Accessing the growth of the telecoms sector in Nigeria

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LAST week, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Professor Umar Danbatta, gave a detailed account of the growth of Nigeria’s telecoms sector over the years, indicating that the investment profile in the nation’s telecommunications sector, including foreign direct investment (FDI) and local investments, had been quite impressive.

Speaking during an interactive session with media managers and executives where he presented his scorecards since he assumed office in 2015, Danbatta averred that the telecoms sector had contributed significantly not only to the country’s revenue growth but the socioeconomic development of the citizenry. According to him, in 2018, the investment profile in the sector stood at $68 billion, and this increased to $70.5 billion in 2019 and $72 billion in 2020. He added: “At the end of 2021, the figure rose to $75,560,563,417.79 ($75.6 billion). The latest figure is the current official investment profile computed in the industry, up from the initial $70 billion investment in the last few years.”

Danbatta added that the telecoms sector had recorded tremendous growth from an initial investment profile of $500 million in 2001 when the sector was fully liberalised, attributing this to what he called the effective regulatory environment by the NCC. He averred that the sector had become a significant contributor to Nigeria’s economy “through an impressive sectoral contribution to the nation’s Gross Domestic Product (GDP) quarterly, up from about 8.5 percent in the third quarter of 2015, contributing N10.126 trillion to the nation’s GDP in 2022 alone.” Citing data from the National Bureau of Statistics (NBS), Danbatta said the telecoms sector contributed N10.126 trillion as an aggregate quarterly contribution to GDP in 2022. He said: “In the first quarter, the sector contributed 12.94 percent, equivalent to N2.246 trillion, while the second quarter witnessed an all-time high GDP contribution by the telecoms sector to the nation’s economy, standing at 15 percent and valued at N2.593 trillion. The sector’s contribution to GDP in the third was 12.85 percent, and in the fourth quarter, it grew to 13.55 percent, which is valued at N2.436 trillion and N2.851 trillion, respectively. The growth trajectory continued this year as the telecommunications and information services sector in Nigeria delivered a handsome N2.508 trillion in terms of financial value contribution to the nation’s GDP, representing 14.13 percent in the first quarter of 2023.”

To be sure, the telecoms sector has been a game changer in the country’s economy, particularly since the arrival of mobile telephony in the country following the return to civil rule in 1999. Indeed, with the rise in investments in the sector as outlined by the NCC boss, there is no doubt that Nigeria’s telecoms sector is one of the most attractive on the African continent. Today, a significant number of Nigerians make a living across several clines in the sector. It is also true that mobile telephony and the internet have made linkage with the rest of the world both easy and profitable. In our view, however, although the sector has grown significantly, the growth has not been at a level commensurate with Nigeria’s resources. We believe that things would have been better if the government had given the right kind of attention to the sector and made things much more organised through policy and legal frameworks.

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A close analysis of the effectiveness and efficiency of investments in the telecoms sector in Nigeria vis-a-vis other African countries, while inevitably acknowledging that Nigeria has done well, would still reveal the rather disturbing fact that in terms of the rate of internet penetration, it is behind countries like South Africa, Kenya and Ghana. This, without doubt, is a reflection of the nature and efficiency of governance in the country, and therefore a good measure of the real worth of situation in the sector. Besides, there can be no glossing over the fact that the services provided by the telecoms companies are still generally suboptimal and sometimes exploitative of consumers without the government coming to their (consumers’) rescue. In general, as we have noted time and again, supervisory authorities in Nigeria tend to behave like captured regulators. This is why the so-called growth in the telecoms sector is significantly accounted for by the rise in the population of telecoms users and the consistent exploitation of Nigerians rather than well executed policy and practice frameworks. It is a fact that even with the itemised gains in the telecoms sector, GSM subscribers in the country continue to experience poor services.

Going forward, the government has a bounden duty to make the business environment in the country far better than it is now. It must facilitate the ease of doing business through better policy options and the provision of social infrastructure, including, most crucially, power. If operational costs go down, so will telecoms charges, all other things being equal. In addition, the regulatory agencies must give consumers of telecoms products and services better protection and ensure that the telecoms companies abide by the rules at all times. The country has a lot to benefit from a rejigged telecoms sector.