 10Mbps in rural areas, with effective coverage available to at least 90 per cent of the population and penetration rate of 70 per cent by 2025 at a price not more than N390 per 1GB of data.
The broadband plan also targets the deployment of nationwide fibre coverage to reach all state capitals, and provision of a point of presence in at least 90 per cent of local government headquarters. It also targets tertiary educational institutions, major hospitals in each state and fibre connectivity at statutory rates of N145/ linear metre for Right of Way (RoW).
From less than six per cent broadband penetration in 2015, Nigeria witnessed increased broadband penetration that reached 45.93 per cent as at Q1, 2020, but witnessed a decline to 41.18 per cent between December 2020 and March 2021, and a further decline to 39.89 per cent in October 2021, which was the period that Nigerians suffered SIM card ban.
Statistics showed that the number of Nigerians with access to broadband (internet high-speed) services on their mobile devices as at Q1 2020, which stood at 87.6 million, reduced to 78.6 million by the end of March, 2021, which has been attributed to policy implementation that rather set the telecoms sector backward. During the same period, basic active Internet subscriptions dropped also from 154.8 million to 144.9 million, according to statistics obtained from NCC’s website.
In spite of the drawback, broadband penetration has picked up again and it is expected to be sustained through the right policy implementation.
The berthing of additional subsea cables and the launch of African Data Centres in November 2021, will further boost broadband penetration across the country in the coming years.
Africa Data Centres
The launch of a 10 megawatt data centre facility in Nigeria in November this year by the Africa Data Centres, which is a consortium of data centre operators, served as another avenue for broadband penetration and economic diversification.
Speaking at the launch, the Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, who was represented by the Director, Licensing at NCC, Muhammed Babajika, said the facility launch in Lagos was a welcomed development and that the NCC would offer all the regulatory support that would make Africa Data Centres succeed and achieve its objectives in Nigeria.
According to Danbatta, “The diversification of Nigeria’s economy is a key priority for the administration of President Muhammadu Buhari, and government therefore welcomes Africa Data Centre to Nigeria to further boost her diversification process.”
Lagos State Governor, Babajide Sanwo-Olu, who was represented by the Commissioner for Science and Technology, Hakeem Fahm, said with the launch of the data centre by the Africa Data Centres, called LOS1, the state government would look forward to seeing LOS2 and LOS3 shortly.
“Today we celebrate the official launch of Africa Data Centres LOS1 facility in Lagos and it is our strong belief that the facility located in Eko Atlantic, will revolutionise digital solutions in Nigeria and the rest of Africa. Government will provide the necessary support required to achieve the objectives of Africa Data Centres,” Sanwo-Olu said.
The new facility, the largest network of interconnected, carrier- and cloud-neutral data centre facilities on the continent, will pave the way for Africa Data Centres hyperscale customers to deploy digitisation solutions to West Africa.
CEO of Africa Data Centres, Stephane Duproz, said: “As part of the recently launched Cassava Technologies group, Africa Data Centres plays a critical role when it comes to providing this very digital infrastructure that is needed to support the mass adoption of digital services for consumers and businesses in the region.”
Managing Director, Africa Data Centres, Wole Abu said the launch in Nigeria would drive positive competition and faster growth of the Nigerian economy.
Challenges
Despite the successes recorded in 2021, telecoms stakeholders said the industry did not end the year without obvious challenges. According to Adebayo, “All eyes are now on the telecoms sector, including the government, who felt telecoms has become a cash cow to milk from. There has been challenges of indiscriminate taxes and levies on the telecoms sector and telecoms facilities have come under severe vandalism, which led to disruption of telecoms services in the affected areas in 2021.”
Incessant closure of telecoms sites by government agencies and stealing of telecoms facilities like generators and batteries at cell sites, were equally part of the challenges faced by telecoms operators in 2021, Adebayo further said.
