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ICT country profile: Nigeria, Africa’s largest mobile market

By , IT in government editor
Nigeria , 25 Oct 2013

ICT country profile: Nigeria, Africa’s largest mobile market

Economics

Nigeria is described by the World Bank as a lower middle income economy, despite the country’s abundant natural oil and gas resources and close to a 170 million strong population.

It has been reported that Nigeria is the 12th largest oil producer in the world, with the natural resource playing a large role in the country’s economy accounting for 40% of gross domestic product (GDP) and 80% of government earnings.

The total GDP was $262.6 billion in 2012, with an annual GDP growth rate of 6.6% that same year, according to the World Bank.

However, despite increasing economic growth, about 70% of the country’s population still lives in rural areas signalling insignificant earning capacity, Nigerian ICT minister Omobola Johnson has told Bloomberg TV.

But Nigeria’s natural oil reserves need not be the only sector that government could look to with regard to expanding the county’s economy.

Global telecoms research firm BuddeComm says, “Nigeria is one of the biggest and fastest growing telecom markets in Africa, attracting huge amounts of foreign investment, and is yet standing at relatively low levels of market penetration.”

According to Nigeria’s ICT minister, the country has over 100 million subscriptions, but the market penetration stands at close to 70% with further room for growth.

Dobek Pater, director at Africa Analysis, has told ITWeb Africa that Nigeria’s ministry of communications has been increasingly drawing attention to the telecoms sector as a growing contributor to the country’s GDP.

“The government recognises the fact that ICT can be a driver of higher economic growth and also a significant indirect contributor to building the economy, e.g. using ICT in institutions of learning to improve the quality of education, which in turn would produce better graduates, who then in turn would be able to have a higher contribution to the economy,” he said.

Pater added, “However, as in other markets, this is not a short process and will take time to unfold.”

Political

Nigeria is led by president Goodluck Jonathan of the People's Democratic Party (PDP).

In 2010, Jonathan, a deputy president at the time, became the country’s acting president after the sudden death of president Umaru Yar'Adua.

Having assumed the position of interim president, Jonathan was then officially elected head of the West African nation in April 2011.

Jonathan’s entry into office, though, was met with incidents of violence and intimidation in Nigeria. This was primarily owing to a Christian Jonathan replacing the Muslim Yar’Adua: it has become custom in Nigeria for presidents of both the predominantly Christian south and Muslim north to equally serve two terms each.

A Reuters report states that after the 2011 elections, around 800 people were killed in three days of violence in that country.

However, following 2011, conflict in Nigeria has been on a steady rise owing to ethnic and religious clashes between rival Christian and Muslim groups.

Boko Haram, an Islamist militant organisation, has been at the centre of conflict in the country, as it has sought to impose Islamic law in Nigeria’s northern states.

The organisation, which was established in 2001, seeks to impose a "pure" Islamic state ruled by sharia law, putting a stop to what it deems “Westernisation.”

The group has attacked Christians and government targets. It has also bombed churches, attacked schools, and targeted police stations and private companies.

South African headquartered mobile network operator MTN has been at the receiving end of the attacks by Boko Haram.

Last year, ITWeb Africa reported on alleged destruction worth over $1.5 billion caused by Boko Haram to some of the telco’s facilities in Nigeria.

Earlier this year, Nigeria’s government even stopped telecommunications services in parts of northern Nigeria, in a bid to stem attacks by Boko Haram.

The result of conflict in the West African nation has been reflected in this year’s Ibrahim Index of African Governance (IIAG), as Nigeria’s ranking has fallen.

The IIAG report is a collection of quantitative data on governance in Africa. The data is compiled in partnership with experts from a number of the continent’s institutions and provides an annual assessment of governance in 52 African countries.

The 2013 IIAG report reviewed details of Nigeria’s performance across four categories of governance namely: Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity and Human Development.

According to the report, Nigeria’s governance ranking fell by eight places since the year 2000. The country is now ranked 41 out of 52 African countries.

“Nigeria has seen a notable decline in its score for Participation & Human Rights. Participation & Human Rights measures the protection of human rights, civil and political participation and gender issues,” states the report.

The index further has ranked Nigeria 49th out of 52 countries in the Personal Safety sub-category, which was the country’s lowest ranking.

Meanwhile, with regard to ICT regulation, the country has a telecoms watchdog in the form of Nigerian Communication Commission (NCC).

