Telecoms sector as major driver of national economy
In a pandemic-stricken global business environment, the ability to possess fact-based strategic foresight, deliver systematic exploration of new growth opportunities and to institutionalise a continuous drive to improve internal business practices is more important than ever. Put simply, a sterling business performance in any sector of the economy is capable of lifting a country from economic recession.
A recession is usually characterised by a state of negative economic growth spanning up to two consecutive financial quarters. Traditionally, economists define a recession as two successive quarters of decline in the growth of the Gross Domestic Product (GDP).
Going by the National Bureau of Statistics’ (NBS) report, Nigeria slipped into recession in November 2020 for the second time in four years, blaming it on COVID-19 pandemic and a slump in oil prices, even as the country’s economy shrank two quarters in a row amid contraction in its oil sector. Prior to the recession, Nigeria’s inflation rate rose to 14.23% in October 2020, the highest in 10 months, and a condition economists refer to as stagflation.
However, experts hinted during the same period in review that Nigeria had good prospects to recover from the recession, predicting that the country’s economy would resume growth in Q1 or Q2 of 2021 in the absence of any new disruptions. It was also reported that whilst the oil GDP growth rate went deeper into the red at -13.89%, the non-oil sector, boosted by the positive growth of 18 sectors compared to 13 sectors in Q2 2020, outperformed it with GDP growth rate of -2.51%.
In line with the aforesaid prediction, the latest report by the Nigerian Communications Commission (NCC) has shown that Nigeria’s telecommunications industry is one of the sectors whose performance lifted the country out of recession in the fourth quarter of 2020, contributing 12.45% to its Gross Domestic Product (GDP). In addition, the most recent data released by the NBS showed that telecommunications & Information Services under Information and Communication grew by 17.64% in Q4 2020 from 17.36% in Q3 2020 and 10.26% in Q4 2019.
Since the outbreak of the pandemic, government institutions, businesses and individuals have relied heavily on telecoms services to carry out their daily operations and official routines.
In the latest NBS report, agriculture, industries, and services sector, under which telecommunications is categorised, contributed 26.95%, 18.77%, and 54.28% respectively. The NCC report is a pointer to the fact that telecommunications, trade, services and crop production are the main drivers of Nigeria’s exit from recession.
Specifically, the NBS report showed that largest sub-sectors in Q4 2020 are crop production at 3.68%, crude petroleum and natural gas at 8.2%, trade at 14.9%, telecommunications & information services at 12.45% and real estate at 5.7%.
In a similar vein, the NCC report further revealed that the telecommunications sector has, in the last five years been a major driver of the digital economy agenda of the Federal Government, as “it has continued to provide the needed digital sinews that support the economy, especially during the COVID-19 pandemic and its attendant restriction period”.
The Commission explained that it has put a number of regulatory measures in place to ensure seamless access by Nigerians to telecommunication services, including protection against any adverse impact on the quality of service enjoyed by consumers.
“The steady growth of the telecoms sector over the years with its pervasive positive impact on all other sectors of the economy in terms of increased automation of processes and digital transformation in service delivery has been remarkable. The growth trend since 2015 has reawakened hope that the economic diversification dreams of the country may finally be a reality as the sector continues to energize significant economic activities in the services sector of the economy,” the Commission stated.
Under the leadership of its Executive Vice Chairman (EVC), Prof. Umar Garba Danbatta, and through its effective regulatory regime, the Commission reported that telecoms investment grew from about $38 billion in 2015 to over $70 billion currently. It added that broadband penetration increased from 6% in 2015 to 45.02% at December, 2020, indicating that 85.9 million Nigerians are now connected on 3G and 4G networks which provide enhanced high-speed Internet that has continued to boost efficiency and increase productivity across the economic spectrum.
Recent statistics show that between 2015 and December, 2020, active voice subscriptions have increased from 151 million to 204.6 million, with teledensity standing at 107.18%, while basic active internet subscriptions grew from 90 million to 154.3 million during the period.
Whether the telecoms sector is going to remain a major driver in Nigeria’s economy will be seen in coming months.
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