In spite of displacing crude oil in sectoral contributions to the nation’s gross domestic product (GDP), information communication technology (ICT) is still bedeviled with capital flight. While some mileage has been achieved in this area, stakeholders say much still needs to be done. LUCAS AJANAKU reports.
When stakeholders in the Information Communication Technology (ICT) sector speak, they do so with a sense of pride deriving from the achievements the industry has garnered so far.
From the Minister of Communication and Digital Economy, Prof Isa Pantami, Executive Vice Chairman, Nigerian Communications Commission (NCC), Prof Garba Dambatta, Chairman, Association of Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, President, Association of Telecoms
President of Association of Telecom Companies of Nigeria (ATCON), Ikechukwu Nnamani and even consumer advocacy groups such as the National Association of Telecoms Subscribers (NATCOMS), Deolu Ogunbanjo and Association of Telephone, Cable Tv, and Internet Subscribers (ATCIS), Sina Bilesanmi, the ICT sector, especially the telecom sector, has done well.
Adebayo believes the sector is the only sector that has remained resilient, with its infrastructure transforming the economy. He said despite the existential challenges posed by the operating environment, the sector has remained standing. For example, the power sector has continued to wobble over a decade after privatisation and funding by the Federal Government.
According to KPMG Macroeconomic Analysis, the ICT sector has become a major catalyst of non-oil growth in recent years and a major contributor to Nigeria’s overall GDP. This is evident in the sector’s growth in contribution to GDP – from less than one per cent in 2000 to 12.6 per cent in Q4 2021. Similarly, the sector’s growth performance of 7.3per cent in 2021 outperformed non-oil sector growth of 4.4per cent.
This was despite the drop in tele-density from 108.94per cent in November 2020/21 to 101.2per cent in November 2021, and the year-on-year drop in mobile and internet subscribers by 7.1per cent and 9.3per cent, respectively, due to the effect of the SIM card registration ban.
However, the 18.44 per cent contribution of the ICT sector to GDP in the second quarter of 2022 (Q2 2022) is phenomenal. Pantami said it is the highest ever in the history of the economy.
The National Bureau of Statistics (NBS) had released the report on ‘Nigeria’s Gross Domestic Product Report’ for Q2 2022, that showed that the Digital Economy sector under Pantami continued its trend of playing a key part in the growth of Nigeria’s economy.
The report indicated that the ICT sector contributed 18.44 per cent to the total real GDP in Q2 2022. This is the highest contribution of ICT to the GDP and is truly unprecedented and marks the third time that the sector has achieved an unprecedented contribution to Nigeria’s GDP during the tenure of the Minister in Q1 2020, Q2 2021 and now Q2 2022.
According to the report, the oil sector contributed 6.33 per cent to the total real GDP in Q2 2022, which was lower than the contribution in Q2 ‘2021 and Q1 ‘2022, where it contributed 7.42 per cent and 6.63 per cent respectively. The non-oil sector’s contribution grew by 4.77 per cent in real terms, resulting in a 93.67 per cent contribution to the nation’s GDP in Q2 ‘2022, higher than Q2 ‘2021 and Q2 ‘2022, where it contributed 92.58 per cent and 93.37 per cent respectively.
Pantami had noted that the growing contribution of the ICT sector to the GDP is as a result of the commitment of the administration of President Muhammadu Buhari, to the development of the digital economy.
The diligent implementation of the National Digital Economy Policy and Strategy (NDEPS) for a Digital Nigeria, stakeholder engagement and creation of an enabling environment have all played an important role in this achievement, he added.
Capital flight
In spite of the growing contributions of the ICT sector to the economy, capital flight continues to be of major concern to stakeholders.
As far back as 2020,it was estimated that the economy must be losing $2.16billion yearly to capital flight.
To some extent, the policy on local content worked at the early stage, but not much has been achieved in recent years.
For instance, offshore printing of recharge cards was stopped. Same applied to Subscriber Identification Module (SIM) cards which are now being produced locally.
Citing a report of ATCON, Pantami stated that the trend of capital flight in the country could be stemmed through the development of a policy by the Federal Government to promote indigenous content.
