The rise of the Nigerian digital economy

The rise of the Nigerian digital economy
Photo by Olumide Bamgbelu on Unsplash

Q2-2020 was a blood bath for most economies as the COVID-1 9 pandemic took the world into the great lockdown. Nigeria was not left behind; this was evidenced by the 6.1%y/y contraction in real GDP over Q2-2020.

Despite the steep contraction in economic output during the period, there were a few bright spots. Notably, the ICT sector – one of the fastest-growing sectors of the Nigerian economy, grew by c.15.1% y/y.

The rise of the Nigerian digital economy
Sources: NCC, United Capital Research

Specifically, the telecommunication, accounting for c.8 0.0% of the broader ICT output surged 1 8.1% y/y. This was unsurprising given the level of digital adoption across the system due to the lockdown. As at June-2020, there were 143.3mn mobile internet subscriber (vs 135.8mn in Mar-2020) and 196.4mn telephony subscriber in Nigeria (vs 189.3mn in Mar2020).

Accordingly, teledensity further improved to 102.8% (vs 9 9.2% in Mar-2020). This fast-paced growth is further reflected in the sharp increase in the number of activities in the digital economy across the country, ranging from massive growth in the eCommerce space, ride-hailing services, drop shipping, affiliate marketing, blogging/vlogging, social media marketing, amongst others.

No doubt, the use of digital channels has expanded in the wake of the COVID-1 9 pandemic and the acceleration is expected to continue even post-COVID. With the foundations of the digital economy being data and voice connectivity, the country seems to be on the right track in developing a functional digital economy.

Beyond, e-commerce, digital marketing and drop shipping, improved data connectivity will also boost the idea of working from home, virtual employments and redefine corporate lifestyle in the pre-COVID era. However, to fully benefit from and fast track the growth of Nigeria’s digital economy, recent development around harmonization of the right of way (RoW) charges among states, must be not only b e resolved, but also friendly.

This will further spur investment in broadband connectivity and other telecom infrastructure across the country, reduce data tariff, ease doing business, boost employment, and improve the traffic situation in cities such as Lagos.