In today’s TechAfrica NewsTechTalk Thursday session, we had the privilege of hosting Angela Wamola, Head of Sub-Saharan Africa at GSMA, to delve deeper into the findings and implications of the groundbreaking report titled “TThe role of mobile technology in boosting the digital economy in Nigeria.” The report, published by GSMA on May 9, 2024, provides an in-depth analysis of the impact of the mobile sector on the Nigerian economy and the critical steps needed to harness its full potential.
While Nigeria has been used as a blueprint in the published report, the findings and recommendations are equally applicable to other African countries. The mobile sector has the potential to be a major enabler for Africa’s economic transformation. However, a major challenge lies in the tendency of governments in the region to burden the sector with taxes and regulations that hamper its growth and expansion, making it difficult to thrive.
There is an urgent need for these governments to change their perspective and move from seeing the sector as a source of revenue to an important factor for broader economic development in their countries.
The economic context: an urgent need for innovation
Nigeria, often celebrated as Africa’s largest economy, has faced significant economic challenges in recent years. During our conversation, Wamola provided a comprehensive overview of the macroeconomic challenges facing Nigeria, particularly in the context of the digital economy. She highlighted that despite Nigeria’s status as one of Africa’s largest economies, it is grappling with significant headwinds. She pointed out that Nigeria is slipping from its leadership position, and is currently the fourth largest economy in Africa.
Wamola stressed the crucial role the mobile telecom sector can play in boosting productivity and addressing inefficiencies within the Nigerian economy.
“Nigeria has been the largest economy in Africa for a few years now, with a GDP of about $472 billion. However, the country is facing major headwinds in terms of economic development going forward. This is simply because the inflationary trend in the country has really increased, making it difficult for small and large businesses to achieve their agenda in the country. Looking ahead, we are trying to understand what role the telecoms sector can play in helping Nigeria and other African countries overcome these challenges by leveraging what technology can do to increase productivity or reduce inefficiencies that have emerged over the years.”
—Angela Wamola, Head of Sub-Saharan Africa, GSMA
In 2023, the mobile sector contributed 13.5% to Nigeria’s GDP, which is equivalent to about Naira 33 trillion, and Naira 2.4 trillion in taxes. The GSMA predicts that if 15 million new mobile internet users can be added by 2030, we can expect a 2.5% increase in Nigeria’s GDP. To achieve this growth, Wamola highlighted the importance of creating an enabling policy and regulatory climate. “We will need to look at different policy and regulatory tools that can be deployed to encourage and promote these 15 million customers to become mobile internet users in the next three to four years.“, she explained.
Tax burden: a major obstacle to affordable mobile internet access
One of the major barriers to greater mobile internet adoption, as noted in the report, is the high costs associated with data services and devices. These high costs can be directly linked to the impact of taxes on the mobile sector. Taxes continue to be levied on the sector, both through sector-specific taxes and through general taxes, which hinder the affordability of devices and data services. By easing the financial burden on both telecom companies and consumers, we can pave the way for affordable and accessible digital services.
During a roundtable discussion to mark the launch of this report, several challenges that need to be addressed to strengthen Nigeria’s digital economy were highlighted, included;
- Securing telecommunications infrastructure:There is a need for better protection against vandalism and inefficiencies that increase the cost of service delivery.
- Rights of way for fibre optic networks:Inconsistencies in right of way tariffs across states in Nigeria hamper the construction of critical infrastructure, discourage investment and hamper the growth of the sector.
- Tax policy:The high tax burden on the mobile sector increases the cost of services and hinders broader adoption of the Internet.
- Infrastructure costs:Since a significant portion of operational costs goes to energy, reducing these costs is critical to making mobile services more affordable.
A path forward: policy and tax reforms and strategic partnerships
The path to a digitally empowered Nigeria lies in policy reform. A harmonized and predictable policy environment is crucial to fostering investment and innovation. There is an urgent need for African countries to work on reducing the tax burden. By standardizing policies and reducing bureaucratic hurdles, African countries can create a more attractive landscape for both local and foreign investors.
Furthermore, by reducing this tax burden, governments can enable more accessible and affordable digital services, ultimately playing an important role in stimulating economic growth, improving digital inclusion and fostering a more robust digital ecosystem across the continent.
Beyond connectivity: the sector’s broader impact
The potential of mobile technology extends beyond improving connectivity. It holds the promise of transforming other key sectors, such as agriculture, manufacturing and trade. For example, increased digitalisation in agriculture could significantly increase productivity and generate substantial economic value, potentially adding trillions to GDP and creating millions of jobs. Moreover, a digitally integrated economy is more resilient and adaptive, and better equipped to meet the challenges of a rapidly changing global landscape.
“In Nigeria, the biggest opportunities lie in sectors like agriculture, where increased digitalisation could add Naira 3.3 trillion to GDP, which is roughly equivalent to 2.8% of GDP and 1.1 million jobs to the sector. I believe that if you can dig deeper and build capacity to understand how the sector itself delivers value and its cost structure, it will enable users to directly engage with the mobile internet, because that is where the value of digitalisation comes from.”
—Angela Wamola, Head of Sub-Saharan Africa, GSMA
Looking ahead: GSMA’s commitment to Africa’s digital future
Wamola expressed her belief in the potential for impactful outcomes from discussions with government and other stakeholders. She stressed the need for continued dialogue and capacity building to ensure that policymakers understand the value of the mobile sector and its critical role in driving the digital economy. “We had a good discussion with the government and stakeholders in Nigeria. Look forward to impactful results in the near future,” she concluded.
As we anticipate these positive changes, it is clear that mobile technology is the key to unlocking Africa’s digital future. As Angela Wamola aptly put it: “Now is the time for action.” Nigeria and other African countries must embrace the digital revolution and leverage their mobile technology sectors to build a future that is not only prosperous, but also inclusive and resilient. With the help of the government actively working to better perspective the mobile sector as an economic engine rather than just a source of income for the country, a transformative change can be brought about that will benefit all stakeholders in the digital economy.
Wamola also outlined GSMA’s ongoing efforts to support the mobile sector in Africa, including initiatives focused on green energy transitions and capacity building for fiscal policymakers. She invited everyone to join the GSMA at the Mobile World Congress in Kigali from 29 to 31 October 2024, where these issues will be further discussed.
Stay tuned for more insightful conversations
Our conversation with Angela Wamola provided valuable insights into the challenges and opportunities facing Nigeria’s digital economy. Her emphasis on collaboration, policy changes and strategic investments highlights the critical steps needed to drive the digital transformation of not just Nigeria, but the entire African continent.
Stay tuned for more engaging conversations in our TechTalk Thursday Series and don’t forget to watch the full video of our conversation with Angela Wamola.
