From Q1 peak to Q3 dip: Tracing Nigeria’s ICT sector contribution to GDP in 2024

Nigeria’s Information and Communications Technology (ICT) sector remained a cornerstone of its economic structure in 2024, with a significant emphasis on telecommunications. It was instrumental in driving the services sector, which dominated the GDP at 53.58% in Q3 2024, up from 52.48% in Q3 2023. 

According to data published by the National Bureau of Statistics (NBS), ICT’s performance over the three quarters of 2024 demonstrates resilience and adaptability in the face of broader economic challenges.

Nigeria’s Gross Domestic Product (GDP) grew by 3.46% (year-on-year) in real terms in the third quarter of 2024. This growth rate is higher than the 2.54% recorded in the third quarter of 2023 and higher than the second quarter of 2024 growth of 3.19%

The performance was driven mainly by the Services sector, which recorded a growth of 5.19% and contributed 53.58%. The agriculture sector grew by 1.14%, from the 1.30% in the third quarter of 2023.

The growth was a 2.18% improvement from the 0.46% recorded in 2023. In terms of share of the GDP, the services sector contributed more to the aggregate GDP in 2024 compared to 2023.

In the quarter under review, aggregate GDP at basic price stood at N71,131,091.07 million in nominal terms. This performance is higher when compared to the third quarter of 2023 which recorded an aggregate GDP of N60,658,600.37 million, indicating a year-on-year nominal growth of 17.26%.

Quarterly contributions and growth rates of the ICT sector

The Information and Communication sector comprises the four activities of Telecommunications and Information Services; Publishing; Motion Picture, Sound Recording and Music Production; and Broadcasting. 

1. Q1 2024
   • The ICT sector contributed 17.89% to real GDP, an improvement from 16.66% in Q4 2023.
   • Nominal growth stood at 13.94% year-on-year, though this declined from 41.84% recorded in Q1 2023.
   • The real growth rate was 5.43%, down from 10.32% in Q1 2023.
   • In nominal terms, the telecommunications sub-sector alone added ₦6.24 trillion to GDP.

2. Q2 2024
   • The ICT sector peaked in Q2, contributing 19.78% to real GDP.
   • Real GDP growth was 4.44%, slightly below the corresponding 2023 rate of 8.60%.
   • The telecommunications sub-sector’s nominal contribution was ₦6.86 trillion, maintaining its position as a significant contributor.
   • Year-on-year nominal growth for ICT was 11.86%, a marked decline from 41.67% in Q2 2023.

3. Q3 2024
   • Contribution to real GDP declined to 16.35% from Q2’s 19.78% but still exceeded the 15.97% recorded in Q3 2023.
   • Real GDP growth rebounded to 6.78%, higher than Q2’s 5.17%, signalling recovery after mid-year fluctuations.
   • The nominal GDP from telecommunications was ₦6.53 trillion, with a nominal growth rate of 7.93% year-on-year.

Other sectoral dynamics 

The non-oil sector grew by 3.37% in real terms in Q3 2024. The rate was higher by 0.62% points compared to the rate recorded in the same quarter of 2023 which was 2.75% and higher than the 2.80% recorded in the second quarter of 2024.

This sector was driven in the third quarter of 2024 mainly by Financial and Insurance (Financial Institutions); Information and Communication (Telecommunications); Agriculture (Crop production); Transportation and Storage (Road Transport); Trade and Construction, accounting for positive GDP growth.

Narrowing it down, in nominal terms, in the third quarter of 2024, the telecommunications sector growth was recorded at 14.51% (year-on-year), a 25.75% points decrease from the rate of 40.27% recorded in the same quarter of 2023, and 2.65% points higher than the rate recorded in the preceding quarter. 

The quarter-on-quarter growth rate recorded in the third quarter of 2024 was -7.01%. 

The telecom sector contributed 11.30% to the total nominal GDP in the third quarter of 2024, lower than the rate of 11.57% recorded in the same quarter of 2023 and lower than the 14.19% it contributed in the preceding quarter. 

The sector in the third quarter of 2024 recorded a growth rate of 5.92% in real terms, year-on-year. From the rate recorded in the corresponding period of 2023, there was a decrease of 0.77% points. On a quarter-on-quarter, the sector exhibited a growth of -9.02% in real terms. 

