Telecoms’ contributions to Nigeria’s Gross Domestic Product (GDP) grew by 2.5% between January 2019 and December 2021, Technext has learnt.
In the first quarter of 2019, covering January to April, the sector’s contribution stood at 10.11% per data from the Nigerian Communications Commission (NCC). At the end of the last quarter, in the years under review, telecoms’ impact had grown to 12.61%. The figure represents a 2.5% increase.
Why this matters
The crucial sector’s contribution to the Nigerian economy rose consistently in the years under review: 2019 – 2021. A common trend in the growth comes from telecoms’ impact in the second quarter (Q2) of these years.
Q2 2019, Q2 2020 and Q2 2021 produced the highest contributions.
- In Q2 2019, the sector posted an 11:39% contribution.
- With a growth rate of 2.91 points, the sector’s impact stood at 14.3% at the end of Q2 2020.
- By Q2 2021, Telecoms’ impact leapt to 14.42%. Of the 12 quarters considered by NCC, Q2 2021 pulled the highest contribution.
Data from the World Bank shows Telecoms made a 10.6% contribution to the country’s GDP valued at $448.1 billion in 2019. The impact improved in 2020 – a 12.45% increase. But GDP dropped to $432.3 billion.
In 2021, the country’s GDP rose to $446.7 billion with Telecoms contributing 12.61%.
Breakdowns and impact
In Q1 2019, Telecoms’ contributions stood at 10.11%. and rose to 11:39% in Q2, before dropping to 9.2% in the third quarter. The impact Telecoms had on the country’s GDP closed out at 10.6% (Q4) for the year.
Just before COVID-induced national lockdowns in 2020, Telecoms contributed 10.88%. And, as the coronavirus pandemic lingered in Q2, the sector posted a 14.3% contribution. A drop ensued from relaxed lockdowns in the third quarter – the size of the sector’s impact stood at 11.2%. The sector picked again, contributing 12.45% in Q4 2020 to close an eventful year.
A year and some months into the pandemic, the sector posted an 11.66% contribution. The figure represents a 0.79% drop from Q4 2020. In the second quarter (Q2 2021), Telecoms’ impact leapt to 14.42% – the highest contribution in the two years under review: 2019 – 2021.
In Q3 2021, Telecoms posted an 11.94% contribution. The year came to a close with an impact pegged at 12.61% for the fourth quarter.
Per NCC, the telecommunications sector is critical to driving the digital economy agenda of the government. The figures provide insights into understanding how the sector serves as a catalyst for economic growth.
Recently, pan-African bank, ABSA commented on the opportunities and potential of the sector. The bank said the opportunities and growth potential remain strong, despite the challenges in the sector, and therefore called on smart investors and entrepreneurs to tap into the opportunities and expected growth.
The telecommunications industry is generating interest from local and foreign investors. This is because the capacity for growth in the industry is limitless. And telcos are already strategically developing useful business vehicles to take advantage of emerging opportunities in the industry.
In 2017, the sector created about 500,000 jobs and contributed $21 billion to the country’s GDP, or 5.5 per cent of the total GDP.
Telecoms is also crucial to the government’s tax drive. The sector provided $1.8 billion in tax revenue, per GSMA, in the same year under review.
Telecoms provide a direct impact on the daily lives of Nigerians. With mobile connectivity, millions of Nigerians enjoy improved welfare and gain access to opportunities. You can spot these in the economy’s inclusive growth, productivity, and efficiency captured in the GDP figures.
Data captured in this analysis suggest a steady contribution from Telecoms to Nigeria’s GDP. But, the sector can have more impact on the Nigerian economy. The opportunity is waiting in the right policy environment and improved collaborations between the industry and government. Nigeria needs to keep up with changes in the global telecoms scene and improve its GDP altogether.
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