‘Amid prospects, ICT’s contribution to GDP falls to N7.9tr in Q1’

Contributions of the information and communications technology (ICT) sector to Nigeria’s gross domestic product (GDP) dropped from N8.4 trillion in Q4, 2023 to N7.9 trillion in Q1, 2024.

But the Ministry of Communications, Innovation and Digital Economy in a document titled, ‘On Nigeria’s GDP and Growth Rate: A Focus on the ICT Sector’, said the sector shows great prospects.

The Minister in charge of the ministry, Dr Bosun Tijani, released the document yesterday via his official X handle @bosuntijani.

Providing basis for the development, the document explained that GDP and the associated growth rate remain the most common metric for tracking economic performance.

The document noted that the assessment must be done using all the right indices and data to ensure a genuine and realistic view of economic performance over a period, which allows the government and citizens to properly evaluate the impact of ongoing initiatives, policies and help determine the need or otherwise for adjustments.

Tijani explained that over the last three quarters (Q3, 2023 to Q1, 2024), representing President Bola Ahmed Tinubu’s time in office, data from the National Bureau of Statistics (NBS) on the GDP of the information and communication sectors showed that the nominal value of the sector’s contribution grew from N7.1 trillion in Q3, 2023 to N8.35 trillion in Q4, 2023.

According to him, similar to the performance of many key sectors, it was followed by a “patterned fall” in Q1, 2024 to N7.86 trillion.

He said a similar trend was also found in the telecommunication and information services sub-sector for the same period.

“However, it is important to note that despite this fall, the nominal value in Q1, 2024 is still 10.81 per cent higher than Q3, 2023, and also 14.18 per cent higher compared to the nominal GDP at the same period in Q1, 2023,” Tijani noted.

Tijani said that the historical pattern indicates that Q1 performance is often below the preceding Q4 performance.

“For example, over the past eight years, there has only been one occurrence where we saw Q1 nominal value higher than the preceding Q4 value. Looking back further, there is also an indication of a cyclical nature in the performance of the ICT sector,” he said.

While particular attention is often paid to the real GDP growth rate, the minister noted that a review of the last seven quarters starting from Q3, 2022, indicated that real GDP growth rate of the Information and Communication Sectors has been on a decline since Q3, 2022, with the sharpest decline in that period happening between Q1, 2023 and Q2, 2023.

“Understanding these differences, a comparison between nominal GDP values and GDP growth rate (in the period in review) establishes an improvement in nominal performance even with a reduced growth rate. It is important to also establish that a slower growth rate is not the same as a negative growth and the observed fall in growth rate extends to seven quarters back,” he stated.

The minister said upon assumption of office, there was a recognition of the need to emphatically address this steep fall in growth rate as indicated above, as well as other broader factors that were inhibiting the pace of growth of the sector including, tech brain drain, which created a shortage in the local technology workforce, particularly between 2021 and 2023; low ranking in the Trade Complexity Index as indicated in Nigeria’s 99th percentile ranking on the ECI Index; imbalance in the level of connectivity across Nigeria; low levels of digital literacy limiting people’s ability to consume digital and ICT products and services; decline in funding for tech startups from 2022 to 2023.

Others are the low level of local domiciliation of technology startups in Nigeria and the low percentage of local content in the ICT value chain.

Tijani said these formed the basis for the agenda of President Tinubu’s administration for the digital economy as manifested in the Federal Ministry of Communications, Innovation and Digital Economy’s (FMCIDE) strategic blueprint, which is to enable Nigeria’s economic growth through enhanced productivity, facilitated by technological innovation.