In its most recent report for the month of September, the Nigerian Communications Commission (NCC) put the number of internet users in Nigeria at 93 million, a slight increase from the 92.1million reported in August.
It is pertinent to clarify that the term “internet users” includes subscribers who pay for Internet access (dial-up, leased line and fixed broadband) and people who have access without paying directly, either as a member of a household or from work, school, a public library or Internet café.
Going by Nigeria’s population of over 180 million people, what this tells us is that about half of Nigerians are online — which in itself should spur the internet economy. But that remains to be seen.
Robert Atkinson, president of the Information Technology for Innovation Foundation, notes that internet penetration is positively related with economic prosperity. In other words, the ubiquity of the internet is something that should spur economic growth.
According to a report by Mckinsey, the internet has accounted for 21% of the GDP growth in mature economies over the past 5 years. It has contributed more than 10% of total GDP growth in China, India, and Brazil within the same period. In America, businesses directly involved with the internet generated an estimated $966 billion in 2014 alone. This is not shocking considering that internet connects 92% of Americans with the broader world. Likewise, China, India and Brazil, to mention a few advanced nations, boast of staggering internet penetration figures. In fact, if the internet were a sector, it would have a greater weight in GDP than agriculture or any of the utility sectors in these countries.
On the African scene, development in the ICT sector has presented a great success story in Kenya’s economy. According to the World Bank, Kenya’s economy grew at an average of 3.7% since 2010, with ICT being responsible for 0.9 of the 3.7% annual GDP growth, and for all of Kenya’s GDP per capita growth. In addition to that, the country’s internet economy is also projected to create up to 55 Kenya-based global companies as well as generate up to $1 billion in ICT exports.
With about 9.1% contribution to Nigeria’s total GDP in the fourth quarter of 2016, the ICT sector has not done badly. But then this is merely a contribution from the telecoms industry through various On-Net and Off-Net channels.
Many internet businesses in Nigeria have suffered (not to mention, shut down operations) as a result of low adoption. For a country touted to have a high percentage of its citizens online, this is completely strange.
Granted, there are countless challenges trailing online business in Nigeria, but mere patronage should boost their chances of survival. Even for low margin businesses, this is not an exception.
So it says a lot that even with the impressive internet penetration figures, online businesses still have a hard time acquiring (or even retaining) customers.
Rather than glorifying the internet penetration figures at this point, the emphasis should be on uncovering more facts concerning the demographic distribution of Nigerian internet users and across different regions, their online spending pattern, and perhaps their level of education.
This bit of information may have actual relevance to understanding how much the internet contributes to the national economy, and how this value created lays a solid foundation for leveraging the internet as the engine of growth.
Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.
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