THE STATE OF ICT IN NIGERIA AND ITS ECONOMIC IMPLICATIONS

By
Sa’idu Sulaiman
Department of Economics, Sa’adatu Rimi College of Education, Kano Nigeria
E-mail: [email protected]

©2010 by Sa’idu Sulaiman

Introduction
Recent trends in the existing field of Information and Communication Technology
(ICT) have brought about new and simpler ways of doing things such as inter
personal communications, data storage, teaching and learning entertainment,
games, e-governance, and a host of others.
The increasing use of technology in all aspects of our lives makes effective use of
Information and Communication Technology (ICT) an indispensable skill for life.
In fact ICT capability is essential to participation and engagement in modern
society. The development in telecommunications has impacted enormously on the
applications of ICTs and their uses. ICT can be used to find, develop, analyse and
present information, as well as to model situations and solve problems. It enables
rapid access to ideas and experiences from a wide range of people, communities
and cultures, and it is a powerful force for change in any society
(http://nationalstrategies.standards.dcsf.gov.uk/node/16069)
The paper reviews some literature on the current state of the ICT in Nigeria, and on
the impacts of the ICT on the economies some countries. Based on these and the
position of Nigeria in the 2008-2009 and 2009-2010 Networked Readiness Index
(NRI) of the World Economic Forum, the paper then draws some economic
implications of the ICT for the Nigerian economy in the 21st century .
Definition and Scope of ICT

ICT is an acronym that stands for Information and Communication Technology. It

is a composite term, which embodies three important concepts: information,
communication and technlogy. Womboh (2008) submits that that to understand
the term ICT, one must understand all the three concepts. He then defines
information as scientifically processed data which aids decision making. But for
Babu, Singh and Sachdeva (1997), information means data that has been put into a

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meaningful and useful context and communicated to a potential user who uses it to
make decisions.

Womboh (2008) also defines communication as the transfer or exchange of

information from person to person or from one place to another, while he describes
technology as the use of scientific knowledge to create tools for enabling human
beings to subdue environmental hazards and obstructions to comfort. The
computer, telephone, cell phone, GSM handsets, television, radio, etc are given as
examples of products of communication technology.

Coming to the definition of ICT, deWatteville and Gilbert (2000) in Womboh

(2008) have defined it in the following terms:

The acquisition, analysis, manipulation, storage and distribution of

information; and the design and provision of equipment and software for
these purposes.

Elsewhere, ICT is also defined as

the various technologies that enhance the creation, storage, processing,

communication and dissemination of information. ICTs also refer to the
different infrastructures used in these processes, their applications and the
numerous services these infrastructures render
((cbdd.wsu.edu/kewlcontent/cdoutput/TR501/page9.htm).

The elements of ICTs include communication media (e.g radio, television,)

information machine (e.g computers) and telecommunications technologies and
equipment (e.g satellites, fibre optic cables, phones, and facsimile machines).
Telecommunications infrastructures in particular have turn out to be the driving
forces of ICTs because they have the ability to link all various ICT elements
together irrespective of locations and to provide a converging platform for them all
(cbdd.wsu.edu/kewlcontent/cdoutput/TR501/page9.htm).

The scope of ICT covers any product that

will store, retrieve, manipulate, transmit or receive information

electronically in a digital form. For example, personal computers,
digital television, email, robots. So ICT is concerned with the
storage, retrieval, manipulation, transmission or receipt of digital
data. Importantly, it is also concerned with the way these different

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 uses can work with each other
(http://tutor2u.net/business/ict/intro_what_is_ict.htm).

The State of ICT in Nigeria

Ogunsola and Aboyade (2005) observe that Nigeria had a late start in the use of
computers, but the growth in their use has been quite remarkable. The computer
installations are widely distributed in universities, government departments and
agencies, banks, commercial establishments, and industries. The private sector is
also not left out in this information technological revolution. Nigerian university
campuses too are now full of Information Communication technology facilities
enabling lecturers and students to do their researches and other academic works
using various IT devices. They also note with happiness that both the Federal
Government of Nigeria and other international funding agencies are interested in
the general development of ICT in higher education in Nigeria. The Federal
Ministry of Education, for instance, has embarked on the establishment of the
National Virtual (Digital) Library Project. Funding agencies like Carnegie
Corporation of New York are also interested in the Nigerian ICT developmental
programme. The Corporation supported the establishment of scientific databases at
the University of Ibadan, Nigeria.

