2024

when

April

Over the past five years, Nigeria’s telecommunications sector has experienced notable fluctuations in its contribution to its Gross Domestic Product (GDP). These changes, captured in quarterly and full-year data from 2019 to 2024, as reported by the <a href="https://nigerianstat.gov.ng/elibrary" target="_blank" rel="noopener">National Bureau of Statistics</a> (NBS), paint a detailed picture of the sector’s evolving performance. 
In 2019, the telecommunications sector began the year with a strong growth rate of 12.18% in the first quarter, followed by a slight decline to 11.34% in the second quarter.&nbsp; Under the Minister of Communications and Digital Economy led by Dr Isa Ali Pantami, the third quarter saw a minor recovery to 12.16% but the year ended with a dip to 10.26% in the fourth quarter.&nbsp; 
Despite these fluctuations, the sector maintained a steady overall growth rate of 11.41% for the full year, while the umbrella ICT sector recorded an 11.08% GDP growth.&nbsp; 
Overall, telecom’s contribution to national GDP for 2019 was 10.30%. 
The following year, 2020, marked a significant period for the sector, primarily driven by the global COVID-19 pandemic.&nbsp; 
The sector’s growth rate dipped to 9.71% in the first quarter but surged to 18.10% in the second quarter, the highest quarterly growth in five years. This spike reflects the increased reliance on digital communication services during lockdowns and social distancing measures.&nbsp; 
The third and fourth quarters maintained strong growth at 17.36% and 17.64%, respectively, culminating in a full-year growth rate of 15.90%.&nbsp; 
<figure class="wp-block-image">
 <img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcWgPcwuOtKdetg1ZUknLqoZkwyXcyDuBgas0PBbMEa-C8wZfTMKQ5XsJxfemvPeFUtLRjDoHAiCOhvclX7K0SXTX0AcWdbN3dlXGml_yH-MQJQgdAz-rIvK5siu7QNVEqdv_4Cqul0AH2dsujthIkZTObl?key=sJh5cLux4Eb51HrSsDB4dA" alt="Contribution to GDP: How Nigeria's telecoms sector fared between 2019 and 2024" title="Points scored">
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The telecom’s total real GDP increased to 12.18% in Pantami’s first year in office.&nbsp; 
However, 2021 saw a significant slowdown in the sector’s growth.&nbsp; 
The first quarter started with a reduced growth rate of 7.69%. It declined further to 5.90% in the second quarter. Although there was a slight recovery in the third quarter, with growth reaching 10.87%, the fourth quarter dropped again to 5.31%. The full-year growth for 2021 settled at 7.28%, reflecting the sector’s adjustment period following the pandemic-driven boom. 
This year indicated a constant total real GDP growth rate as the telecom sector recorded a 12.63% contribution.&nbsp; 
In 2022, the sector showed signs of recovery, starting strong with a 14.50% growth rate in the first quarter. However, this was followed by a drop to 7.71% in the second quarter.&nbsp; 
The third and fourth quarters saw more stable growth at 10.06% and 11.24%, respectively, leading to a full-year growth rate of 10.72%. This year marked a return to more typical growth patterns, although still below the heights seen in 2020. 
<figure class="wp-block-image">
 <img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXckVEJe1poFA_4_KknYz1LRq8rO5VJrMkkVXP6c1VCnD6-Zns0JbGr5Da3IqSe3NQR18iqh_OJHnFrNdpiIx5qMDuxPyHmSlsOJvIl99io1QsPg_gHlzuXqYnznUROz-RbTkfTMaQuLeWpHN5PVoWjBeRlQ?key=sJh5cLux4Eb51HrSsDB4dA" alt="Contribution to GDP: How Nigeria's telecoms sector fared between 2019 and 2024" title="Points scored">
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The telecom sector recorded a total real GDP contribution of 13.57%.&nbsp; 
The year 2023 presented mixed results for the telecommunications sector. The first quarter began with an 11.71% growth rate, followed by a decline to 9.74% in the second quarter.&nbsp; 
The downward trend continued in the third and fourth quarters, when Dr Bosun Tijani became the Minister, with growth rates of 7.74% and 6.93%, respectively. The overall growth for the year was 8.90%, indicating a period of stabilisation at lower growth levels.&nbsp; 
Amid this, the telecom sector followed the constant upward trend of percentage contribution to total real GDP. In 2023, it was 14.38%.&nbsp; 
As of 2024, the available data suggests that the sector is continuing to face challenges. The first quarter recorded a growth rate of 6.23%, which further dropped to 5.17% in the second quarter. These figures suggest that 2024 could be a challenging year for the sector, potentially leading to the lowest annual growth rate in the period analysed. 
<figure class="wp-block-image">
 <img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXecgqkBKhokIP6iSGfncOX_aGSRXwiFguTwNR01Jq07OWqT_hiUiY6EwmplA8P3jbJZEm1-elTK-3C8RAiIhiLV8ZhnANb9gR6a55obBCugP4o9fVk712w6KMOHkiJdHrHMRSgYeJ52wSAq27_S6Joft2pc?key=sJh5cLux4Eb51HrSsDB4dA" alt="Contribution to GDP: How Nigeria's telecoms sector fared between 2019 and 2024" title="Points scored">