“The NCC is one of the better regulatory authorities in Africa – proactive and with the well-being of the consumer users of telecoms services in mind. It tries to monitor the quality of mobile communications delivered and has over the past several years taken austerity measures,” said Dobek Pater, of Africa Analysis.

But the NCC has also received some criticism for not being particularly successful in regulating all areas of the country’s ICT market.

“The NCC has not been very successful in some instances for example stimulating the broadband market development, and does draw criticism from operators in Nigeria over lack of proper spectrum management (frequent occurrences of interference),” Pater said.

Culture and demographics

In 2012, the World Bank recorded Nigeria’s population at 168.8 million, making the West African country Africa’s most populous nation.

Nigeria comprises of 36 states with the federal capital city being Abuja while the economic hub is Lagos.

The country has over 50 languages and over 250 dialects. Nigeria also has a range of ethnic groups with the largest three being the Hausa-Fulani, Igbo and Yoruba.

Nigeria.gov.ng states that the Hausa-Fulani ethnic group is predominant in the North; the Igbo in the South-East part of the country while the Yoruba are in the South-West.

The country is mainly divided between two religious groups: Islam in the North and a Christian South.

According to a report by the Pew Research Centre on religion and public life in Nigeria, 49.3% of Nigeria's population is Christian and 48.8% belongs to the Muslim religious group. Less than 0.1% of people in the country follow other religions.

Market maturity

For a nation with almost 170 million people, Nigeria’s state of market maturity still presents plenty of opportunity for growth, according to analysts.

The GSMA has estimated that Nigeria’s SIM card penetration was at 67% in the fourth quarter of last year.

However, Dobek Pater of Africa Analysis says that SIM card penetration can be somewhat deceptive, especially considering the high incidence of dual-SIM handset usage in the country.

According to Africa Analysis’ estimates, “unique users of mobile communications are probably around 60 million to 65 million.”

This in turn translates to a true population penetration of less than 40%, explains Pater.

Pater further says that the greenfields opportunity for market growth in the country is in the lower socioeconomic classes, where disposable income levels are small. With the declining cost of handsets and tariffs, these individuals are now in a better position to become subscribers to mobile communications and are doing so.

“Operators continually try to produce products that will make mobile communications more accessible to the lower classes,” says Pater.

“The Nigeria market is still in a growth phase, although it is beginning to reach the growth plateau and will move into a maturity phase in the next two years,” he added.

Local ICT market

Pater has described Nigeria’s ICT landscape as dynamic with a lot of opportunity for innovative products and services.

And the uptake of mobile services in Nigeria has seen the country’s mobile communications become one of its most advanced sectors.

Currently, Nigeria has eight mobile operators, according to the GSMA. These operators are operators Airtel, Etisalat, MTN, Glo Mobile, Multi-Links, Starcomms, Visafone and ZOOM Mobile.

South African headquartered mobile operator MTN Group has cemented its dominance in Nigeria as the country’s largest telco. MTN’s subscribers reached the 55.6 million mark for the third quarter of 2013.

Furthermore, Nigeria’s ICT minister, Omobola Johnson, has said that Nigeria’s IT industry has been “growing at about 20% year-on-year for the last five years.”

According to BuddeComm, Nigeria also has the most competitive fixed-line market in Africa with over 80 companies licensed to provide fixed telephony services.

The research firm, however, says that the country's market penetration rates in the fixed line market are forecast to be just 0.2% at the end of 2013.

In addition, there are currently 45 million Nigerians who access the internet on a daily basis while the country has a 6% broadband penetration, according to ICT minister Omobola Johnson.

Despite progress in various areas of its ICT market, the Nigerian market is still “very immature” according to Pater.

He has explained that Nigeria’s data centre and cloud-based services for instance are an infantile stage.

Research conducted by the International Data Group (IDG) on behalf of IBM revealed that Nigeria lags behind with regard to big data implementations because of immature cloud markets and a lack of infrastructure.

According to a global 2013 Microsoft commissioned survey, 90% of countries around the world have a budget for Big Data, about half (51%) are in the middle of a Big Data solution, 72% have started planning the process and 13% have Big Data up and running.

But these figures are lower in Nigeria, says the IDG.

In the survey -- which was conducted with companies in Kenya and Nigeria that have over 100 employees -- just 46% surveyed in Nigeria said they are in the planning phases for Big Data projects.

Meanwhile, 12% of Nigerian respondents said they have a Big Data pilot scheme in operation while 10% of Nigerian firms surveyed said they have implemented a Big Data project.

32% of firms in Nigeria said that they have no Big Data plans at all.

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