By YZ Ya’u, CITAD
Last week, I participated in the discussion of a paper titled Digitization of the Economy and Economic Growth at the 14th Annual Conference of the Association of Nigeria (ANAN) held at the International Center for Abuja conferences. The objective of the paper was to explore the relationship between ICT and economic growth in the context of Nigeria. Although there have been detailed studies of this type for several other countries, lack of data did not allow this for Nigeria. This data deficit alone illustrates the weakness of our digitalization process.
There is general agreement that ICT contributes significantly to generating economic growth since several studies have shown a positive correlation between ICT and GDP growth in many countries. In the Nigerian context, this can therefore be taken for granted, which leaves us with the most useful question both from the perspective of knowledge generation and policy options, namely, on what condition will ICT growth lead to economic growth? This is important because over the last two years, the contribution of ICT to the national real GDP has increased, which means that there has been a growth in the ICT sector, however, the country’s economic growth has entered a recession. In this sense, there seems to be an inverse relationship between ICT and economic growth, a situation that might seem to contradict the global experience. This is why it is important to interrogate this rather than simply showing that ICT could lead to economic growth.
One of the main conclusions of the article I referred to above is that over the years, the export of ICT services is 281 times greater than the export of ICT goods. ICT services include software design, ICT consulting, online training, website design and hosting, outsourcing, etc. This finding should not come as a surprise given that the country lacks the capacity to produce and export ICT goods on a competitive basis. Instead, the county imports virtually all of its ICT goods because we manufacture virtually nothing locally. The four local computer assembly companies are dependent on importing CKDs which they combine, but increasingly even this assembly business has suffered a setback as locally assembled computers are unable to compete with those imported from Taiwan, Dubai, etc. aggravated by the collapse of the national currency against the dollar with which much of our international trade is carried out.
It is this lack of capacity to produce ICT goods that has slowed the growth of the ICT sector. In fact, the affordability of ICT goods is low and therefore the consumption of ICT services would naturally be lower than the potential need for these services. This therefore hinders the growth of the sector and therefore its contribution to the economic growth of the country and its overall importance on the profile of our economy.
And that brings me to my second big question on paper. It seems to state the obvious rather than delving deeply into what is not on the surface, which should be the goal of research. Seen in this light, a more useful intellectual exercise would have been to compare our exports of ICT goods services and their imports. This should then allow us to see whether over the years our import of ICT services is greater or less than our export of services, and therefore decide whether Nigeria is a net importer of ICT services or a net exporter? If we are a net exporter, we seem to earn a lot from our exports, and we seem to have a comparative advantage. If, however, despite the growth in ICT service exports, we are a net importer, then we are more likely not to see a positive impact of ICT on the overall economic profile of the country.
Thus, a more plausible explanation for the anomalous relationship between ICT and economic growth in the country would have been given by the propensity of the country to import more ICT services than it exports.
My third concern with the document is that in an attempt to explain why the country exported ICT services rather than goods, it claimed that the country had invested heavily in broadband. Leaving aside the fact that classifying broadband consumption as an export rather than an import is problematic, as we do not generate it but obtain it from international undersea cable owners as well as satellite companies, based in outside the country, the word massive must be understood with care. . I have looked at the progress made in broadband penetration in the country and this progress cannot be called huge, because in the five years of implementing the first National Broadband Plan, we have added less than 10% to the roughly 35% that it was at the start. If by massive it could mean that two broadband plans were developed, that could be correct, if it means that a lot of money could have been spent in implementing the plans, that could also be correct, but if by massive, it refers to the results of the investment, then it cannot hold water.
The anomaly in the relationship between our ICT assets and economic outcomes lies in the nature of policies and their implementation. Although we have a number of policies and plans including the National Digital Economy Policy and Strategy (NDEPS) 2020 – 2030 and the Nigerian National Broadband Plan (NNBP) 2020 – 2025, there are has a lack of clarity about overall strategic policy. Goals. One of the plans says the goal is to be among the top 20 economies, but what does that actually mean? Is the reference to the top 20 in terms of GDP size or in terms of GDP growth rate? Or does it refer to the country’s performance in terms of eliminating poverty or creating jobs for its citizens?
Each of them requires a different deployment of ICT in the national space. In general, there are two main ways of deploying ICT. One is to view it as a service sector that would enhance other sectors such as education, health, etc. In this, emphasis is placed on the integration of ICTs in these sectors to improve access, quality, efficiency and effectiveness. For example, the integration of ICT in the education sector would improve access and quality, thus making education more accessible and affordable for citizens. Similarly, when applied to health care, it can lead to improved availability and quality of health services for citizens. The overall impact of these is to improve the quality of citizenship, workforce, health of citizens, etc., which then contributes in terms of improved productivity and efficiency economic.
A second approach is to deploy ICT as a key economic sector in its own right. Here, the objective is to use ICT to generate economic activities, create wealth and generate jobs. This would generally lead to growth in economic indicators and translate directly into economic growth. This approach is particularly useful in a context of massive youth unemployment, but it can also easily improve economic indicators.
While the first approach requires a massive deployment of infrastructure, in the second you need highly specialized enclaves where technology and connectivity are world-class. Such enclaves, notably in the form of ICT parks, exist in a number of countries. Silicon Valley in the United States is a typical example, but it was not specifically planned as such in the conventional sense of ICT parks. Designed ICT parks are more common in countries like China, India, Malaysia, Taiwan, etc. In Africa, there are few.
Because ICT parks are essentially enclaves of creativity and innovation, deploying ICT as an economy also requires a robust education sector that will produce the skilled workforce needed to engage in creative and innovative endeavors. innovations in ICT packs.
The strategic objective of Nigeria’s digital transformation program is not too clear. In the same way, its main objectives are not clear. There is also no consistency around the strategies. For example, academics have been on strike for more than six months in our universities. A country that aspires to produce a skilled workforce to capitalize on its innovation potential cannot afford such disruption.
On the other hand, although there are targets that speak to the national coverage of infrastructure, there are no appropriate strategies to ensure that this infrastructure is widely and massively available and affordable for the population. integration of ICT in the various critical sectors of the country as to bring about the desired improvement in these sectors. For example, today, very few institutions have the infrastructure to deliver online training. In other words, we do not have the national capacity to deploy online training programs. We have no capacity for e-health.
Affordability remained a sensitive issue for both services and goods. While at the level of services, factors such as lack of stable electricity supply, insecurity, collapse in the value of the national currency are some of the factors responsible for the high cost of services, in this Regarding goods, we have failed to develop and launch programs that will domesticate the production of needed ICT goods in the country. We cannot even produce functional handsets despite the huge markets for them in the country as Rwanda produces smart phones.
We have very little meaningful access, as I wrote two weeks ago. There are no ICT parks in the country and no plans to start manufacturing computers, laptops locally. Even the assembly that was taking place has diminished as companies are not able to compete. The government has not developed a policy to support local industry. Ministries, departments and agencies still import laptops while Zinox, Beta, Omatek and United could meet our needs. In other words, without a Nigerian policy first, local industry cannot thrive and be competitive.
Ultimately, while at the policy level we quickly celebrate the country’s growth of ICT in national GDP, we do little to ensure that the growth in ICT’s contribution to GDP correlates to a similar growth in GDP itself. In this way, we can banish the abnormal relationship between ICT and economic growth in Nigeria.