The growth of Nigeria’s telecoms industry from a mere 1.5% contribution to Nigeria’s GDP in 2001 to 17% of GDP in 2021 has primed it as the best tool to push financial inclusion over the finish line.
This was disclosed by socioeconomic research firm, SBM Intelligence in its Monday report titled, “Towering high: A look at Nigeria’s telco sector”.
The report also added that the impact of the Covid-19 pandemic on work and social patterns benefitted the telecom industry as people increasingly made use of internet-based interaction platforms to deal with the inability to meet in person.
SBM in the report said, “The Telecommunications industry is a major contributor to Nigeria’s economy with a Gross Domestic Product share that has reached 17% in 2021 from a paltry 1.5% in 2001, according to the Nigeria Communications Commission (NCC).
“The sector almost single-handedly lifted Nigeria out of recession in the fourth quarter of 2020 with a contribution of 14.7% in the same period in which the second-fastest growing sector, Agriculture, grew at a paltry 3.42%.”
It added that due to the liberalisation of the sector and the introduction of the Global System for Mobile communications (GSM) platforms in the country, the industry’s economic contribution has seen a meteoric rise and now stands well above both Manufacturing and Oil & Gas despite recent setbacks fostering innovation in such sectors as banking, information technology, sports, logistics, healthcare, media and entertainment while enabling the birth of such growth sectors like fintech and e-commerce.
Adding that due to the enablement of Nigeria’s emerging social economy, Telecoms serves as the primary anchor for the country’s identity management strategy, and is expected to unlock new opportunities for driving financial inclusion with the recent award of payment service bank licenses.
“MTN leads the financial inclusion train through its more than 180,000 MoMo (mobile money) agents and 6.6 million MoMo subscribers, well ahead of other telecom operators and already a bigger cohort than all but the biggest banks. It is currently the only operator that is licensed to operate the 3.5GHz spectrum that enables 5G connectivity in the country,” the report said.
With people aged 25 and below making up over 60% of Nigeria’s population, SBM revealed these are signals for the telecom industry as a largely young population has embraced the lifestyle developments associated with the era of the internet and smartphones, grow further into the use of telecom services as a platform for meeting their financial transaction needs.
“The impact of the Covid-19 pandemic on work and social patterns has doubtless benefitted the telecom industry as people increasingly made use of internet-based interaction platforms to deal with the inability to meet in person. Financial inclusion will be a key part of how both the industry and the big telecom service providers evolve in the near term.
“With the Central Bank of Nigeria’s grant of an Approval-in-Principle (AIP) to the telecoms firm launch a Payment Service Bank service, Airtel and MTN Nigeria would be able to function as financial institutions that can hold a certain level of deposits, offer savings account services, issue prepaid and debit cards, and offer other services albeit while not being allowed to handle transactions related to foreign exchange dealings, loaning operations, and some other critical banking features,” it added.
It revealed that 38 million Nigerians or about 36% of the adult population do not have access to financial services, warning that a retail bank-led model will not help the CBN achieve its ambitious target of reaching 95% financial inclusion by 2024.
“The ubiquity, innovation and marketing nous of the telcos make them the logical next step; MTN Nigeria’s customer base alone dwarfs the customer footprint of the biggest banks by a factor of six,” the report stated.
Recall Nairametrics reported last month that Airtel Africa announced that its subsidiary, Airtel Mobile Commerce Nigeria Limited, has been granted approval in principle by the Central Bank of Nigeria (CBN) to operate as a super-agent in Nigeria.
Similarly, Airtel’s main rival in the Nigerian market, MTN Nigeria, had earlier obtained a super-agent license in 2019. Subsequently, the firm (MTN Nigeria) also obtained approval in principle to launch its payment service arm in Nigeria, known as MoMo Payment Service Bank Limited.