ICT sector struggled with recession in 2016

ADEYEMI ADEPETUN reports that despite
some growth recorded in the Information and
Communications Technology sector (ICT) in
2016, the industry also felt the impact of
recession. This is just as stakeholders have
canvassed a workable policy for the sector in

The year 2016 has some 72 hours left to reach
its destination. Without mincing word, it has
been a tough year for both the economy and

The economy under President Muhammadu
Buhari is experiencing a lull, moving at a
snail speed, with negative impacts felt across
all the sectors. The recession has spared not
one industry, even the much-celebrated
Information and Communications Technology
(ICT) industry has also been touched.
It has been a gale of complaints across

That is not to say there were no notable
positive developments, but to a large extent,
they have been overshadowed by the pangs
of recession.
This development has prompted industry
watchers to opine that driving economic
advancement requires strong leadership with
the political will and proper framework to
leverage opportunities still inherent in the
sectors, especially ICT for socio-economic

To start with, while the ICT sector’s
contribution to Gross Domestic Product
(GDP) increased to 9.8 per cent, the
telecommunication sector’s investment has
climbed to $68 billion, with $35 billion
coming from indigenous operators. This was
confirmed at the 2016 International
Telecommunications Union (ITU) Telecoms
World conference in Bangkok, Thailand.
Recall that as at 2001, when the government
libralised the telecommunications sector,
aggregate industry investment stood at $50

According to Nigerian Communications
Commission (NCC) Executive Vice Chairman,
Prof. Umar Danbatta, this development was
due to the huge potential and the resilient
nature of the sector despite the present
economic situation in the country.

Interestingly, while about 10.7 million
telephone lines were disconnected across the
networks last year due to the failure of the
quartet of MTN, Globacom, Airtel and Etisalat
to deactivate some faulty Subscribers
Identification Module (SIM) cards, this
resulted into fall in the country’s teledensity.
As at today, the country can boast of about
110 per cent teledensity from about 90 per
cent in January, while total mobile
subscription is in excess of 230 million, about
155 million have been active despite the
toughness of the economy. Internet
subscriptions also increased to about 100
million from about 93 million in the course of
the year.

The sector’s contribution to the country’s
GDP fluctuated in the course of the year. It
witnessed for the first time since the
liberalisation, a short fall.
According to available data from the National
Bureau of Statistics (NBS), in the first quarter,
spanning January through March, the sector
contributed N1.41 billion and N1.58 trillion
in second quarter. By the end of third
quarter, it fell to N1.398 trillion as a result of
the recession.

Also, the GDP for telecommunication as at Q3
of 2016 under Information and
Communication contracted at 0.95 per cent in
Q3 2016 from 1.49 per cent in Q2 2016 and
4.69 per cent in Q3 2015.

Impact of recession
Many might not know that in the course of
the year, mobile phones sales dropped by 80
per cent.
Accordingly, The Guardian investigation
showed that rather than buy new ones, most
Nigerians either maintain their damaged
phones, go for refurbished ones or buy low-
end devices available in the market because
of the economic situation.

Some of the leading mobile phone vendors,
who spoke to The Guardian, confirmed that
there has been a lull in the mobile device
market, which they blamed on lack of
liquidity and inability to access foreign
Also, in the course of the year, the auction in
the 2.6GHz spectrum, which could have
added about N44 billion to government
coffers was also impacted by the pangs of

