ICT: Game Changer for Nigerian Economy Since Independence

At 62 years of independence, the Information and Communications Technology (ICT) sector has significantly impacted the Nigerian economy in various ways, despite avalanche of challenges faced by the economy, writes Emma Okonji

At Independence in 1960, Nigeria had a paltry 18,724 telephone lines, with a population of 40 million people, translating to a teledensity of 0.5 per cent. In 2001, when the Global System for Mobile communication (GSM) was launched in Nigeria, telephone lines, which were controlled under a monopolistic market by the Nigerian Telecommunications Limited (NITEL) and few other Code Division Multiple Access (CDMA) operators, telephone lines, were still within 400,000 in number and they were owned only by the affluent in the society.

Between 2001 and 2006, the Nigerian Communications Commission (NCC), the telecom industry regulator, deregulated the telecom industry and granted five years exclusivity period to GSM operators, a development that suddenly pushed the number of telephone lines from less than 400,000 in 2001 to over 10 million in 2006, thus giving opportunity for all Nigerians to own and operate a mobile telephone.

From the trajectory of the evolution of telecom in Nigeria, it shows that the Information and Communications Technology (ICT) sector has the potential and capacity to transform the Nigerian economy and make it competitive with global economy in today’s digital transformation era, giving its growth antecedents.

Speaking about the trajectory of the evolution of telecom in Nigeria, with reference to the nation’s growth, the Executive Vice Chairman of the NCC, Prof. Umaru Garba Danbatta, said as at July 2022, active telecom subscribers have grown significantly hitting 209 million active subscribers, which represents a teledensity of 109.47 per cent.

“Besides, basic internet subscriptions have also grown from zero in the pre-liberalisation era to over 152 million. It is also gratifying that the broadband subscriptions now stand at 85 million, representing a 44.49 per cent penetration,” Danbatta said.

ICT Contribution to GDP

According to Danbatta, as of today, the ICT sector contributed 18.44 per cent to the nation’s Gross Domestic Product (GDP) in the second quarter of 2022. From this figure, telecommunication sector alone contributed 15 per cent.

Chairman, Association of Licensed Telecom Operators of Nigeria (ALTON), Mr. Gbenga Adebayo said the telecom sector has continued to reduce cost of its service deliveries, even in the midst of inflation and economic hardship, thus making it possible to connect more Nigerians and offer them opportunity to transact online, to boost e-commerce. According to him, it is only in telecom that cost of telecom services continues to drop. “In 2001, cost of voice calls was N50 per minute, but today, it has dropped to less than N20 per minute, while cost of SMS messages has equally dropped from N15 per text message in 2001to N4 per SMS in 2022.  The telecom sector is the only sector that supports virtually all other sectors of the economy,” Adebayo said.

The ICT sector has to a large extent, developed the financial sector, through the Financial Technology (FinTech) operators. The Fintech operators have positively disrupted the banking sector, through their innovative technology solutions that have changed the face of financial transactions in the financial sector. With Fintech solutions, mobile apps have been developed that allow bank customers to carry out almost all financial transactions from their mobile phones and from the comfort of their homes and offices, without visiting any physical bank.  

Service Quality

In the area of service quality, Adebayo said although there had been improvement in service quality since 2001, he however said various environmental factors that are beyond the telecom regulator and operators are still impeding service quality. “For Nigeria to have unhindered service quality, all critical factors must be looked into, which he said, include electricity supply, roads, government policies on Right of Ways (RoWs) and multiple taxation. Adebayo therefore advised government not to tax telecoms operations to death, as currently been seen in some states of the federation. 

Adebayo, who commended the federal government for the approval of the 5G network rollout in Nigeria, said: “At 62 years of Independence, government has made the right decision to approve the policy on 5G roll out. This is because 5G is the next generation network that will speed up development. Countries without 5G will be stifling their growth and development. So the approval of 5G rollout in Nigeria by the Federal Executive Council (FEC), is quite significant and this will provide solid foundation for the future development of ICT in Nigeria.”

So many things that will speed up the country’s development, will ride on ICT infrastructure just like the eNaira that was introduced by the Central Bank of Nigeria (CBN). 5G is the technology that is sought-after and it is coming at the right time when Nigeria is celebrating her 62st Independence, Adebayo further said. 

5G Rollout

Still counting on the contribution of ICT to national development since 1960, Nigeria, last month, launched her commercial 5G network, beginning from Lagos State.

MTN Nigeria Communications Plc, was the first network to launch its commercial 5G network in Lagos, with a promise to carryout 5G commercial launch in six other cities, which include: Abuja, Port Harcourt, Ibadan, Kano, Owerri, and Maiduguri.

