Nigeria\u2019s economic growth faces a potential hurdle due to the decline in the telecommunication contribution to the Gross Domestic Product. This decline is because of the sector\u2019s weakening financial performance. <\/p>\n
The telecoms sector has long been one of the pillars of the Nigerian economy, which is heavily reliant on its services sector. \u201cThe telecoms sector is a major contributor to the economy of Nigeria and provides the foundations for the digital transformation process,\u201d said GSMA, the global industry body for telcos. <\/p>\n
Telecom was one of the sectors that helped the country exit a recession in the fourth quarter of 2020. The mobile telecoms sector accounted for 13.5 per cent of total GDP in 2023, GSMA noted. <\/p>\n
However, in Q1 2024, the telecom sector\u2019s GDP contribution in real terms dropped by 12.60 per cent quarter-on-quarter to N2.67 trillion, due to sustained losses by telecom operators. <\/p>\n
The information and communication sector, dominated by the telecoms sector, also experienced a 9.89 per cent decline in q-o-q in real terms. While it achieved a year-on-year growth rate of 5.43 per cent, it still experienced a 4.89 percentage points decline from the corresponding period of 2023. <\/p>\n
\u201cOf total real GDP, the sector contributed 17.89 percent in the 2024 first quarter, higher than in the same quarter of the previous year in which it represented 17.47 percent and higher than the preceding quarter in which it represented 16.66 percent,\u201d the NBS noted. <\/p>\n
The ICT sector includes activities such as telecommunications and information services, publishing, motion pictures, sound recording and music production, and broadcasting. Of the sector\u2019s N3.27 trillion contribution, telecom was responsible for 81.50 per cent. <\/p>\n
The performance of the country\u2019s GDP in Q1 2024 was driven mainly by the services sector (which includes the ICT sector), which recorded a growth of 4.32 per cent and contributed 58.04 per cent to the aggregate GDP, according to the National Bureau of Statistics. <\/p>\n
Nigeria\u2019s GDP grew by 2.98 per cent year-on-year in real terms in Q1, 2024, a rate higher than the 2.31 per cent recorded in Q1, 2023, and lower than the fourth quarter of 2023, which had a growth rate of 3.46 per cent. <\/p>\n
The decline in the telecom sector\u2019s performance has been attributed to a combination of factors. MTN Nigeria and Airtel Africa recorded a combined loss of N511.27 billion in Q1, primarily because of a nearly 30 per cent devaluation of the naira. <\/p>\n
This financial strain will also likely impact tax revenues, as the sector previously contributed N2.4 trillion to the government tax revenue in 2023. <\/p>\n
\u201cA sustained reduction in industry revenue has implications that go beyond just the service providers\u2026 The direct contribution of the industry to the total GDP of the country is also reduced,\u201d GSMA said. \u201cA slowdown in the mobile industry will have a further negative impact on the GDP of the country\u2026 If the industry suffers, this will feed through into lower rates of digital adoption, and the country will miss out on the potential boost to GDP that it would have delivered.\u201d <\/p>\n
The recent decline in subscriber base due to the NIN-SIM linkage may be another contributing factor, Afrinvest Consulting noted.
\n\u201cThe entire ecosystem is battling with a range of challenges that must be addressed,\u201d highlighted Gbenga Adebayo, the chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON). <\/p>\n
These challenges centre around rising costs of operations, he highlighted. Failing to cushion the effect of these challenges will impact operators in the space and innovation, he continued. <\/p>\n
\u201cThis is a critical moment for the industry. How we approach and resolve it will define the future of Nigeria\u2019s digital economy,\u201d he added. <\/p>\n
Recognising the sector\u2019s importance, Bosun Tijani, minister of Communications, Innovation and Digital Economy, recently established a committee to review operational conditions and propose fiscal measures to cushion the impact of macroeconomic pressures on telecom operators.
\n\u201cAs a major contributor to our country\u2019s GDP, the telecommunications industry is critical to the development of our nation as it helps to spur innovation and promote digital inclusion among Nigerians,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Nigeria\u2019s economic growth faces a potential hurdle due to the decline in the telecommunication contribution to the Gross Domestic Product. This decline is because of the sector\u2019s weakening financial performance. The telecoms sector has long been one of the pillars of the Nigerian economy, which is heavily reliant on its services sector. \u201cThe telecoms sector is a major contributor to the economy of Nigeria and provides the foundations for the digital transformation process,\u201d said GSMA, the global industry body for telcos. Telecom was one of the sectors that helped the country exit a recession in the fourth quarter of 2020. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-816555","post","type-post","status-publish","format-standard","hentry","category-telecom"],"acf":[],"_links":{"self":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/816555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/comments?post=816555"}],"version-history":[{"count":0,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/posts\/816555\/revisions"}],"wp:attachment":[{"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/media?parent=816555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/categories?post=816555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/telecomlive.in\/web\/wp-json\/wp\/v2\/tags?post=816555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}