Of total real GDP, the sector contributed 16.35% in the third quarter of 2024, higher than in the same quarter of the previous year in which it represented 15.97% and lower than the preceding quarter in which it represented 19.78%. 

The ICT sector’s trajectory in 2024 reflects underlying trends in Nigeria’s economy, shaped by structural shifts, policy changes, and global influences.

Telecommunications and Information Services

Telecommunications dominated the ICT landscape, accounting for the largest share of the sector’s output. Its consistent contributions underscore its role as a foundational element in Nigeria’s GDP.

• The Q3 real GDP growth of 6.78% in telecommunications was robust, driven by expanding mobile and broadband penetration.
• Quarter-on-quarter nominal growth, while fluctuating, remained positive, indicating sustained demand for telecom services despite economic challenges.

Digital transformation and investments

Government-led initiatives and private-sector investments played a critical role in maintaining ICT’s growth trajectory. Efforts to expand 4G – which increased to 46.27% in October 2024 – and introduce 5G networks  – which increased to 2.33% by October 2024 – created opportunities for enhanced connectivity, fueling demand in urban and semi-urban areas.

Sector challenges and performance fluctuations

Despite its impressive contributions, the ICT sector faced several headwinds:

1. Declining nominal growth:
   • The nominal growth rates across all three quarters in 2024 were significantly lower than in 2023. For instance, Q1’s 13.94% was down from Q1 2023’s 41.84%.
   • These declines reflect external pressures, such as global economic slowdowns and domestic inflation, which affected consumer spending on telecom services.
2. Quarterly volatility:
   • After peaking in Q2 with a 19.78% contribution to real GDP, the sector’s share dropped in Q3 to 16.35%, indicating possible saturation in certain sub-segments.
   • Quarter-on-quarter declines in nominal terms, such as Q3’s -7.01%, hint at seasonal variations in consumer and business activity.
3. Cost pressures and inflation:
   • Rising operational costs as severally mentioned by MTN Nigeria’s chief, driven by inflation (33.88% according to the NBS) and exchange rate volatility, squeezed profit margins for telecom operators, potentially slowing investment growth.

Comparison with other economic sectors

In 2024, ICT’s contribution consistently outpaced those of other sectors:

• Agriculture: Though a traditional economic mainstay, its growth remained modest at 1.14% in Q3 2024. Crop production, the primary driver, lacked the dynamism seen in ICT.
• Industry: With a Q3 growth rate of 2.18%, the industry sector lagged behind ICT in both growth and GDP share, emphasising ICT’s importance as an engine of economic activity.

Regional and global context

Nigeria’s ICT performance aligns with broader trends in sub-Saharan Africa, where digitalisation is rapidly transforming economies. However, the country’s growth rates suggest it is at the forefront of this digital revolution, leveraging its large population and youthful demographics.  

Policy implications and future outlook

The Nigerian government’s focus on ICT as a strategic growth driver appears well-placed, but further policy support is essential to sustain momentum.

Key recommendations:

1. Strengthening infrastructure: Continued investments in broadband expansion and rural connectivity are vital to unlocking the sector’s full potential.
2. Regulatory support: Policies that lower operational costs for telecom providers, such as tax incentives, could boost growth and encourage innovation.
3. Fostering digital skills: Enhancing digital literacy will expand the workforce capable of participating in and contributing to the ICT economy.

Long-term projections:

• The ICT sector is expected to surpass a 20% contribution to real GDP by 2030 if current trends persist, driven by increasing digitisation across industries.
• Telecommunications will remain the dominant sub-sector, though emerging areas like fintech and e-commerce could significantly bolster the broader ICT landscape.

Bottomline

The ICT sector, particularly telecommunications, was a cornerstone of Nigeria’s economic performance in the first three quarters of 2024. Despite challenges such as declining nominal growth rates and quarterly volatility, the sector demonstrated resilience and remained a critical contributor to GDP. 

Looking ahead, with the right investments and policy frameworks, ICT has the potential to solidify its role as Nigeria’s economic growth engine, propelling the country toward a more digital and connected future.