How Telecom Impacted Nigerian Economy in 2022
TECHDIGEST – Emma Okonji writes about the impact of telecom services on the Nigerian economy in 2022, despite the many challenges it faced
As the year 2022 winds down, telecom operators stand tall to count their many achievements, which they said have impacted the Nigerian economy, including individuals and organisations in several ways, despite the challenges it faced with government agencies in some states that imposed all manners of levies and taxes on telecom operations.
Social miscreants, who were bent on milking the telecom sector dry, also faced operators with unnecessary monetary demands and willful destruction of telecom facilities.
Despite the challenges faced in 2021, the telecom operators, the industry regulator and the Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, have said the telecom sector raised the Nigerian Gross Domestic Product (GDP), created job opportunities and sustained the Nigerian economy by cushioning the effect of COVID pandemic on the economy.
Chairman, Association of Licensed Telecom Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, told THISDAY that the telecom industry did well in 2022 in the areas of broadband penetration and coverage. According to him, in 2021, there were discussions around 5G spectrum licence, which was concluded in 2022, and one of the winners of the 5G spectrum licence, MTN, has since rolled out its 5G network in some states of the country. In 2022, another 5G licence was auctioned and Airtel was offered the 5G licence.
“The telecom industry in 2022 impacted a lot of sectors of the Nigerian economy.
It also supported the financial sector in ensuring that the Central Bank of Nigeria (CBN) achieved its financial inclusion goals for the country. The telecoms sector also supported the Fintech in disrupting the financial sector, especially the banks,” Adebayo said.
GDP Growth
In August this year, the National Bureau of Statistics (NBS) released data on sector contribution to Gross Domestic Product (GDP) for 2022. According to NBS statistics, the telecom sector contributed 12.12 per cent to total nominal GDP and 18.44 per cent to total real GDP in the second quarter of 2022.
Telecom and information services are the major components of the sector. Of the sector’s total nominal GDP contribution in the first two quarter of 2022, telecom contributed 76.29 per cent, and 79.49 per cent to its total real GDP contribution.
Explaining the sector’s impact on the economy, NBS said, “In nominal terms, in the second quarter of 2022, the sector growth was recorded at 14.11 per cent (year-on-year), 14.18 per cent points increase from the rate of -0.07 per cent recorded in the same quarter of 2021, and 6.43 per cent points lower than the rate recorded in the preceding quarter.
“The quarter-on-quarter growth rate recorded in the second quarter of 2022 was 14.13 per cent. The Information and Communications sector contributed 12.12 per cent to the total nominal GDP in the 2022 second quarter, lower than the rate of 12.22 per cent recorded in the same quarter of 2021 and higher than the 10.55 per cent it contributed in the preceding quarter.
“The sector in the second quarter of 2022 recorded a growth rate of 6.55 per cent in real terms, year-on-year. From the rate recorded in the corresponding period of 2021, there was an increase of 0.99 percentage points. Quarter-on-quarter, the sector exhibited a growth of 13.41 per cent in real terms.
“Of total real GDP, the sector contributed 18.44 per cent in 2022 second quarter, higher than in the same quarter of the previous year in which it represented 17.92 per cent and higher than the preceding quarter in which it represented 16.20 per cent.”
Broadband Penetration
The latest statistics obtained from the website of the Nigerian Communications Commission (NCC), the telecom industry regulator, showed that broadband subscription and penetration increased in 2022.
According to the statistics, in July 2022, Nigeria recorded broadband subscription number of 84.9 million with a penetration rate of 44.49 per cent. In August 2022, broadband subscription increased to 85.2 million and penetration also increased to 44.65 per cent. In September 2022, broadband subscription rose again to 86.06 million with an increased penetration of 45.09 per cent. In October 2022, broadband subscription also increased to 86.94 million and penetration also increased to 45.55 per cent.
The Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, said with the continued increase in the growth rate of broadband subscription and penetration, Nigeria would be able to achieve the 70 per cent broadband penetration target as contained in the Nigerian National Broadband Plan (2020-2025). The broadband plan seeks to deliver data download speeds across Nigeria at a minimum of 25Mbps in urban areas, and 10Mbps in rural areas, with effective coverage available to at least 90 per cent of the population and penetration rate of 70 per cent by 2025 at a price not more than N390 per 1GB of data. The broadband plan also targets the deployment of nationwide fibre coverage to reach all state capitals, and provision of a point of presence in at least 90 per cent of local government headquarters. It also targets tertiary educational institutions, major hospitals in each state and fibre connectivity at statutory rates of N145/ linear metre for Right of Way (RoW).
Analysing the growth of broadband subscription and penetration in 2022, Adebayo said the growth helped more Nigerians to have access to the internet to perform various online transactions in the financial sector and the e-commerce sector. He said more Nigerians were able to carry out online businesses in 2022, and also successfully carried out financial transactions from their smartphones and other devices. “With increased broadband connectivity, people were able to communicate seamlessly through voice calls and data communication via chats.” Adebayo said.
