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FG Lists Constraints To Economic Digitalisation

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To unleash Nigeria’s potential for industrialisation and sustainable economic growth, while ensuring competitiveness in a global digital economy, the Federal Government says it will take measures to digitise the economy and make digitalisation a key driver of national economic development strategies.
In a document released towards this end, the government said it will ensure that, by 2025 critical digitisation challenges are addressed so that the sector can achieve its job creation and economic productivity potential.
Consequently, the Federal Government, in its National Development Plan (NDP) 2021 to 2025, Volume 1, has projected about N150 billion investments.
The N150 billion, which according to the Federal Government, is public investment, will be spread across priority projects in the sector as well as projects essential to the operations of the relevant ministries.
In addition, the government said the ICT sector is projected to facilitate the formation of up to $1 billion in private equity and private capital investments in digital infrastructure of approximately $40 billion.
The document noted that despite recent improvements in Nigeria’s ICT sector, several challenges, including low funding and weak digital infrastructure, especially in noncommercial hubs, have limited the value-creation potential of businesses.
These constraints include digital and financial exclusion of key segments of the population; intermittent access to power, which threatens the development of the ICT sectors, particularly to the telecoms and IT services and last-mile connectivity; lack of local funding for promising start-ups (over-reliance on foreign funders who may not necessarily fund start-ups based on local needs); and low capacity of digital infrastructure and institutions, especially in non-commercial hubs.
Others are low skills development due to skills mismatch between academia and industry, leading to a shortage of workers with digital skills; new risks associated with data privacy and cybersecurity challenges.
The Federal Government said these constraints must be addressed to reduce the risk of low regional and global competitiveness, low economic productivity, business exits, and brain drain.
“Thus, to create high-growth businesses, including unicorns, and maximize job creation opportunities, the digital economy building blocks are of strategic importance and priority,” the document stated.
While challenges exist, FG said Nigeria has a significant young, tech-savvy, resilient, and entrepreneurial population, which creates opportunities for the ICT sector.
The FG, which puts Nigeria’s population at approximately 200 million, said a privately held start-up with a valuation exceeding $1 billion, noted that the population makes Nigeria an attractive destination of choice for ICT services and products, and the installation of under-sea cables has boosted bandwidth capacity in the last decade and provided a framework for digitisation across the country.
According to the document, these trends have led to an influx of world-leading multinationals establishing operations in Nigeria as well as international equity investments into start-ups operating in these sectors.

 

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Association  Tasks Politicians On Internet Market 

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The Global System for Mobile telecommunications Association (GSMA) has warned that market imbalances between network operators and online service providers could stall growth in several sectors of the internet-based economy, and called on politicians to urgently address the issue.
In its GSMA 2022 Internet Value Chain report, the trade association noted factors including asymmetric regulation and restrictions, sector-specific taxes, and spectrum costs are squeezing the business models of infrastructure providers whilst allowing big tech to thrive.
The body noted that those in charge of setting laws and regulations must consider the interdependence of online services and other growth sectors on the underlying infrastructure investment.
In a recent statement obtained online by the Press, its Chairman, Jose Maria Alvarez-Pallete, said “growing recognition of this issue by policymakers is important, especially as the Internet-based economy expands across all sectors over the next decade”.
The report encouraged  decision makers to consider the full landscape of taxation and regulation.
It also advised   companies investing in infrastructure  to build and upgrade the networks, which underpin online services.
The study found revenue across the internet value chain doubled in five years, from $3.3 trillion in 2015 to $6.7 trillion in 2020, noting that much of this growth comes from online services, revenue from which increased 19 per cent per year in 2020.
However, the return on investment in infrastructure for network operators was far lower, at between six per cent and 11 per cent.
The GSMA noted that operators are receiving less than 10 per cent returns on capital because of pressure to invest up to 20 per cent of revenue in capex.
The body  further revealed that the Internet continues to grow at a pace in terms of users, services and, most of all, traffic.
It stressed that the growth was relentless, adding that there is much more to go.
“The number of people with access to the internet has reached 4.6 billion in 2020 (via either fixed or mobile networks), an increase of 44 per cent since 2015 and a yearly growth rate of 7.5 per cent.