Mobile cellular services made their first appearance on the Nigerian market in
1993 with a “national” service operated by NITEL and a smaller Lagos service
operated by Mobile Telecommunications Services (MTS). The two firms, with a
joint subscriber base of 12 500, provided voice services over an analogue E-TACS
network, as well as basic value-added services such as voicemail and paging, from
three switches in Lagos, Enugu, and Abuja. However, in 1995, MTS closed its
operations due to failure to pay interconnection charges to NITEL. M-Tel
subsequently emerged as NITEL’s mobile service provider. The GSM licensing
process was cancelled early in 2000 and the process of auctioning four mobile
cellular licences was reopened in December of that year, after soliciting credible
bidders. The winners who emerged out of this process and settled the agreed
licence fees included Econet Wireless Nigeria, Mobile Telephone Networks
(MTN) and Communications Nigeria. The new GSM licences were awarded for a
period of five years (renewable) and all operators can operate in the 900Mhz and
1800Mhz spectrum bands. Whereas they do provide for a potential upgrading of
future networks to GPRS (general packet radio switching), they do not encompass
third generation (3G) networks, which will probably be auctioned off sometime in

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the future. Nigeria’s digital mobile network has grown significantly since the three
companies, awarded the Global System for Mobile Communications (GSM)
licence in January 2001, began operating in August 2001. According to the
Nigerian Communications Commission (NCC) the GSM network achieved
350,000 connections within six months of their launch (Telecommunication in
Nigeria-Overview http://www.mbendi.com/indy/cotl/tlcm/af/ng/p0005.htm)

By August 7, 2008, seven years since the introduction of GSM in Nigeria, the
country has witnessed an unprecedented massive development of telecom
infrastructure across the country by the operators. Indeed, the rate of investment in
the telecom sector since 1999 is regarded only second to the oil industry. With over
45 million subscriber base, Nigeria's telecommunication industry is regarded as the
fastest growing in the world. This has opened up huge business opportunities in the
telecom industry. The GSM has also revolutionalized our business environment as
people can transact their businesses from the comfort of their homes through the
use of GSM facilities. At the same time social relationships have been enhanced.
GSM has also empowered the people economically through creation of mass
employment. Today, so many unemployed people are earning their living by
making phone calls, selling recharge cards and GSM accessories. GSM has equally
become a major source of revenue for the government.

The NCC has continued to introduce necessary measures to enhance the quality of
service delivery and steady growth of the industry. The measures include the
introduction of unified licensing, which made it possible for fixed wireless
operators to offer GSM service. Equally significant is the granting of G3 licenses
to some operators. The G3, as it is popularly called, is the most advanced
technology on GSM, which enables the operators to offer both data and voice
services (Udutchay, 2008).

Awe (2009) says for Nigeria to truly celebrate the October 2009 independence,
ICT must be called to the party as it is an engine for sustainable development in
health, education, agriculture, poverty reduction, wealth creation, employment,
security, youth empowerment and other key sectors. Awe’s assessment of the state
of the ICT in the country includes the following, among others:

a) Telecom availability has improved and Nigeria is one of the world’s fastest
growing mobile markets. But the cold, hard facts are that communications
quality is low and ICT penetration is still insufficient considering Nigeria’s
size and population.

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 b) It’s important to note that important variations in the nature of access
determine telecom impact, for instance, broadband density is particularly
low as there is a great gulf between broadband and voice telephony
penetration. Nigeria must move beyond voice telephony.
c) Furthermore, cost is a barrier. Lack of awareness and access excludes many
from the digital environment. In a country where poverty still walks the
streets, ICT remains a stranger. Computing and telecom resources are
unaffordable to the majority.
d) Software is at the heart of the global knowledge economy. Any nation that
values its sovereignty must take software serious. Software opportunities in
Nigeria are not being fully exploited to unleash the potentials of the
Nigerian people and the Nigerian nation. Local developers however face
challenges of ignorance and patronage. Existing software promotion
policies have not made much impact. Bureaucratic sloganeering will not get
us anywhere.

e) Information security is an area of concern. Cybercrime, hacking, phishing,

ATM fraud and general identity theft are on the increase. Security of
information assets is critical to building confidence in today’s networked
world. Having secure information environments helps in attracting more
investment in ICT.

From this assessment on could see that there are many problems that that need to
be addressed in order improve the state of ICT in Nigeria and subsequently enable
Nigerians to reap more benefits offered by the ICT, and to enable them compete
favourably with citizens of other nations in economic spheres and other fields of
human endeavour.

Nigeria in the Networked Readiness Index (NRI)

Networked Readiness Index (NRI) being published annually by the World

Economic Forum measures the propensity for countries to exploit the opportunities
provided by ICT. The NRI is a composite of three components: the environment
for ICT offered by a given country or community, the readiness of the
community’s key stakeholders (individuals, businesses, and governments) to use
ICT, and finally the usage of ICT amongst these stakeholders. The index was
originally developed by the Information Technology Group, which worked at
Harvard University's Center for International Development until 2002. The table

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below shows the ranking of Nigeria among 134 and 133 countries that were
included in the 2008-2009 and 2009-2010 of the index respectively.

Table 1: Networked Readiness Index (NRI) for some selected countries

Country 2008-2009 2009-2010

Ranking Ranking

Den mark 1 3
USA 3 5
Singapore 4 2
Malaysia 28 27
Qatar 29 30
Saudi Arabia 4o 38
South Africa 52 62
Nigeria 90 99
Zambia 102 97
Uganda 120 115
Chad 134 133
Sources: extracts from The Global Information Technology Report 2008-2009
from http://www.weforum.org/pdf/gitr/2009/Rankings.pdf and
http://www.weforum.org/pdf/GITR10/TheNetworkedReadinessIndexRankings.pdf

The table indicates the low positions occupied by Nigeria in 2008-2009 and 2009-
2010, which were quite low when we consider its abundant material and human
resources.

