• Sunday, June 16, 2024
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Leveraging on the digital economy to spur Nigeria’s economic growth

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Globally, the field of digital technology is an attraction for foreign capital investing. Almost one in five foreign direct investments in Europe or 19 per cent, targets the digital technology sector. Digital technology is rapidly transforming and reshaping global economic landscape, infusing virtually every sector and aspect of daily life as well as changing the way and manner businesses functions.

In 2016, the global digital economy was worth some $11.5 trillion, equivalent to 15.5 per cent of the world’s overall GDP. It is expected to reach 25 per cent in less than a decade, quickly outpacing the growth of the overall economy. However, countries like Nigeria are currently capturing only a fraction of this growth and need to strategically invest in the foundational elements of their digital economy to keep pace.

Ernst & Young Nigeria, in 2018 defined Digital Economy as the part of the economic output derived solely or primarily from digital technologies with a business model based on digital goods and services. The digital economy is made up of various components, including a platform economy, a gig economy, an industry 4.0, a digital economy, data analytics, robotics and Artificial Intelligence (AI), machine learning, 3-D printing, and e-commerce among others.

An insight gained from the World Bank Nigeria Digital Economy Diagnostic Report reveals that digital economy can change the way economies of scale are achieved; this can be evident during the economic lockdown and cessation of movements caused by the novel coronavirus pandemic, with online service delivery restricted, the digital economy provided a soft landing for both buyer and sellers in a competitive market. And again, it is certain to address the issue of irregular information, solving some principal-agent problems where buyers and sellers are separated by intermediaries or even multiple levels of intermediaries.

It can also strengthen people’s trust in firms or governments by enabling some decentralized forms of trust (such as with a blockchain) where centralized authorities are not trusted. It may allow products and services to be customized and targeted—enabling better inclusion but also easier ways to exclude some too.

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Improved digital connectivity can only achieve the desired transformational impact on economic opportunity and inclusive growth if combined with improvements in digital skills and literacy, the coverage of digital identity schemes, and access to digital payments and other financial services, as well as digital support to start-ups and existing businesses. With such capabilities, the Nigerian economy can harness digital data and new technologies, generate new content, link individuals with markets and government services, and roll out new and sustainable business models.

In building a solid digital economy, Nigeria needs to focus on digital infrastructure, digital literacy and skills, digital financial services, digital platforms, and digital entrepreneurship and innovation.

The industry is such a dynamic sector that even the health crisis of COVID- 19 could not have its tolls or rather affect the investment activity that concerns it. Although, the effects of the pandemic on the economic activity across nations varied considerably from sector to sector.

Take for instance, tourism and aviation sector had the major brunt, as the lockdown directives instigated by the Nigerian government and other nations alike caused a vast deep in the demand for air transportation. According to the International Air Transport Association (IATA) data released in March 2020, the report reveals that globally the sector lost $252 billion.

Other sectors include – hospitality, transport, automotive industry, construction, manufacturing amongst others have been hit hard while sectors like digital services and e-commerce have been slightly affected.

Isa Pantami, the minister of communications and digital economy, who presented the keynote address during a virtual forum organised recently by the Association of Telecoms Companies of Nigeria (ATCON), urges all federal government parastatals under the supervision of his ministry to promote the country’s digital economy initiative.

The recent and ongoing Covid-19 pandemic which almost paused the world’s economic activities has brought about a new normal where the demand for critical data infrastructure and broadband are now in higher demand to enable people to keep abreast with digital developments and to enable local and international investors to keep track of their investments.

Despite the recent growth in fibre installations in Nigeria, national fixed-line infrastructure is still poor, and mobile systems remain the primary means for carrying retail and enterprise data traffic in Nigeria. Furthermore, fixed broadband penetration in Nigeria is very low, with a household penetration rate of 0.04 per cent at the end of 2018, below the African regional average 0.6 per cent, and well below the world average 13.6 per cent. This is due to backbone investment in Nigeria having focused primarily on major urban areas and inter-city routes, and unlike its West African peers such as Ghana and Senegal, 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 most common and popular way through which people in Nigeria access the internet.

“Federal government will continue to develop its digital economy policy for a digital Nigeria. Both the Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) that are under the supervision of my ministry, now have special departments that promote digital economy initiative and I urge them and all other parastatals under my supervision, to ensure that they promote the digital economy initiative of the federal government to maintain investor’s confidence and to protect the interest of Nigerians, especially telecoms consumers”, Isa Patanmi said.

He added that the government on its part would ensure that the interests of telecoms companies and the interest of Nigerians were protected, saying that the government is currently addressing the challenges in the cost of investments such as the issue of vandalization of telecoms infrastructure, among others.