In a recent report by the National Bureau of Statistics (NBS), the Information and Communications Technology (ICT) sector of the economy received credit facilities worth N814.5 billion from the banks in the second quarter(April to June) of this year. This figure represents a mere 5.3 percent of the total of N15.34 trillion banks’ credit to the private sector during the quarter. Worse still, the sector recorded 5.8 per cent decline in credit facilities, when compared with N865.3 billion credits which the sector received from the banks in the first quarter of this year.
In spite of its increasing importance as a driver of growth in the economy, it is sad to note that ICT is being relegated to the background by the banks in the disbursement of loans to the critical sectors of the economy.
Of the total N15.34 trillion credit given by the banks to the private sector during the second quarter, Oil and Gas sector got the highest with credits worth N3.45 trillion, while the manufacturing sector came second with bank credit worth N2.02 trillion. ICT came seventh with a disappointing bank credit worth N814.5 billion.
The ICT sector is currently being observed and promoted as the next frontier for Nigeria’s economy after oil and gas and has made significant contributions to the country’s Gross Domestic Product (GDP) year-on-year. However, funding has been a major challenge for businesses in the sector, especially the start-ups and young technology companies. Yet, banks are unwilling to give credits to the emerging start ups in the sector.
Nigeria’s emerging digital economy, with its largest Internet penetration in Africa, is gradually becoming an important driver of economic growth. Visits to the country in recent years by Google’s Chief Executive Officer (CEO), Sundar Pichai, Facebook’s Mark Zuckerberg and Microsoft’s Bill Gates and Satya Nadella to initiate training programmes for Nigerian and other African youths in digital skills are evidence of a growing digital economy.
In fact, Google has committed to training over 10 million Africans in digital skills over the next five years; the Chan-Zuckerberg initiative has also invested $24 million in Andela, a startup aiming to train Nigeria’s and other Africa’s emerging technology talent.
We urge the banks to increase their credit facilities for the sector in the third and fourth quarters of the year. While we welcome the recent approval of a N200 billion credit facility from a consortium of 12 banks in the country to drive the ICT sector in further deliverance of convergent and optimal quality. However, more needs to be done to further deepen and broaden the provision of ICT services in the country, as the sector has proven to be the fastest growing segment of the economy.
More so, across the world, ICT is seen as the driver of global economy in the 21st century. The upsurge of digital economy and the emergence of “Artificial Intelligence (AI)” in world industrialisation make it imperative that the country can ill afford to toil with the development of ICT. The emergence of ICT, dramatically improving businesses and economies across the world when put against the economic challenges currently facing some major oil producing countries like Venezuela and Libya are further signals that oil may not appreciably improve Nigeria’s economy too in the long run. Oil and gas have propelled Nigeria’s economy over the years and it cannot significantly do so in the face of the gloomy future facing the sector following the embrace of electric cars. Therefore, it must be noted that the country’s future depends on how much is being invested in ICT capacity and infrastructure development.
In addition, it is important for the banks to have a broader view of the economy by giving credit facilities to supporting sectors outside the manufacturing and agriculture sectors, particularly the ICT and other service sectors that are complementing and driving productivity and performance in the real sector so that the country’s economy can achieve robust growth.
With a population projected to surpass that of United States by 2050 and the highest level of Internet penetration in Africa, Nigeria is beginning to scratch the surface of its technological potential. So far, the growth of the digital economy has spurred the development of numerous industries from the entertainment to financial services. Given the enormous potential of ICT sector, the banks will need to give more credits to the ICT sector so as to further develop the sector and enable it play more significant role in driving the economy.
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