• Saturday, July 13, 2024
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What a near 50% broadband penetration means for Nigeria

FG urges state governors to prioritise broadband penetration to boost GDP

Nigeria has hit a current rate of 44.7 percent, pushing it closer to 50 percent, a target the federal government is hoping to achieve by 2023.

Broadband penetration according to experts is the number of subscriptions to fixed and mobile broadband services divided by the number of residents in each country, according to experts.

Analysts explained that a near 50 percent penetration rate is not the best for Africa’s biggest population, aiming to become a full digital economy.

At near 50 percent, Nigeria will be getting closer to countries like Algeria while lagging other African peers like Egypt, South Africa, and Kenya.

Citing data from International Telecommunication Union (ITU), South Africa and Egypt have recorded 116 percent and 77 percent broadband penetration rates respectively while Kenya also leads Nigeria with 54 percent penetration rate.

Ajibola Olude, secretary, Association of Telecommunication Companies of Nigeria (ATCON) disclosed that the gap between Nigeria and these African peers can be traced to be a result of enabling environment and FDI attracted by those countries.

He said, “When you benchmark Nigeria with countries like South Africa, you find out that they are more because the bulk of FDI into the sector goes to South Africa.

They have been able to create an enabling environment that makes the division go to them when it comes to attracting FDI.”

According to Olude, the Telecom industry is both capital and asset driven so the likes of South Africa have more assets, capital and others to drive productivity in the area of digital economy than Nigeria.”

Furthermore, at 44.7 percent, broadband penetration means that Nigeria almost accounts for less than almost 40 percent of South Africa’s broadband penetration.

It also means it is about 55 percent of Egypt’s penetration, which implies that almost 60 percent of Nigeria’s population don’t have broadband connections.

However, Olude noted that a near 50 percent penetration rate means that Nigeria is getting closer and digital services are also increasing, which signals that the country will soon achieve its broadband vision if extra efforts are put in place.

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“A near 50 percent penetration means that the level of digital literacy is on the increase and it will continue if all efforts are made to get all Nigerians alone,” Olude said.

“This signals that further investment is being injected into the effort to actualize the broadband target.”

Olude further said more services are now being offered through digital platforms and both government and private companies are spending more in the area of broadband penetration.

“There is a likelihood that the contribution of the sector to GDP might also increase as a result of a near 50 percent penetration,” he said.

Challenges of broadband penetration in Nigeria

Olude stated that the increasing cost of Right of Way (RoW), Energy and Taxes remains a major challenge in deepening broadband penetration rate in the country.

When you look at the cost of Energy and RoW in Nigeria, it remains very high. There is a need for all states to buy into the harmonised ROW which is N145. If the cost is N145, unlike when it is like N1000 to N1500, there will be more money left to buy equipment and employ more people, according to the ATCON president.

“With N1500, you can get 10 linear meters but when it is reduced to 145, it means that you will be doing 10 times what you were doing before which means that the capital outlook for laying cables and others will further channel to deepen broadband penetration,” Olude said

He said, “What we pay in terms of ROW and energy are way too high. Diesel that used to be N250 is now sold for N800 and has limited the money that we marked for buying fuel.

“All these are factors responsible for the slow pace of broadband penetration in Nigeria. There is a need for the government to create a good atmosphere in terms of energy, Right of way and multiple taxes.”

Meanwhile, the federal government set up the Nigerian Broadband Policy Plan to fast-track broadband penetration with an agenda to achieve 70 percent growth in 2025.

Nigeria National broadband plan 2025

Nigeria’s National Broadband Plan set a supposedly ambitious target for the country to attain 70 percent broadband penetration by 2025.

Isa Ali Pantami, the minister for communication and digital economy reiterated this four months ago at the conference and exhibition of ATCON in Abuja

“The plan is carefully designed to deliver data download speeds across Nigeria. 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 by 2025 at a price not more than N390 per 1GB of data as well as penetration rate of 70 per cent by 2025,” he said.

The minister explained that it had been identified by industry experts that a 10 per cent increase in broadband penetration would increase the Gross Domestic Product (GDP) of an economy by between 1.6 per cent and 4.6 per cent.

Adding to what Olude stated, Pantami also agreed that multiple taxation and regulation, non-conformity with agreed Right-of-Way (RoW) charges, difficulty in obtaining approvals and permits remains the major challenge of deepening broadband penetration in Nigeria.