An inflection point for Nigeria’s digital economy: The imperative for sustainability

Nigeria’s telecoms industry, and the digital economy that has developed around it, are at a fundamental inflection point. The decisions that we make now will determine whether the growth and development of our digital economy continues on a sustainable trajectory, or whether the connectivity infrastructure that drives it begins to degrade.

The scope, breadth and sophistication of Nigeria’s telecoms industry today is a shining example of what can happen when a country combines the right policy and regulatory environment, with the right market opportunity. Since the first call was made in 2001, Nigeria’s telecoms sector has evolved into one of the largest and most sophisticated in the world, meeting the growing needs of Nigerian consumers and employing millions of people. Today, the Nigerian Communications Commission (NCC) statistics show that there are now more than 157 million active connections, and that number is growing every month.

As the telecoms industry has expanded connectivity, it has enabled the emergence and rapid growth of the digital economy. In 2024, ICT contributed nearly 20% to Nigeria’s GDP, more than twice the contribution of oil and gas, and it continues to grow. As Nigeria transitions to the non-oil based economy that will enable more inclusive growth, connectivity is becoming more and more important. It is the foundation on which our future economy will be built. Whether it is your digital banking solution, social media and marketing, your mobile-based agricultural extension services, your e-government portal or the telemedicine and edtech solutions that are enabling broader access to healthcare and education, the impact of improved connectivity is universal.

That is why we must act now to ensure that we have a sustainable platform for the connectivity needs of the future. The NCC and the Federal Government are quite rightly-focused on ensuring Nigerians have the service levels that they deserve, but they also recognise that the industry needs the help and support of the government. The administration of President Bola Ahmed Tinubu, and the ministry of digital economy and communications under the able minister, Bosun Tijani, should be commended for their recognition of the need to support the industry, and the actions that they have taken to do so. For instance, legislation like the critical national infrastructure bill is vital to the maintenance of service quality levels, and systemic debt issues in the sector – both of which have now been comprehensively addressed. These all help establish the foundations for the future.

It is also commendable the other generic, giant strides the minister and the government as a collective, are taking to promote the nation’s digital economy. For instance, the ‘Three Million Technical Talents’ (3MTT) programme, which is a critical part of the Renewed Hope Agenda, is aimed at building Nigeria’s technical talent backbone to power our digital economy and position Nigeria as a net talent exporter. Put this side by side with the same government’s planned 90,000km terrestrial fibre roll-out, it becomes glaring that we now have a more forward-looking policy formulators at the helm of affairs. When completed, the fibre optics network will move the nation’s capacity from 35,000 to 125,000, making it one of the longest in Africa.

Ensuring service quality and reliability is at the heart of our mission as telecom operators, but achieving this requires a delicate balance between the cost of a product, and the investment that is made to maintain or enhance it.

Over the last decade, the tariffs that you pay for telecom services have not changed, yet over that time, operating expenses in the sector have increased by more than 300%. That equation is simply unsustainable for any industry, but even more so for a capital-intensive sector like telecoms. If you look closely at the financials of a telecoms company you will see that in order to maintain standards, delivery service quality and invest in new technology operators have to make continued and significant capital investments. The simple reality for our industry is that investment drives growth. If costs exceed revenue generation, then it becomes questionable whether the funds that need to be reinvested into the network every year will continue to be available. When that happens, growth stops and the service quality that our customers rely on suffers.

The consequences of this would go far beyond the telecoms industry. The digital services that we have all become reliant on could begin to suffer. Millions of jobs would be lost and Nigeria’s economic development would be set back by decades. This is not just a threat to our company and our industry. It is a threat to the nation, and every one of its citizens.

At the same time, the industry and the government recognise that Nigerian consumers have faced a range of significant cost of living challenges over recent years, and the transition to market pricing in the fuel and electricity sectors have driven up prices across the board. We know that we have to find the right balance between the increases that the industry wants, and the prices that Nigerians can afford to pay.

It is also important to assess the cost of Nigeria’s telecoms services compared to our contemporaries in Africa. Recent studies have shown that the average cost of 1GB of data in Nigeria is $0.38. That compares to $0.59 in Kenya, $0.68 in Ethiopia, $1.77 in South Africa and $6 in the USA. Today, Nigeria has some of the cheapest data prices for its citizens anywhere in the world.

The discussions between the industry and government have been deliberate and focused on finding the right balance, while aligning with pricing in other markets. It is why the proposed tariff increases will surely be capped, and definitely much lower than the price increases that have been imposed in other sectors like power/energy and oil; and ensuring that prices remain below our contemporaries. So not only will increases be capped well below the levels the industry has requested, but they are linked to a requirement to invest in network upgrades and service improvements, which will be overseen by the NCC to ensure compliance.

This balance of tariff increases, alongside investment commitments means that not only will the telecoms industry have the confidence to invest, and a clear pathway back to sustainability – but the higher prices will lead to better networks, more relevant services and so the better customer experience that enables growth.

Nigeria’s digital economy has shown its potential in the last decade, but the journey we are on to develop and grow it is still in its very early stages. The decision that the government has taken to ensure a sustainable tariff regime is brave, necessary and must be commended. It will ensure that our digital economy can remain on its growth path.

At MTN Nigeria we have demonstrated our long-term commitment to Nigeria many times. We believed when no one else did. We continue to believe, and we are committed to partnering with Nigeria and Nigerians to continue to invest based on that belief.

Dr Karl Toriola is the CEO of MTN Nigeria.