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Why Nigeria's ICT market continues to attract investors

By , ITWeb
27 Feb 2017

Why Nigeria's ICT market continues to attract investors

Technology is constantly disrupting the way we interact with each other and is having a profound impact on the way in which businesses operate in today's new digital economy. The Information Communication Technology (ICT) industry is playing an increasingly significant role in reinforcing on regional trends in business, investment and modernisation, which are the core surfacing of a connected IT environment.

The rapid evolution of the digital era in Africa is providing opportunities for businesses to be more profitable and focus on the needs of the customer, as they look to new markets to find opportunities. The digital transformation in Africa has led to a better connection between people, and more opportunities for organisations and businesses.

Digital transformation as a catalyst has changed the African economy, offering new opportunities for job seekers, entrepreneurs, brands and businesses. This pace of transformation across Africa has led to countries such as Nigeria and South Africa reaping the benefits of greater digital penetration.

The 'We are Social' report (2016), released key digital statistical indicators highlighting on digital, social and mobile usage around the world. The report found that Africa as a whole has about 1,201 million people and out of the whole African population, 986 million people have a mobile connection. With a growing, urbanising population, Africa as a whole has 349 million active internet users, of which 129 million are active social media users and 102 million are active mobile social users.

The shift that is taking place in Africa's ICT sector is driven by a strong desire to attract new businesses and the booming market is reaping these benefits, stimulating economic growth and making way for a more digital future.

Nigeria, being Africa's leading economy and population, has an overwhelming appetite for mobile connectivity, and this has led to the emergence of new technologies and a strong drive towards digitisation.

According to the ICEF Monitor research (2014), Nigeria is expected to enter the "economic stratosphere" between now and 2050, with the highest average GDP growth in the world. Nigeria's annual GDP growth has been around 7% over the past few years, as compared to 2.8% in the US in 2012 and less than 1% in the UK, that same year."

Nigeria takes up 184.6 million of the total population in Africa and out of that 97.2 million is active on the Internet. 154.3 million Nigerians have a mobile Internet connection, with 15 million being active social media users and 11 million being active mobile social users. The country has experienced a startling growth of 12% in the number of active Internet users between the years 2015 and 2016 with the figure expected to increase in 2017.

Nigeria's ICT sector has shown rapid expansion over the years. As the country continues to be seen as a centre for investors and entrepreneurs who are attracted by the prospect of growing services to Africa's largest population and economy.

Nigeria now faces the challenge of further growing its ICT industry to empower its citizens economically. The telecommunications space in Nigeria has largely been dominated by key players such as Airtel, Globacom, Etisalat and MTN. According to the 'We are Social' report (2016), it is estimated that 38% of Nigerians have access to the internet and most access it through their mobile phones.

Battling for the number one spot for Africa's largest economy are both Nigeria and South Africa. They both benefit from some of the most high-tech markets in the world and are home to the headquarters of various multinational players in the ICT industry such as Microsoft, Google and IBM.

Digital trends such as cloud computing, mobile web services, smart grids, and social media, are radically changing the business landscape and reshaping the nature of work. Digital technologies disrupted the traditional business models of organisations. In the long term, three trends are likely to sustain Africa's growth; firstly, the continent has a young population with a growing labour force – a highly valuable asset in an ageing world.

Secondly, Africa is still urbanising and much of the economic benefit lies ahead. Productivity in cities is three times as high as in rural areas and, over the next decade, an additional 187 million Africans will live in cities, according to the United Nations. Thirdly, African economies are also well positioned to benefit from rapidly accelerating technological change that can unlock growth and improve infrastructure.

Digital transformation is a positive direction for the Nigerian ICT industry. It shows that the market is ready for further growth in the technology space. With the greater adoption of internet services, businesses are able to engage in direct contact with consumers through e-commerce, generate high revenue and accelerate the growth of the Nigerian economy as a whole.

By Yannick Decaux, Sales Director for sub-Saharan Africa at Orange Business Services.

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