Telcoms surpass oil as Nigeria’s biggest GDP contributor

July 29, 2020 9:11 am13 comments
Globacom Nigeria

Globacom Nigeria

from OKORO CHINEDU in Lagos, Nigeria
LAGOS – ANALYSTS have identified the telecommunications sector as pivotal in diversifying Nigeria’s economy.

This comes as the sector exceeded the oil industry in terms of contribution to the country’s gross domestic product (GDP).

The breakthrough follows significant investments by mobile networks.

The telecommunications sector contributed 10,9 percent in the first quarter (Q1) of 2020, up from 7,7 percent in 2012.Oil, for many years the main revenue generator, contributed 9,5 percent in Q1 2020.

Africa’s biggest economy, Nigeria, is also Africa’s largest producer of crude oil.

Nigeria has MTN Nigeria has 14 main mobile companies, mainly Glo Mobile (Globacom), Bharti Airtel (formerly Zain, Celtel), 9Mobile (Etisalat Nigeria, EMTS, Mubadala), M-Tel (Nitel), Visafone, Starcomms (Capcom), Multi-Links, Reliance, InterC Network (Intercellular), Megatech Engineering (Zoda Fones), Telkom, Econet Wireless and Vodacom.

“Now more than ever, we believe that the Nigerian is set to take a leading role in the government’s effort to diversify the economy,” said Tunde Abidoye of FBN Quest, the local market watcher.

The mobile sector has defied the economic problems presented by the outbreak of the coronavirus (COVID-19).

In contrast to other sectors that were hit hard by the economic outcomes of the pandemic, the sector was one of the few that recorded growth in Q1.

“Its essential role in easing the lockdown through the provision of digital tools for home working and social distancing resulted in a surge in demand for telecom services during the quarter,” according to Abidoye.

In Q1, MTN Nigeria (MTNN) and Airtel Nigeria both delivered strong revenue growth of 17 percent year-on-year (y/y) and 27 percent y/y respectively.

This was mainly driven by stellar growth in data revenue – which was up by more than 50 percent for both firms.

FBN Quest believes the solid performance carried on into Q2 on the back of strong data demand during the lockdown.

The solid revenue growth of 17 percent y/y (data 40 percent y/y), Airtel’s Q1 2021 at end-June 2020 also buoys the prospects.

– CAJ News

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