Despite challenges, Nigeria’s telecom sector experiences upward shift, contributes 16% to GDP 

Despite challenges faced by Telecom operators amidst the current business climate in Nigeria, the telecommunications sector has continued to experience an upward shift contributing 16 per cent in the second quarter of 2023 to the nation’s Gross Domestic Product (GDP).

This is according to Executive Vice Chairman of Nigerian Communications Commission(NCC), Prof. Umar Danbatta during a keynote address he delivered at the Annual Telecom Executives and Regulators Forum (TERF) hosted by the Association of Telecom Companies of Nigeria (ATCON) in Lagos on Thursday.

Earlier in August, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Engr. Gbenga Adebayo explained that the hike in the cost of petroleum products was adversely affecting the telecoms sector, just the same way it is affecting other sectors of the Nigerian economy.

Adebayo who spoke about the implication of diesel hike on telecoms operations said, “As a telecoms service provider, we consider the interest of the country first and that is the reason why we have continued to maintain the same cost in telecoms services without making any move to increase the cost of service since inception. But the truth is that we cannot continue to provide quality service when we do not have the right pricing in the telecoms industry.

“Telecom operators have their own challenges that are affecting service delivery. The reality is that our charges must reflect the cost of providing telecoms services and we cannot shy away from that. We cannot continue to provide services below cost, because if we continue to do so, then we will go out of business and the sector will suffer for it. Telecom operators are private entities that are doing business without any form of government concession or waiver.”

Danbatta yesterday however noted that the sector grew from a 14.13 per cent contribution in the first quarter of 2023,  15 per cent all-time-high record contributed in the second quarter of 2022, to 16 per cent to the national GDP in the second quarter of 2023 to set a new record.

Danbatta, while speaking on the theme: “Success Factors and Barriers to National Broadband and Digital Economy Aspirations,” took the audience, promising executives of telecom companies and other industry stakeholders, through the giant strides being made by the Commission.

He attributed the growth to sustained regulatory excellence and operational efficiency by the Commission.

According to the EVC, “The industry has grown in leaps and bounds over the past two decades and this has impacted on all other sectors of the economy. The effective regulatory regime employed by the NCC and with the support from all stakeholders has been our major success factor as an industry.”

The EVC stated that while there are barriers to broadband deployment in the country, ranging from the issue of right of way (RoW), fibre cuts, high capital requirement for deployment, multiple taxations and regulations, among other challenges, the NCC is navigating regulatory complexities, digital divide and literacy, security concerns with firmness and increased collaborations with necessary stakeholders such as ATCON to create measures towards tackling the challenges.

On the RoW challenge, the EVC said there are about 46 different taxes directed at the telecom sector at the moment. Such charges and levels, coming in various names, are imposed on telecom operators by some agencies and tiers of government, especially at the state and local levels. Danbatta said the challenge translates into greater economic burdens on telecom subscribers in the country.

Speaking about connectivity, Danbatta said, “Over the years, we have identified some clusters of access gaps all over the country but we have recorded a significant drop in the number of access gaps, as we continue to drive initiatives that boost access to telecommunications services.”

He stated that the Commission does this by enlisting government commitment to a digital economy with robust policy frameworks, promotion of investment and funding, stimulation of infrastructure development, digital inclusion and literacy, promotion of competition and market liberalization, effective allocation of spectrum, as well as driving the e-government ecosystem.

Danbatta said with various ongoing regulatory efforts, “The NCC is confident that we are going to reach 50 per cent broadband penetration threshold by the end of 2023 and by 2025, we would have met and possibly surpassed the 70 per cent broadband penetration target, as contained in the Nigerian National Broadband Plan (NNBP), 2020-2025.”

The EVC particularly commended ATCON and its members for being partners in progress and for constantly engaging the Commission in constructive ways towards finding solutions to the myriad of challenges confronting the industry. The EVC said a national broadband network and a thriving digital economy are not without their challenges.

“However, these challenges can be overcome through determination, innovation, and strategic planning. By focusing on the success factors and addressing the barriers, we can create a future where every Nigerian has access to the opportunities that the digital world offers,” he added.

Danbatta also stated that the success of the nation’s digital aspirations is beyond technological advancements but also about transforming lives, driving economic growth, and ensuring that a nation remains competitive on the global stage.

“As we work together to navigate this path, I enjoin all our stakeholders in the public and private sectors to remain committed to building a brighter and more connected future for our country,” he said.