Digital Economy Policy
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Riding on the federal government’s National Digital Economy Policy and Strategy (NDEPS 2020-2030), which seeks to fast-track digital development and empower Nigerians with the right technology skills that will enable them develop technology solutions that will drive digital transformation across the country, the NCC, under the leadership of Danbatta, initiated the development of ICT Parks in each of the six geopolitical zones, and the commission is in the process completing the technology parks. When completed, it will boost youth digital skills acquisition, promote innovations, provide jobs for the teaming Nigerian youth and ultimately support the overall digital economy agenda of the federal government.
According to NCC, the four main objectives of establishing the ICT Parks are to provide Innovation Labs and Digital Fabrication Laboratories (Fablabs) for use by ICT innovators and entrepreneurs to turn their ideas into products and prototypes; provide a Commercial Hub for ICT capacity building and digital skills; create employment and entrepreneurial activities; and facilitate smart city deployment across the digital industrial complex.
NDEPS, which was launched in November 2019 by President Muhammadu Buhari, was developed to reposition the Nigerian economy in order to take advantage of the many opportunities that digital technology provides. The policy was developed to diversify the Nigerian economy away from dependence on oil and gas sector.
The NDEPS has eight pillars which include: Development Regulations; Digital Literacy; Skill Development; Solid Infrastructure; Service Infrastructure; Soft Infrastructure; Digital Societies and Emerging Technologies, as well as Indigenous Development.
Consequently, the NCC’s ICT Parks project resonates with three the key pillars of the NDEPS, which Danbatta said, impacted the Nigerian economy in 2022.
The ICT Parks, involve the construction and equipping of fully-functional Tier-4 Digital Industrial Complex (DIC) in each of the six geo-political zones across the country.
Danbatta promised that since the project was designed to have a national spread, the commission would ensure that no part of the country would be left out of the initiative, adding that every corner of Nigeria will see the initiative taking off at different times.
5G Spectrum Auction
The NCC, in collaboration with the Ministry of Communications and Digital Economy, in 2021, commenced the process of auctioning 5G spectrum licence and concluded it in 2022, after it issued 5G licence to MTN Nigeria Plc and Mafab Communications Limited. In November this year, NCC planned the second round of 5G spectrum auction in the 3.5GHz band, and had released the final information memorandum and bidders have expressed their interests to bid, before NCC eventually announced Airtel as the winner of the 5G spectrum in December, since it was the only operator among the bidders that met the payment deadline for the 10 per cent initial bid deposit.
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According to the information memorandum, which NCC had released, NCC had planned to offer the remaining lots of 2 x 100MHz TDD in the 3.5GHz Spectrum band to support the rollout of 5G services in Nigeria. The proposed deployment is in line with the National Digital Economy Policy and Strategy (NDEPS) 2020 – 2030, National Policy on Fifth Generation (5G) Networks for Nigeria’s Digital Economy and in fulfilment of one of the key initiatives of the Nigerian National Broadband Plan 2020-2025 (NNBP).
5G technology, also known as the fifth generation technology, is expected to bring a lot of benefits and opportunities that will engender accelerated growth and smart living in the country, when fully deployed. The technology is also expected to bring substantial network improvements, including higher connection speed, mobility and capacity, as well as low-latency capabilities. 5G is projected to contribute $2.2 trillion to the global economy by 2034, according to a 2020 GSMA Intelligence report, titled: ‘The Mobile Economy’.
Determined to take the market by storm, MTN had earlier this year, launched its commercial 5G network in Lagos and Abuja, with plans to launch in additional five cities, namely Port Harcourt, Ibadan, Kano, Owerri, and Maiduguri.
The Chief Executive Officer of MTN Nigeria, Mr. Karl Toriola, had said customers with certain enabled devices would be allowed to connect with and try out the new service where coverage is available.
To access the 5G network and enjoy its benefits, customers will need compatible devices, such as routers and mobile phones, which can be pre-ordered from designated MTN walk-in stores and online via the MTN Nigeria website and e-marketplace.
Chief Marketing Officer, MTN Nigeria, Adia Sowho, said: “Every major technological evolution redefines what is possible – changing the way we live and the way we connect. MTN Nigeria has been at the forefront of every leap in telecommunications: from GSM to 2G, 3G, and 4G. 5G has the potential to change everything. It will allow us to connect, create, collaborate, and compete in ways we have not even begun to imagine.”
The Challenges
Despite the achievements of telecom sector in 2022, the sector also faced some challenges, which Adebayo said must be addressed in 2023 in order to sustain the gains of the telecom sector.
According to Adebayo, “The telecom sector had its challenges in 2022. Telecom operators suffered too many destructions of telecom equipment in 2022, which affected infrastructure rollout across the country. Telecom masts and a lot of fibre optic cables were damaged in 2022. The sector suffered multiple regulations from different tiers of government and government agencies, who used that opportunity to impose multiple taxes and levies on telecom operations in the country. The challenges affected growth in telecom because telecom operators had to contend with the challenges.”
We were also faced with the challenges of Forex, and high cost of diesel to power base transceiver stations (BTS). A lot of the telecom sites run on diesel and cost of diesel jumped from less than N300 per litre in January 2022 to over N800 per litre by December 2022, which affected the cost of delivering telecom services, even though we have not increased cost of telecom services, Adebayo further said. He therefore called on government to begin to think about the sustainability of the telecom industry, to avoid further challenges in 2023.