Some Studies on the Impact of ICT on the Economies of Nations

In a study by Sherif, Rateb and El-Tawil (n d) on the impact of ICT investments on

economic development in Egypt, it has been shown, among others, that the ICT
sector in the country, which is considered a catalyst for economic development, is
based on a multi-stakeholder approach comprising multinationals, the private
sector and the civil society. Their massive investments in the telecom sector for
example, led to a unique growth rate globally in the rate of mobile user penetration
that exceeds 50% (Kamel, 2007 in Sherif, Rateb and El-Tawil). Moreover, the
investment in ICT had also helped in modernizing the Egypt National Postal
Organization (NPO), which was able to modernize and diversify its activities that
include providing societal services, eGovernment services and financial services.
Moreover, the contribution of the telecom sector has been remarkable to GDP

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exceeding 4.35 billion US dollars during the period 2006-2007 (Kamel, 2007 in
Sherif, Rateb and El-Tawil, nd).

Piatkowski (2003 in Bongo, nd) also indicates that in Poland, ICT investment
contributed on average 0.47 of a percentage point or 8.9% of GDP growth and
12.7% or 0.65 of a percentage point contribution to labor productivity between
1995-2000. During the second half of the 1990s the US and also some EU Member
States (notably Ireland, the Netherlands, and Finland) as well as some other OECD
countries (e.g.US, Australia and Canada), recorded a resurgence of economic
growth and of productivity, fixed or declining inflation and diminishing
unemployment through the use of ICT (Commission of European Community
2001 cited in Bongo, nd). Bongo (nd) further adds that some study results

clearly demonstrate that when the contribution of ICT is greater, so

is the real output growth. For example in the UK, between 1990 and
1995 when the contribution of ICT accounted for 0.43 of a
percentage point of economic growth the Real Output Growth for
that period was 2.12, whereas between 1995 and 1999, when the
contribution of ICT was 0.47, the Real Output Growth that occurred
during that period was 3.48. As a result, we could say that ICT
drives the economy and also effective ICT investments do have a
positive impact on the economy.

It is worth noting that the use of ICT can also have negative consequences on the
economies of nations, for instance, it can lead to labour displacement, especially of
the unskilled.
Implications Drawn for the Nigerian Economy
There is now what is called "knowledge driven economy" (KDE) or "the new
economy", Debbie, (2000) describes it as an economy in which the generation and
the exploitation of knowledge has come to play the predominant part in the
creation of wealth. It is about the more effective use of all types of knowledge and
creativity in all manner of economic activity.

Most of Nigeria’s wealth and power is from the control of physical assets - land,
oil, iron and steel, coal. In the 21st century, as Debbie (2000) argues, this cannot
continue to happen simply because the major source of value and competitive
advantage in the new economy is human and intellectual capital. As Nigeria lags

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behind in the use of ICT, its performance in relation to the knowledge based
economy will also remain low.

ICTs are expanding the possibilities of developing economies to participate in

international markets. The Internet, for instance, had changed the way goods and
services are produced, delivered, sold and purchased. ICT has led to an ever
growing number of people and businesses connected digitally. Most Nigerians
could not participate in the International markets from the comfort of their offices
and rooms due to erratic supply of electricity, dearth of adequate ICT facilities and
the enabling environment that supports e-business. Low participation in internal
market means low transactions and contribution to the global economy.

The use of ICT empowers weak players in an economy by providing them with
information, communication and knowledge they could not access before. ICT
enhances the competitiveness of small and medium-sized enterprises (SMEs) they
can establish their presence on the Internet and use it to communicate with
suppliers and customers, to search for business information and to advertise their
products. Unfortunately, SMEs in Nigeria do not enjoy this in a substantial way
due to the low state of the ICT of the country, so their success and contribution to
the economy could also remain low.

Even though the use of ICT robs unskilled workers of their jobs; it increases the
efficiency with which economic activities are undertaken, the use of digital
technology in printing, radio and TV broadcast, photography, for example,
increases productivity, so a country that is not very fast in adopting these
technologies will not have a fast growing economy.

Conclusion
The current state of ICT in Nigeria has positive and negative implications for the
Nigerian economy. The increase in number of businesses and job opportunities
offered by the ICT in the country, which is quite enormous, is part of the positive
implications. However, the paper gives emphasis on the negative implications
because the performance of Nigeria in the use of the ICT leaves much to be desired
and it needs wake up. Finally, the economic implications stated above have not
been exhausted, in fact, more implications will crop up as more ICT –related
innovations and new ICT devices come into the global arena and the Nigerian
market.

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References
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Debbie, Ariyo (2000) Developing A Knowledge-Driven Nigerian Economy:

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Babu, A. Ramesh; Singh, Y. P. and Sachdeva, R.K. (1997) Improving agricultural

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