Telecoms’ Impact on Nigerian Economy Since Independence

Since Independence in 1960, the telecoms sector has impacted on the Nigerian economy in several positive ways, creating jobs and contributing to the nation’s Gross Domestic Product, writes Emma Okonji

Telecoms operations, no doubt, have become a special tool for social and economic empowerment, social integration, community development and growth.

Although Nigeria is a late starter to telecoms regulation and rollout of Global System for Mobile (GSM) Communication, which came to bear after 40 years of attaining Independence, the country was able to catch up with the global telecommunications trends, given the growth rate recorded in the telecoms sector since 2001 when GSM services was first rolled out.

Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, who shared his thoughts on the impact of telecoms on the Nigerian economy and on the Nigerian citizens, told THISDAY that telecoms had over the years, became part of life of the Nigerian subscribers. According to him, telecoms operations have become as important as the air and water to the Nigerian citizens. “Nigerians can forget their physical wallet at home when rushing out for work and still feel comfortable all through the working hours, but they cannot afford to forget their mobile phones at home while rushing for work and still remain comfortable all through the working hours. That shows the importance of telecoms in the lives of Nigerians, as they continue to utilise the services of telecoms for voice and data communications as well as for financial transactions through several electronic channels,” Adebayo said.

Telecoms’ evolution

Before Nigeria gained independence in 1960, communication was mainly through the telegraphic wire, initiated by the colonial masters, but after independence in 1960, the Nigeria Telecommunications Limited (NITEL), was established in 1985, following the separation of postal services from telecommunications services. As at that time, telecommunication was the exclusive right of the affluent in the society as only few people had access to telephony. People had to queue for hours and days, just to make international calls and sometimes local calls with the 090 NITEL line.

However, the advent of GSM in 2001 eventually demystified telecommunications, and gave every Nigerian the access and right to communicate. The introduction of GSM in 2001, increased the number of registered lines, from less than 400,000 in 41 years, to over one million lines in less than one year.

After 2001, Nigerians could sit at the comfort of their homes and offices to make instant calls within and outside Nigeria, through their personal hand-held devices called the mobile phones. Banking activities are now transacted on the mobile phones, without the bank customer visiting the banks.

The most eventful period was between 2001 and 2015, when the telecoms sector was liberalised.

In 2001, the first set of GSM operators were licensed. They included Econet Wireless (now Airtel), MTN and NITEL. In 2003, Globacom was licensed and in 2008, Etisalat, now 9mobile, was licensed, while ntel was licensed in 2014, but rolled out services in 2016, after its successful privatisation process through a guided liquidation exercise.

Following the inability of NITEL to cope with competition from GSM operators, it folded up its operations and was eventually sold to NATCOM in 2014, and later re-sold to private investor after it was unbundled and it currently trades as ntel, under a private ownership.

Telecoms After Independence

At Independence in 1960, Nigeria had a paltry 18,724 telephone lines, with a population of 40 million people, translating to a teledensity of 0.5 per cent. In 2001, when GSM was launched, telephone lines, which were controlled under a monopolistic market by NITEL and few other Code Division Multiple Access (CDMA) operators, were still within 400,000 in number and they were owned only by the affluent in the society.

Between 2001 and 2006, the Nigerian Communications Commission (NCC), the telecom industry regulator, deregulated the telecoms industry and granted five years exclusivity period to GSM operators, a development that suddenly pushed the number of telephone lines from less than 400,000 in 2001 to over 10 million in 2006, thus giving opportunity for all Nigerians to own and operate a mobile telephone.

Speaking about the trajectory of the evolution of telecom in Nigeria, with reference to the nation’s growth, the Executive Vice Chairman of the NCC, Prof. Umaru Garba Danbatta, said as at August 2023, active telecom subscribers have grown significantly hitting 220 million active subscribers, which represents a teledensity of 115.63 per cent.

GDP Contribution

Telecoms contribution to GDP has been significantly huge since 2001 and telecoms operations have impacted the Nigerian economy in several ways, since the 2001.

Citing a recent report released by the Nigeria Bureau of Statistics (NBS), the Nigerian Communications Commission (NCC), said telecommunications sector’s contribution to the nation’s Gross Domestic Product (GDP), increased significantly to 16 per cent in the second quarter of 2023.

Danbatta stated this in his keynote address delivered at the Telecom Executives and Regulators Forum (TERF), hosted by the Association of Telecommunications Companies of Nigeria (ATCON) in Lagos recently.  

According to Danbatta, from a 14.13 per cent contribution in the first quarter of 2023, and up from the hitherto 15 per cent all-time-high record contributed in the second quarter of 2022, the telecommunications sector added 16 per cent to the national GDP in the second quarter of 2023 to set a new record. “From about eight per cent contribution to GDP in 2015, when I came on board as the EVC of NCC, quarterly GDP has increased significantly to reach its current threshold of 16 per cent and that this has continued to positively impact all aspects of the economy.

“Through sustained regulatory excellence and operational efficiency by the Commission, 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 emplaced by the NCC and with the support from all stakeholders has been our major success factor as an industry,” Danbatta said.