Way forward
Pantami said as part of efforts to promote indigenous content, a policy for promoting indigenous content in the telecom sector to complement similar efforts that focus on the information technology sector has been developed.
“This is important to stem the tide of capital flight, among other things.
A report of the Association of Telecommunication Companies of Nigeria suggests that such capital flight in the telecom sector is as high as $2.16billion annually.
“A healthy digital economy requires a robust indigenous content policy to significantly reduce this.”
The minister explained that there was an urgent need to promote the development of indigenous content in every sector of the economy.
He said the Indigenous Content Development and Adoption pillar was addressing this for the digital economy.
“This pillar aligns with Executive Orders 003 of May 2017 and 005 of February 2018, on ‘Support for Local Content Procurements by Ministries, Department and Agencies of the Federal Government of Nigeria,” he said.
Pantami said it also aligned with the order on Planning and Execution of Projects, Promotion of Nigerian Content in Contracts and Science, Engineering and Technology.
The minister also noted that the solid infrastructure arm of the digital economy policy would address the need to provide broadband access and data centres required to enable citizens to access the digital solutions.
He said the Nigerian National Broadband Plan (2020-2025) was developed to accelerate the growth of broadband connectivity across the country.
Pantami said: “The plan is designed to deliver data download speeds across Nigeria of a minimum 25Mbps in urban areas, and 10Mbps in rural areas, with effective coverage available to at least 90 per cent of the population by 2025.
“This will be at a price not more than N390 per 1GB of data (two per cent of median income or one per cent of minimum wage).”
He said the government also approved the designation and protection of relevant telecommunications infrastructure across the country as critical national infrastructure.
The minister said the Indigenous Content Development and Adoption, under Pillar 8 of the National Digital Economy Policy and Strategy (2020 – 2030), would tackle the issue.
He said: “Telecom has become a larger part of our Gross Domestic Product (GDP), and it creates some jobs and income. However, the significant gains from providing the initial capital, network and subscriber equipment, software and specialised services are gained offshore. This trend, in all honesty, cannot foster discernible economic growth.
“As part of our efforts to promote indigenous content, we have developed a policy for promoting indigenous content in the telecom sector to complement similar efforts that focus on the information technology sector. This is important to stem the tide of capital flight, among other things.
NCC has also urged stakeholders to intensify efforts in the promotion of Nigeria’s indigenous telecommunications sector.
Danbatta, who said the development of the indigenous telecommunications sector was vital for the growth of the country, harped on effective local participation in the sector’s value chain.
The chief telecom regulator also said the Federal Government launched the National Policy for the Promotion of Indigenous Content (NPPIC) for effective implementation to develop indigenous capacity in the telecom sector.
According to him, the NPPIC has articulated several targets and high-impact interventions, which were specific, measurable, attainable, relevant and time-based (SMART).
“We have not only identified a number of critical stakeholders in the industry, but we have engaged over 30 different entities ranging from MDAs, mobile network operators, and SIM manufacturers and mast manufacturers via the Nigeria Office for Developing the Indigenous Telecom Sector (NODITS). At a higher level, the Commission had identified some time-based metrics for NPPIC which it classified into immediate, short term, medium term, and long-term items.
“Some of the activities include the creation of NODITS dedicated to guiding the policy, the constitution of the local content steering committee, and engagement with relevant internal and external stakeholders.
“Others include commissioning baseline studies on the level of indigenous content in the Nigerian telecoms industry, development of regulations, enforcement of key performance indicators and methodologies,” Danbatta said.
He further said the transformation of the action points into metrics would not only streamline the implementation of the policy but also provide for a SMART system to show progress.
He said the commission was, therefore, counting on the efforts of industry stakeholders, watchdogs, and partners to create independent metrics that would ensure the achievements of the goals of the NPPIC.
He said NCC was delighted to note that some of the actions it implemented through NODITS had yielded fruits.
Since it is often said that Nigeria is never lacking in good policies, it is hoped that the various government policies would be harmonised and implemented so that the capital lost to flight could be domiciled in-country to further deepen the sector.