Telecom Sector Drives 3.11% GDP Growth In Q1 2022
TECHDIGEST – The Nigerian telecommunication sector has raised the bar further high, with a stellar 14.5% year-on-year growth in real terms. The telecommunication sector, which is a component of the broader ICT sector grew significantly to N2.25 trillion in Q1 2022 from N1.96 trillion recorded in the corresponding period of 2021.
However, compared to the previous quarter (Q4 2021), the telecommunications sector recorded a 12.4% decline from N2.56 trillion. This is no surprise, considering the huge spending activities usually associated with the last quarter of the year.
Meanwhile, the Nigerian economy as a whole in Q1 2022 grew by 3.11% in real terms, following a 3.98% year-on-year growth recorded in the previous quarter, which represents the sixth consecutive quarterly growth in the Nigerian economy after the covid-induced recession in 2020.
A 3.11% GDP growth in Q1 2022, means that Nigeria’s aggregate real GDP increased by N522.49 billion from N16.83 trillion recorded in the corresponding period of 2021 to stand at N17.35 trillion in the review quarter. More interestingly is the contribution of the telecommunications sector in the growth of the broader economy.
Notably, the Nigerian telecommunications sector grew by N284.45 billion year-on-year from N1.96 trillion to N2.25 trillion, indicating that the sector contributed about 54% to the N522.49 billion growth recorded in the Nigerian economy in the period under review.
Also, on the back of the banking, aviation, and rail transportation sectors, the telecommunications sector ranks one the best performing sectors in the review period.
The covid-19 pandemic has changed the norms across the world with people and businesses using more online platforms now as against physical meetings. A number of organizations still operate remotely, meetings and seminars are being held online, students have subscribed more to online lectures, and more online content creators have also surfaced in the country.
This means increased data usage by the customers, which indicates more top-line revenue growth for the telcos. Another factor is the rise in the cost of services in the country, occasioned by rising inflationary pressure. The telcos have been able to shift some of these costs to its customers by increasing their tariffs.
A look at the annual reports of the two listed telco companies in the country showed commendable improvement in different metrics. For example, Airtel Nigeria grew their customer base by 5.8% to over 44.4 million while MTN Nigeria’s mobile subscribers hit 68.5 million with its 4G population coverage rising to 70.3% in 2021.
The telcos have also been involved in expanding their operations beyond just voice and data, they are increasing their presence in value-added services in the financial technology space. Recall that the Central Bank of Nigeria (CBN) in April of this year granted MTN the final approval to operate as Momo Payment Service Bank Limited (Momo PSB) in Nigeria.
In the same vein, the CBN also gave Airtel the final approval to operate its SMARTCASH subsidiary as a Payment Service Bank in the country. The company also invested a sum of $550 million into its mobile money business during the year.