Telecoms sector hard hit by harsh govt policies — REPORT
LAGOS — The Information and Communications Technology, ICT, the sector has shown great stability in recent years, holding off bad economic conditions, to contribute handsomely to the nation’s Gross Domestic Product, GDP.
However, the sector, buoyed by the huge contribution of the telecommunications sub-sector is beginning to show weak signals which industry operators are not comfortable with.
The weak signals, ranging from surprising dips in the revenue of sector players, declining average revenue per user, ARPU, declining contribution to GDP and drastic whittling of the purchasing powers of the average consumer of the sector’s services, among others, have been attributed to some harsh government policies like removal of fuel subsidy, devaluation and floating of the naira.
Notable experts including renowned economist and Managing Director of Financial Derivatives, Bismarck Rewane, Chairman of the Association of Licensed Telecom Operators in Nigeria, ALTON, Engr Gbenga Adebayo, Chairman of the National Association of Telecom subscribers of Nigeria, NATCOMS, Chief Deolu Ogubanjo, and even top officials of the General System for Mobile Communications Association, GSMA have expressed great concern.
These professionals say that if nothing is done to stem the tide, the aggregate economy will be hit in a more devastating manner than already being witnessed.
Sector’s growth trajectory
In the past ten years, ICT has maintained a steady growth and become a major boost to the country’s GDP. Except in 2013, when there was a slight drop, ICT contribution to GDP maintained a steady climb between 2012 and 2022. According to statistics obtained from NCC’s website, telecoms’ contribution to GDP in 2012 was 7.7 per cent, but the figure doubled to 14.3 percent as at the second quarter of 2020. This represented a N2.3 trillion growth, whereas the total contribution of Information and Communications Technology (ICT) to GDP was 17.5 percent.
In 2012, telecoms’ contribution to GDP was 7.7 percent and in 2013, the contribution dropped slightly to 7.4 per cent, but it picked up again in 2014, contributing 7.6 per cent to GDP.
In 2015, it increased its contribution to 8.5 per cent and hit 9.13 percent in 2016. In 2017, it contributed 8.7 per cent and 9.9 per cent in 2018.
In 2019, ICT contribution to GDP grew again to 10.6 per cent and as of the second quarter of 2020 it has skyrocketed to 14.3 per cent, representing N2.3 trillion.
Rewane said that “Market distortions arise from fixed prices, which hinders competition and affordability for consumers.”
He also described price controls as a deterrent to investment, impacting service quality
His reasons for proffering the solutions were that the decline in telecom sector investments limits infrastructure development and technological advancements while over-regulation stifles telecom innovation and quality, distorting markets and diminishing investment incentives.
He noted that the economic repercussions of such practices include job losses, reduced GDP contribution, and digital inclusion setbacks, which Nigeria does not need to experience on a large scale.
He said if these measures are not taken, the ICT industry may sink into oblivion but warned: “If the sector collapses, the economy fails.
“Without immediate intervention, the revenue potential from telcos may start falling drastically. Telcos are linked to many sectors, hence, any disruption in its operations will have a chain effect on other sectors of the economy.”
Rewane said that “Market distortions arise from fixed prices, which hinders competition and affordability for consumers.”
He also described price controls as a deterrent to investment, impacting service quality
His reasons for proffering the solutions were that the decline in telecom sector investments limits infrastructure development and technological advancements while over-regulation stifles telecom innovation and quality, distorting markets and diminishing investment incentives.
He noted that the economic repercussions of such practices include job losses, reduced GDP contribution, and digital inclusion setbacks, which Nigeria does not need to experience on a large scale.
He said if these measures are not taken, the ICT industry may sink into oblivion but warned: “If the sector collapses, the economy fails.
“Without immediate intervention, the revenue potential from telcos may start falling drastically. Telcos are linked to many sectors, hence, any disruption in its operations will have a chain effect on other sectors of the economy.”
