Business & Strategy

Nigeria’s ICT Sector Faces Economic Pressures Amidst Growth Concerns

Written by Jerry Alomatu on July 18, 2024

News Views: 165

Nigeria’s Information and Communications Technology (ICT) sector, a stalwart in the nation’s economic landscape, is encountering significant challenges despite its historical resilience and contribution to the Gross Domestic Product (GDP).

In recent years, the ICT sector, driven prominently by telecommunications, has been a major pillar of Nigeria’s GDP. However, current indicators reveal troubling signals of decline. Industry experts, including economist Bismarck Rewane, Engr. Gbenga Adebayo of ALTON, Chief Deolu Ogubanjo of NATCOMS, and officials from GSMA, have voiced growing concerns over these developments.

Historically, the ICT sector exhibited robust growth, with telecoms’ contribution to GDP peaking at 17.5% in 2020. Despite these highs, recent quarters have shown a downturn. For instance, in Q1 2024, the sector’s GDP contribution dropped by 12.60% quarter-on-quarter, reflecting weakening financial performances attributed to harsh economic policies and reduced consumer spending power.

Major telecom operators like MTN Nigeria and Airtel Africa have reported substantial financial losses, driven by currency depreciation and economic hardships. MTN Nigeria recorded a pre-tax loss of N575.69 billion, contrasting sharply with previous profits. Airtel Africa similarly posted losses, highlighting challenges in maintaining revenue streams amidst economic constraints.

Experts emphasize urgent intervention to stabilize the sector. Bismarck Rewane advocates for regulatory reforms to ease operational burdens, including multiple taxation and high operating costs. Engr. Gbenga Adebayo underscores the need for policy adjustments to support sectoral sustainability and stimulate investment.

Stakeholders, including GSMA, underscore the ICT sector’s pivotal role in Nigeria’s digital transformation and economic growth. They warn that sustained revenue declines could hamper digital adoption and economic progress. Addressing these challenges is crucial to safeguarding the ICT sector’s contributions to national development.

The ICT sector’s current challenges underscore the need for strategic interventions to mitigate economic pressures and sustain growth momentum. Nigeria’s digital economy hinges on overcoming regulatory barriers, fostering investment, and enhancing sectoral resilience amidst global economic uncertainties. Effective policy measures will be vital in navigating these turbulent times and securing the ICT sector’s pivotal role in Nigeria’s economic future.