The Lagos 5G commercial launch came on the heels of its 5G pilot launch in August this year, as mandated by the telecom industry regulator, the Nigerian Communications Commission (NCC).

During the pilot launch, MTN had promised to carry out 5G commercial launch in six cities, beginning from Lagos.

Speaking during the commercial launch in Lagos last month its Chief Executive Officer, Mr. Karl Toriola, said the Lagos 5G commercial launch was in fulfillment of MTN’s earlier promise to begin 5G commercial launch in cities, within one month of 5G rollout.   

The advanced 5G technology promises to extend the reach and capacity of MTN Nigeria’s data network in Nigeria and enable much faster speeds and lower latency, giving customers near-instant access to the things they care about and downloads that take seconds, instead of minutes.

According to MTN, to access the 5G network and enjoy its benefits, customers will need compatible devices, such as routers and mobile phones, which can be pre-ordered from designated MTN walk-in stores and online via the MTN Nigeria website and e-marketplace. The pre-ordered devices can be picked up or will be delivered to customers at designated location.

MTN showed its readiness to offer Nigerians the best of service with 5G technology, when it became the first telecom operator to roll out 5G technology services on its network on August 24, 2022.  MTN Nigeria kicked off an open 5G pilot in the lead-up to its highly anticipated commercial launch.

With the MTN commercial 5G launch, leveraging the largest spectrum dedicated to 5G in Africa, Nigeria will join a handful of African countries that have rolled out the 5G network. 

 5G Spectrum

The spectrum issued to MTN Nigeria as one of the two successful winners of the 5G license bid holds a promising future for technology in Nigeria, and is projected to contribute $2.2 trillion to the global economy by 2034, according to a 2020 GSMA Intelligence report -“The Mobile Economy”. The implementation of 5G will accelerate the actualisation of the national targets in the Nigerian National Broadband Plan, the National Digital Economy Policy and Strategy, as well as other sectoral policies designed to enhance Nigeria’s digital transformation. 

With the MTN 5G launch, leveraging the largest spectrum dedicated to 5G in Africa, Nigeria will join a handful of African countries that have rolled out the 5G network. 

NCC had in December 2021, auctioned two slots in the 3.5GHz spectrum in a keenly contested bid process among MTN Nigeria Communications Plc, Mafab Communications Limited and Airtel Nigeria Communications. At the end of the exercise, NCC declared MTN and Mafab winners of the two frequency slots and gave them timeline to make payment for the 5G frequency licence before issuance of the licence.

Challenges  

One of the challenges faced by telecom operators in recent times was the planned imposition of 5 per cent excise duty on telecom operations, a development that was vehemently resisted by the industry stakeholders in the telecom sector. The Federal Ministry of Finance, Budget and National Planning, had in August this year, notified the telecom sector of the intention of the federal government to introduce five per cent excise duty on telecom operations, in addition to the 7.5 per cent Value Added Tax(VAT) that all sectors of the economy pay for goods and services rendered.

Disturbed by the planned imposition of five per cent excise duty on telecom services, the Minister of Communications and Digital Economy, Dr. Ibrahim Pantami, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, telecom operators and subscribers, all opposed to the plan, describing it as another form of tax. 

Pantami faulted the timing and process of imposing the five per cent tax on the telecom industry, and insisted that part of the responsibility of a responsive government was not to increase the problems of the citizens.

On his part, the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, said: “It is a strange move, it appears a bit unusual. Excise duty is supposed to be apportioned to goods and products, but we are surprised this is on telecom services, and it must be resisted.”

Following the agitations from industry stakeholders, the federal government, last month, announced the suspension of the five per cent tax, and inaugurated a committee chaired by Pantami, to immediately review the policy. 

Another major challenge faced by the telecom sector is the refusal of banks to honour the agreement reached between them and the telecom operators over the use of the Unstructured Supplementary Service Data (USSD) code, which the telecom operators currently offer to banks to support financial transactions of bank’s customers. The banks were supposed to be remitting certain percentage of the amount charged for the USSD service to telecoms operators, but they have refused to do so, and the money has accumulated to over N80 billion, a development that recently compelled the operators to announce a new plan to withdraw the service and disrupt the banking operations.

Another challenge is the incessant disconnection of telecom site by government agencies over the refusal of telecom operators to pay certain levies, which the operators perceived as multiple taxes imposed on telecom operations by government.

Despite the many challenges faced by telecom operators, industry stakeholders are of the view that the sector has contributed immensely to national development, since 1960.