Nigeria’s digital economy risks losing the growth it has seen over the years with broadband penetration in four months decline.
The latest report by the Nigerian Communications Commission (NCC) shows that broadband penetration declined by 0.8 percent to 42.06 percent in February compared to 42.93 percent in January. The decline, which started in November 2020, has now left the industry -8.4 percentage points adrift. It is the longest run of decline in a year the data have seen.
Broadband penetration refers to the amount of the internet access market that high-speed or broadband internet has captured. It is also defined as the number of subscriptions to fixed and mobile broadband services, i.e. with advertised data speeds of 256Kbps or more, divided by the number of residents in each country.
The penetration rate is very critical to the growth of any digital economy. The digital economy, also known as the internet economy, describes an economic activity that results from billions of everyday online connections among people, businesses, devices, data, and processes. When people are denied – for any reason and in any situation – access to the internet, it fractures any progress to growing the digital economy.
The National Broadband Plan 2020-2025 sets a target of 70 percent broadband penetration for Nigeria. At that rate, the country plans to deliver data download speeds across Nigeria of a minimum 25Mbps in urban areas, and 10Mbpds in rural areas, with effective coverage available to at least 90 percent of the population by 2025 at a price, not more than N390 per 1GB of data (i.e. 2% of median income or 1% of minimum wage).
At the current 42 percent penetration, Nigeria is 3 percentage points ahead of the average in Africa at 39.3 percent but about 16 percentage points adrift of the global average at 58.8 percent. The decline in February is particularly worrying because it means the country has seen two consecutive drops in 2021 which puts the momentum seen in previous years in question.
Nigeria recorded the most internet penetration in 2018 when it grew from about 19 percent in January to over 31 percent in December of that year. The momentum continued in 2019 with 6 percent added taking the penetration rate to 37 percent. Another 7 percent was added in 2020 taking the rate to 45 percent.
The current decline is largely a result of the ongoing National Identification Number (NIN) registration exercise that has seen the government partially shut down SIM card registration to enable existing subscribers to get registered.
“We need to review this freeze on number portability and new SIM registration because we simply can’t afford to stall our major pole,” Akin Oyebode, commissioner of Finance and Economic Development, Ekiti State, said.
Since December the order to freeze SIM registration came into effect, the entire telecommunication industry has lost over N16 billion in revenue and over 11 million subscribers have exited the networks.
Ekiti State is one of the few states that are intentionally courting telecom investors in order to widen penetration in the state. At 1.9 million, the state has the third-lowest number of mobile subscribers in Nigeria as of the fourth quarter of 2020, data from the National Bureau of Statistics (NBS) showed. Bayelsa and Ebonyi occupy the top positions with 1.5 million and 1.8 million, respectively.
Last year, Ekiti began taking active steps to bridge the gap by being the first state to cut fees on the right of way for fibre cables. Following the decision, the government of the state said it has received offers from investors to commence the deployment of fibre cables within the state.
The freeze on SIM registration would affect the efforts states like Ekiti are making and also shake investors’ confidence. Moreover, network operators are losing revenue and are forced to reprioritise their capital deployment as more subscribers get wiped off their platforms.
“Most of the “wiped off customers” are customers who lost their phones or misplaced their phones. My phone was stolen with my SIMs and I went through hell to get one of the SIMs back,” Oladeji Damilola, a subscriber said.
Broadband penetration growth is not only slowing, its distribution is heavily in favour of urban cities like Lagos, Kano, Port Harcourt, Ogun and Abuja. This is largely a function of how operators have deployed broadband infrastructure to mostly these cities due to cost considerations. Access to fibre networks within 5 kilometres of the population currently stands at an average of approximately 39 percent reach, with a high of 85 percent in Lagos State and a low of 12 percent in Jigawa State.
With the NIN registration still ongoing, it is unlikely that broadband penetration will come back to growth when March figures are released and if the court order that ordered a two months extension is anything to go by, the losses are likely to extend till June.
However, what can help is the minister allowing telcos to resume SIM registration alongside NIN registration giving that more Nigerians would still require identity numbers going forward.
