• Friday, May 24, 2024
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BusinessDay

At 60, ICT contribution to GDP rises, but infrastructure investment fails to impress

ICT

The information and communication technology (ICT) sector accounts for 15.09 percent of Nigeria’s gross domestic product (GDP), as of the second quarter of 2020. It is a rise from 9.99 percent recorded in the previous quarter and a very big jump from 4.1 percent recorded in 2004, three years after the country issued its first telecom licence to the private sector.

By this record, the ICT sector is the second-largest contributor to the Nigerian economy overtaking the oil sector for the second quarter in a row. Earlier in 2020, the current executive vice-chairman of the Nigeria Communications Commission (NCC) said the sector had attracted $70 billion in investment so far. Sadly, it has failed to uplift the infrastructure to the level expected to accommodate efficiently the demand of 147 million internet subscriptions.

Over the years, different governments have tried to play up the growing digital adoption as a sign the ICT sector is growing. Mobile subscriber number has surged to 198 million putting the country ahead of other countries in Africa. Nigeria is also ahead of peers in Africa in terms of internet subscriptions now at 147 million.

But, while broadband penetration has grown significantly from about 6 percent in 2012 to 42.02 percent in July 2020, it is a far cry from the global average of 58.8 percent and the rest of the world at 62.9 percent. It however eclipses the African average at 39.3 percent.

Different governments’ contribution to ICT

In terms of investment, Nigeria’s internet growth has come a long way. Although the country has been slow in deploying infrastructure, it has over the years played up its intention to invest in the sector.

Ernest Ndukwe, former executive vice-chairman of the Nigerian Communication Commission (NCC), had said in 2004 that investment in the telecom sector ranked second only to the oil industry.

The period between 2001 and 2004 may have seen the biggest increases in technology infrastructure investment according to stakeholders who spoke with BusinessDay.

“The administration of Chief Olusegun Obasanjo witnessed the highest and sharpest increase in FDI into the ICT sector,” Olusola Teniola, president, Association of Telecommunication of Nigeria (ATCON), told BusinessDay.

The FDI was dominated by spectrum allocation via auction processes, which singularly resulted in close to $3 billion to the coffers of the government over the eight years that administration led the country.

Collins Onuegbu, executive vice-chairman, Signal Alliance and director at Lagos Angels Network, agrees with Teniola.

“The Obasanjo administration has the credit of unbundling the telecoms industry. This ushered in lots of investment in the sector,” Onuegbu told BusinessDay. “Its effect in the sector was transformational and has helped build the foundation for most of what has happened to the tech industry in the past 20 years.”

Onuegbu also gave high marks to the efforts made by the President Goodluck Jonathan’s administration in expanding the scope of the ICT space. “You would not have had a fintech industry for instance if Nigeria was struggling with one million telephone lines,” Onuegbu said.

Niyi Yusuf, managing director of Verraki, sees the role played by the Jonathan’s administration as foundational for a deliberate and targeted approach to harnessing the power of ICT, by the creation of the Ministry of Communication Technology (MoCT) led by Omobola Johnson, and the integration of existing agencies under the supervised by the Ministry including the Nigeria Communications Commission (telecoms regulator) as part of the promotion of the fusion of IT and Telecoms.

The ministry also actively promoted Tech hubs and Startups including establishing the IDEAS Hub in Lagos, establishing a Startup Fund managed by a Private Venture Capital Firm and pioneering Tech LaunchPad initiative to provide support to startups and linkage to Corporate CIOs for mentorship.

The Ministry developed the first National Broadband Strategy, Local Content Guidelines, and 10Gbs Fibre optic Network that connected Nigerian universities to wider research and education universe, in partnership with the NUC, World Bank and TetFund, facilitated eGovernment drive with over 86,000 email addresses deployed for Government use on the .gov.ng domain names, and 250 websites hosted on .gov.ng platform as well as 382 MDAs connected in Abuja and other parts of the country; and the inauguration of the National Council on Information Communication Technology with states and FCT commissioners of ICT as members.

Under President Muhammadu Buhari’s administration, Teniola says, the Minister of Communications Adebayo Shittu made some interventions that introduced investigations in TV White space, cloud computing, and also the generation of data protection regulations under the National Information Technology Development Agency (NITDA).

“Also ICT 2017-2020 Roadmap was launched. USPF, NITDA ITF, and ECC projects have been launched within a spate of 1 year of this current administration,” Teniola said.

Infrastructure not keeping pace with demand

While companies are happily taking up every available space in the value chain of the sector catering to very eager consumers, the investment in infrastructure has not kept pace with rising demand.

In 2019, the World Bank noted in the Nigeria Digital Economy Diagnostic Report that in terms of infrastructure investment, the country has focused on major urban areas and inter-city routes, and unlike peers in West Africa, Senegal, and Ghana, Nigeria does not have a national backbone network through which high-speed internet connectivity can be extended across the entire country. As a result, mobile broadband has become the more common and popular way through which people in Nigeria access the internet.

Nigeria’s mobile broadband investment hit 99.83 percent in the second quarter of 2020 whereas fixed broadband has only received 0.05 percent investment.

As of 2019, Nigeria had deployed only 38,000km of fibre out of about 120,000km of fibre network the country requires for pervasive coverage leaving a deficit of 82,000 kilometres.

This is after billions of dollars in investment have been made by the government and private operators in the telecommunications sector. For instance, Nigeria has about five fibre optic cables lying on its shores with terabytes of capacity. The Nigerian Telecommunications Limited (now nTel), South Atlantic 3 (SAT3) Fibre optic cable is an investment of over $600 million; MTN’s West African Cable System’s is worth $650 million, ACE Cable by Dolphin Telecoms is worth $700 million, MainOne is worth $300m and Globacom’s Glo cable is worth $800 million.

The EVC also admitted in 2020 that despite generating over $70 billion investment, the total number of base stations so far deployed in the country was at 39,000, leaving the country’s telecommunication sector in dire need of additional 41,000 BTS.

A new dawn setting

The renaming of the ICT ministry to the Ministry of Communication and Digital Economy is part of measures the current government has taken to show its seriousness in accelerating developments in the sector. Apart from the rebrand the government has also replaced the old national plan to guide the sector. The National Broadband Plan 2020-2025 now pegs the target for broadband penetration at 70 percent. The country is currently at 42.02 percent as of July 2020 and there is hope that with renewed investment in infrastructure the target would even be surpassed.

Progress has also been made in the efforts to reduce the right of way (RoW). About eight states have agreed to adopt the N145 set by the National Executive Council (NEC) and the federal government has waived fees for every highway fibre project across the country.

Yusuf sees gaps in intellectual property rights. Addressing this will ensure appropriate use of intellectual work and commensurate benefits and financial returns to the rights owner. There are also gaps in the lack of clear government direction on tech development.

“Given that the majority of the tertiary institutions of learning are government owned, the strongest economic sectors such as Oil & Gas, Telecoms, Financial Services etc. are government regulated, the government’s role in this model is pivotal to driving sustainable tech development,” Yusuf said.

Onuegbu says a thriving economy will ultimately depend on the growth of the ICT sector.

“I can credit the current government for streamlining the structure of technology in the public sector and some work being done around national identity management. If these works, it will support the growth of technology in Nigeria. The government also has a chance to take advantage of the current COVID-19 pandemic to spur digitization of government. This will be a boost to technology adoption in the country,” said Onuegbu.