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On a positive note, of total real GDP, the telecoms sector contributed 14.58% in the first quarter of 2024, which has grown to 16.36% in the second quarter.&nbsp; 
<h4 id="implications-for-the-telecoms-industry" class="wp-block-heading">Implications for the telecoms industry?</h4> 
The fluctuating growth rates of Nigeria’s telecoms sector over the past five years reflect its resilience and challenges.&nbsp; 
The sharp growth observed during the pandemic in 2020 highlights the sector’s critical role in maintaining economic stability during times of crisis. However, the subsequent slowdown and stabilisation in growth rates from 2021 onwards suggest the sector is adjusting to post-pandemic realities, where demand for digital services is normalising. 
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 <img loading="lazy" decoding="async" width="800" height="449" src="https://technext24.com/wp-content/uploads/2023/06/Telecoms-1.jpeg" alt="Number of Nigerians living without telecom services drops by 27% in 10 years" class="wp-image-195902">
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The rising percentage contribution of the telecoms sector to Nigeria’s total real GDP, despite these fluctuations, indicates that it remains a key driver of economic activity.&nbsp; 
The increase from 10.30% in 2019 to 16.36% by the second quarter of 2024 underscores its growing importance. However, the sector’s slowing growth in 2024 could signal potential challenges ahead, such as market saturation or the need for further infrastructure development to sustain its economic contribution. 
<h4 id="looking-ahead" class="wp-block-heading">Looking ahead</h4> 
The total real GDP numbers depict a sector that has potential, but there is a lot to look forward to, especially when we remember that telecom companies keep reiterating calls for an increase in prices of calls, data, and other services, citing a rise in operational expenses.&nbsp; 
In 2022, the Association of Licensed Telecom Operators of Nigeria (ALTON) requested a 40% hike in the price of calls, SMS, and data charges. It cited the rising cost of doing business as a major reason. That same year, the Nigerian Communications Commission (NCC) ordered telecom operators to reverse the tariff hike they introduced. According to the regulator, that decision was implemented without its approval. 
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 <img loading="lazy" decoding="async" width="800" height="400" src="https://technext24.com/wp-content/uploads/2023/10/Untitled-design-2023-10-16T114700.162.png" alt="Telcos may sue banks, discontinue USSD services over N120 billion debt-NCC" class="wp-image-218366">
</figure> 
<a href="https://technext24.com/2023/08/24/nigerians-telecom-rate-hike/">In 2023</a>, according to ALTON, the current structure is no longer sustainable.&nbsp; 
Gbenga Adebayo, the chairman of ALTON, stated “What we are charging, today, is certainly not sustainable. It is only a matter of time; either it will impact on scale of service or the industry’s performance and service availability. But certainly, it is not sustainable…what we have currently. We are living on borrowed time.”&nbsp; 
The same year, both MTN Nigeria and Airtel declared losses. Airtel recorded a loss of $89 million for its year ended March 2024, and MTN Nigeria’s loss was ₦137 billion for the year ended 2023. Both telcos blamed the naira devaluation, rising inflation, and worsening macroeconomic conditions in the country. 
The tariff increment <a href="https://businessday.ng/technology/article/telcos-renew-push-for-first-general-tariff-hike-in-11-years/" target="_blank" rel="noopener">argument came up in April</a> again when the telecom providers insisted on cost-reflective tariffs, claiming that adverse economic headwinds are threatening their financial viability. 
<figure class="wp-block-pullquote">
 <blockquote>
 The operators stated that its general service pricing framework has not been reviewed upward in the last 11 years because of regulatory constraints.
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Even more recently, Karl Toriola, CEO of MTN Nigeria, speaking at the telecom investment forum hosted by the Financial Derivatives Company (FDC) in Lagos, <a href="https://nairametrics.com/2024/08/20/nigeria-telecom-is-in-an-intensive-care-unit-mtn-ceo-what-does-this-mean-for-investors/#:~:text=Karl%20Toriola%2C%20CEO%20of%20MTN,rising%20costs%20and%20unsustainable%20pricing." target="_blank" rel="noopener">stated</a> that despite significant growth over the past two decades of liberalisation, the telecom sector now faces serious threats due to rising costs and unsustainable pricing.&nbsp;
The post <a href="https://technext24.com/2024/08/28/telecoms-gdp-2019-to-2024-review/">Contribution to GDP: How Nigeria’s telecoms sector fared between 2019 and 2024</a> first appeared on <a href="https://technext24.com">Technext</a>.

Contribution to GDP: How Nigeria’s telecoms sector fared between 2019 and 2024

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