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MTN Begins PSaB  Services In Nigeria

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MTN Nigeria’s fintech subsidiary, MoMo Payment Service Bank (MoMo PSB) Limited,  has formally commenced PSB operations sequel to the recent approval of the service by the Central Bank of Nigeria (CBN).
The Network provider said, this follows a successful pilot initiated on May 16, 2022, which was in commemoration of the launch of its  GSM operations on May 16, 2001 and listing by introduction on the Nigerian Stock Exchange Limited on May 16, 2019.
It described the listing as  key milestone in delivering the company’s Ambition 2025 strategic priorities.
Also, in a stock market statement, Airtel Africa announced that its subsidiary, SmartCash PSB, had started providing services through selected retail outlets with plans to expand across Nigeria in the coming months.
Airtel Africa secured a full Payment Service Bank licence from the CBN through its subsidiary in April, having received an in-principle approval in 2021.
MTN informed that a market activation took place recently at Oke-Arin market in Marina, Lagos, where traders were shown how to open a MoMo wallet, by simply dialing *671# on any network.
It also hinted that the system allows subscribers the opportunity to  send money to any mobile phone in the country as well as buy airtime/data and as well,  pay bills.
The telecommunications firm said in addition to delivering a wide range of digitised payment services aimed at removing the friction from everyday payment by digitising cash payment, MoMo wallets in the future will also enable account holders to receive inbound remittance from any country in the world.
With an expansive agent network of over 166,000 active agents and digitised partnership infrastructure, MTN claimed that MoMo PSB is poised to enable millions of unbanked and underserved Nigerians to access a wide range of financial service products.
Chief Executive Officer  of MTN Nigeria, Karl Toriola,  said the company was grateful to the CBN for its  support and guidance through the process.
Toriola noted that it was an important milestone for MTN Nigeria in its  mission to support the delivery of financial services to everyone in the country.
In his reaction, the MoMo PSB CEO, Usoro Usoro, noted that providing easy to use, accessible and affordable financial services to all Nigerians was  essential to executing the CBN’s financial inclusion strategy and the digital inclusion agenda of the Minister of Communications and Digital Economy.
Usoro said his firm was looking forward to playing its  part, saying that it was excited about the opportunities to partner with relevant institutions across various sectors to co-create and expand access nationwide.
According to Airtel Africa, the licence allows it to deliver what it described at the time as a full suite of mobile money services.
Airtel Africa CEO, Segun Ogunsanya, pledged to revolutionise financial services in Nigeria and drive inclusion.

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FG Increases Call Rate By 9%

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The Federal Government has placed a new tax on phone calls in Nigeria, saying it is to enhance funding for free healthcare for the Vulnerable Group in the country
It would be recalled that telecommunication companies had made moves to increase the price of its services as a result of an unfavourable operating climate.
In the National Health Insurance Authority Bill 2021 signed by the President, Muhammadu Buhari, last week, section 26 of the act provides that the source of money for the Vulnerable Group Fund includes telecommunications tax, not less than one kobo per second of GSM calls.
“Section 26 of this new law imposes a telecommunications tax of not less than 1kobo per second on GSM calls. With call rates at about 11kobo per second, this translates to a 9 per cent tax on GSM calls,” it said.
Fiscal Policy Partner and Africa Tax Leader at Price Waterhouse Coopers, Taiwo Oyedele,  noted that Section 26 of the  new law imposes  telecommunications tax of not less than 1kobo per second on GSM calls.
With call rates at about 11kobo per second,  Oyedele said that it stood for  about nine  per cent tax on  GSM calls.

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