By Adewole Kehinde
Figures from the National Bureau of Statistics (NBS) reveals that the Information and Communications Technology (ICT) sector recorded the highest growth rate of all the sectors of the Nigerian economy in both the fourth quarter of 2020 (Q4 2020) and the entire year 2020. This was based on the Q4 2020 Report on Nigeria’s Gross Domestic Product (GDP) released yesterday, the 18th of February 2021, by the National Bureau of Statistics (NBS).
Nigeria’s Gross Domestic Product (GDP) grew by 0.11%(year-on-year) in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the last three quarters.” This indicates that we have strongly exited recession. In real terms, the non-oil sector contributed 94.13% to the nation’s GDP in Q4 2020 as opposed to the 5.87% contributed to total real GDP by the oil sector.
It is noteworthy that the ICT sector grew by 14.70% in Q4 2020, making it the fastest growing sector of the Nigerian economy in the last quarter and the only sector to have grown by double digits. The ICT sector grew at a rate more than 4 times the Agriculture sector, which was the next fastest growing sector of Q4 2020, with a growth rate of 3.42%.
The ICT sector also maintained its rapid growth rate in the overall year 2020 assessment, growing at 12.90%, or over 3 times the Water Supply, Sewerage, Waste Management and Remediation sector, which was next fastest growing sector of 2020 with a growth rate of 3.81%.
Again, the ICT sector was the only sector with a double digit growth rate.
Furthermore, the telecommunications sector recorded a growth rate of 15.90% and this was its highest growth rate in the last 10 years. This performance is unprecedented.
Nigeria’s ICT (information and communication technologies) sector has grown from less than 1 percent of GDP in 2001 to almost 10 percent of GDP today (OC&C Consulting, 2018). Nigeria has also surpassed South Africa to emerge as a premier investment destination with 55 active tech hubs raising a total of US$ 94.9 million, while South Africa raised US$60.0 million with 59 active start-ups. The country is also Africa’s biggest technology market and accounts for 23 percent of internet users in Africa with 122 million people online in December 2018. It also has the largest number of telecommunications subscribers, with a teledensity figure of almost 90 percent. The growth of the tech sector offers new possibilities for Nigeria’s growing labor force, in terms of employment and entrepreneurship.
Nigeria’s tech sector is an outgrowth of the Global Systems for Mobile Communications (GSM) System, which was introduced in Nigeria in August 2001, a few months after the creation of the National Information Technology Development Agency (NITDA). Almost 20 years later, over 100 million people have access to mobile telephones and internet use has risen to almost 50 percent. Mobile telephony and internet connectivity, combined with urbanization and population growth, have created an environment for technology products and services.
The Nigerian tech sector has benefitted from entrepreneurs moving to the country to set up companies. In 2012, two Harvard Business School graduates cofounded Jumia, a Nigerian e-commerce site and one of the first tech start-ups in the country. Since then tech firms have been established in the fields of energy, agriculture, banking, transportation, logistics, health, and finance. Several large tech companies have emerged over the past few years; these have attracted international attention and funding.
Nigeria’s tech sector has often found creative solutions to fill gaps left by the state. A weak public education system has provided room for education (“edutech”) start-ups that try to make learning more accessible and effective. Financial technology (fintech) start-ups are looking to engage segments of the population that cannot access traditional financial services.
One thing is sure, an increase in broadband penetration will lead to an increase in Nigeria’s GDP contribution. As a matter of fact, a 10% increase in broadband penetration will result in a 0.9% – 1.5% increase in GDP.
So the industry regulator needs to put more efforts towards achieving its goal of 65% broadband penetration in order to improve its contribution to the country’s GDP.
Also, regulatory tussles can be seen to have a negative impact on the sector’s contribution, hence NCC and other government agencies might need to apply more tact in dealing with the telecom companies moving forward.
Adewole Kehinde is the publisher of Swift Reporters and can be reached via 08166240846, 08123608662