Job Creation

In the area of job creation, Adebayo said telecoms sector created several direct jobs and more of the indirect jobs. According to him, the number of persons directly employed by telecoms operators is relatively high, but the number of people that are indirectly employed by the telecoms sector, is largely huge.

“We have about 15,000 direct employees across all telecoms networks, with over 500,000 indirectly employed through the kind of telecoms support services that they offer to Nigerians, and these indirect employees are within the categories of contractors, suppliers, vendors, and other telecoms support service providers like Value Added Service (VAS) providers,” Adebayo said.

5G Rollout

Following the 5G license granted MTN and Airtel by the NCC, MTN, in September last year, launched its commercial 5G network in Lagos, with a promise to carryout 5G commercial launch in six other cities, which include: Abuja, Port Harcourt, Ibadan, Kano, Owerri, and Maiduguri.

Similarly, Airtel in June this year, launched its 5G network in four states, with plans to cover the entire country by the end of the year. 

The MTN Lagos 5G commercial launch, came on the heels of its 5G pilot launch, as mandated by the telecoms industry regulator, the Nigerian Communications Commission (NCC).

During the pilot launch, MTN had promised to carry out 5G commercial launch in six cities, beginning from Lagos.

Speaking during the commercial launch in Lagos, its Chief Executive Officer, Mr. Karl Toriola, said the Lagos 5G commercial launch was in fulfillment of MTN’s earlier promise to begin 5G commercial launch in cities, within one month of 5G rollout.   

The advanced 5G technology promises to extend the reach and capacity of MTN Nigeria’s data network in Nigeria and enable much faster speeds and lower latency, giving customers near-instant access to the things they care about and downloads that take seconds, instead of minutes.

MTN showed its readiness to offer Nigerians the best of service with 5G technology, when it became the first telecom operator to roll out 5G technology services on its network on August 24, 2022.  MTN Nigeria kicked off an open 5G pilot in the lead-up to its highly anticipated commercial launch.

With the 5G launch of Airtel Nigeria, the telecoms company joins other telecoms service providers like MTN that has also launched 5G in Nigeria. 

According to Airtel, the 5G Launch is a non-standalone version that is better in service delivery.

Speaking at the 5G launch, the Chief Executive Officer of Airtel Nigeria, Carl Cruz, said: “The 5G revolution opens a new vista of opportunities and it is a quantum leap from the existing 4G network. With 4G, video playback and video calls are smooth but in 5G, end-to-end video creation with the support of Artificial Intelligence (AI) is possible. 5G is a completely new experience that supercharges cloud computing, telemedicine, self-driving cars, cloud gaming, Augmented Reality (AR), Virtual Reality (VR), and Internet of Things (IoT). With 5G, we can only be limited by the limits of our imagination.”

He said with 5G, there would be more collaboration among stakeholders in the telecoms space to do new things with Artificial Intelligence, Machine Learning, Internet of Things, Smart Cities, among others.

With the MTN and Airtel commercial 5G launch, leveraging the largest spectrum dedicated to 5G in Africa, Nigeria will join a handful of African countries that have rolled out the 5G network. 

Challenges

Speaking on the challenges in the telecoms sector after Independence, Adebayo said since Nigeria started as a late starter in telecoms business, the telecoms’ operators had to build their own infrastructure for network expansion.

According to him, from the beginning of GSM rollout in 2001, telecoms operators were mandated to build and deploy their own telecoms infrastructure.

“At the beginning of GSM rollout, telecoms operators were measured by the number of Base Transmission Station (BTS) and radio links that they deploy, hence there were clusters of BTS in same location at the beginning of GSM rollout because there was no co-location for sharing of telecoms facilities.

Another challenge faced in terms of infrastructure rollout is that there are no designated areas for the installation telecoms masts (BTS) in the capital territory, Abuja and this is posing some challenges, because as at the time the Abuja Master Plan was developed about 40 years ago, there was no consideration for telecoms radio network and telecoms masts deployment. So today, there are challenges on where best to install telecoms infrastructure in Abuja metropolis.

Telecoms operators, have on their own, built terrestrial infrastructure across the country for the laying of fibre optic cables.  Telecoms operators have covered the entire country with either terrestrial fibre or terrestrial microwave radio links.

Telecoms infrastructure is in the exclusive list of government, yet telecoms operators are left alone to deploy telecoms infrastructure across the country, ”Adebayo said.

Quality of Service

Addressing the issue of quality of service since Independence and since the rollout of GSM in 2001, Adebayo said telecoms operators had been faced with the burden of deploying telecoms infrastructure and that most times, government does not even protect the telecoms infrastructure, leading to willful vandalism and theft of telecoms infrastructure across the country.

“Telecoms operators are also faced with the destruction of telecoms infrastructure during road construction. Again, government agencies close telecoms sites with impunity, when enforcing payment of levies charged on telecoms operations in their states. All these have in one way or the other, affected the quality of service delivery in the affected states,” Adebayo said. He however explained that there had been significant improvement on service quality, since Independence and since the rollout of GSM services across networks.

Despite the many challenges faced by telecom operators, industry stakeholders are of the view that the sector has contributed immensely to national development, since Independence in 1960.