The NCC, which had targeted both local and
international investors, was disappointed.
The Director of Spectrum Administration at
NCC, Austine Nwaulune, at a post-event
briefing in Lagos, said the commission was
disappointed when it discovered that
operators that had shown interest in bidding
later on withdrew from the race. Most of
them complained bitterly about the huge cost
of the spectrum and most especially, their
inability to access foreign exchange because
of the policy of the present government.
On the long run, only MTN bided and got six
of the 14 slots after paying about $96 million
to the NCC.
The economic situation also affected some
Internet Service Providers (ISPs) in the
country. From about 120 licenced ISPs, the
figure has dwindled to 37. The 37 operators
compete to service 390, 794 subscribers in the
The collapse in the number of smaller players
in the industry has been attributed to many
factors, including the intense competition
from the bigger operators and the current
economic situation.
The Guardian learnt that intense competition,
increase in capital expenditure (CAPEX) and
operational expenditure (OPEX), coupled
with the problem of accessing foreign
exchange and poor financial muscle worsen
smaller operators’ survival in Nigeria’s
highly-competitive telecoms market.
Unfriendly government policies
While countries including Ghana, Kenya and
even South Africa have either reduced taxes
on ICT or mulled the plan, the Federal
Government of Nigeria has expressed its
readiness to tax Nigerians who use ICT
through what it called Communication
Service Tax (CST). The bill, which is about to
pass second reading at the National
Assembly, if it becomes a law will see ICT
users pay extra nine per cent tax on calls,
SMS, MMS among others.
To make things worse for the sector, the
Central Bank of Nigeria’s Governor, Godwin
Emefiele, also suggested telephone calls
above three minutes should be surcharged,
all in the wake of the recession. The target,
according to Minister of Communications,
Adebayo Shittu and Emefiele, was to generate
revenue for government to cushion the effect
recession on the economy.
Already, there have been strong oppositions
against these moves, which telecoms
operators, industry associations and
subscribers said would raise the cost of
accessing telecoms services by consumers,
and further deny about 20 million Nigerians
from accessing ICT services.
Stakeholders’ perspective of the year
Speaking to The Guardian, the
President, Association of Telecommunications
Companies of Nigeria (ATCON), Olusola
Teniola, said sector at large witnessed a very
mixed set of circumstances in Nigeria in 2016.
Teniola said the impact of devaluation of
naira to the dollar, changes in NITDA
leadership, rise in inflation, delay in
implementation of 2016 budget and loss of
jobs characterised 2016 and also created some
He said the sector contributed almost 9.9 to
GDP in 2016 despite all the headwinds and
against a slow-down in the overall economy.
The ATCON president listed the release of
2.6GHz and 5.4GHz spectra by NCC;
government’s commitment to accelerate
digital migration and 4G/LTE roll outs by
some of the operators as some of the
landmark achievements of the year.
To the Director-General, Delta State
Innovation Hub (DSIHUB), Chris Uwaje, ICT
Nigeria is currently greedily directionless!
Though, Uwaje listed the appointment of
what he described as a listening, ready-to-
learn and proactive Minister of
Communication, as one of the achievements
for the year, he lamented the sector’s
inability to establish a National IT
Framework Bill and enactment of various
enabling Acts for the empowerment of IT-
Nigeria…with particular reference to National
Software Board, policy, strategy and
operational direction as well as the
establishment of the Office of the IT General
of the Federation.
Going forward
A telecoms expert, Kehinde Aluko, wants
Shittu and Danbatta to go beyond just coming
up with sector’s blue print and eight point
agenda, “we have gotten to a stage where
policies must be matched with actions.
Danbatta promised ubiquitous broadband for
Nigerians, yet the NCC and operators are
bent on increasing data prices. That is a
typical example of policy summersault.”
To the Chief Executive Officer, MainOne
Cables, Funke Opeke, 2016 has been a tough
one for the economy, “but I believe going
forward technology can play a big role in
increasing productivity, marketing what we
have not only to Nigerians, but foreigners as
well. I am hoping that as we enter into 2017,
domestically, we leverage technology value
chain very well and reduce our foreign
consumptions so that we can boost our
economy. Technology should dominate the
According to Uwaje, ICT Nigeria is
erroneously growing but not developing. He
explained that there is a distinct difference
between “Growth and Development”.
“Our focus for 2017 should be to retool
Computer Science education, sharpen up our
curriculum, Lecturers and concentrate on
building massive quality capacity on software
engineering and development for the mobile
knowledge economy, e-Learning, e-
Government, entertainment and national
security. Indeed, Nigeria is still ICT backward
in terms of IT creativity and Innovation. This
fact is vividly demonstrated in our global ICT
status rating and international e-readiness
index. Regrettably, we are myopic champions
in terms of ICT product consumption – most
of which amount to colossal waste,” he
For Teniola, government’s focus next year
should be in unlocking ‘local content’ in the
industry and ensuring a level playing field
exists to bring about increased employment
for the growth in the skills set required to
generate a digitally transformed industry.
According to him, the ecosystem will bring
about new players from the OTT space and
regulation that balances the interests of these
players versus the investments already made
by the Telco players will need to be
The ATCON president posited that the
investments required to fund the mobile
broadband revolution must be addressed, “so
all incentives and an enabling environment is
put in place by the Federal Government, so
that investors’ confidence is not eroded any

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