Telecom drops contribution to GDP QoQ
By Jeph Ajobaju, Chief Copy Editor
Telecom contribution to real Gross Domestic Product (GDP) dropped 8.38 per cent quarter-on-quarter (QoQ) from N2.85 trillion in Q2 2023 to N2.63 trillion in Q3 2023, according to latest figures released by the National Bureau of Statistics (NBS).
This translated into N219.97 billion decline even though telecom gingered national economic growth in Q3 2023.
NBS data shows GDP grew 2.54 per cent year-on-year (YoY) in real terms in Q3 2023, driven largely by the service sector (that includes telecom) which grew 3.99 per cent and contributed 52.70 per cent to aggregate GDP.
“The sector in the third quarter of 2023 recorded a growth rate of 6.69 per cent in real terms, year-on-year,” the NBS said of the information communication technology (ICT) which includes telecom.
“From the rate recorded in the corresponding period of 2022, there was a decrease of 3.84 per cent points. On a quarter-on-quarter, the sector exhibited a growth of -10.30 per cent in real terms.
“Of total real GDP, the sector contributed 15.97 per cent in the 2023 third quarter, higher than in the same quarter of the previous year in which it represented 15.35 per cent and lower than the preceding quarter in which it represented 19.54 per cent.”
The expansion of telecom in recent years is evidenced by its sustained contribution to GDP but a challenging macroeconomic environment now threatens it.
Nigeria’s record high inflation reduces purchasing power and currency devaluation cuts margins.
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MTN, Airtel lose N476 to naira devaluation
In the first nine months of the year (M9 2023), MTN and Airtel (the only two telcos publicly traded) lost N479 billion to naira devaluation and had their profit margins reduced, per reporting by The PUNCH.
Airtel suffered $13 million loss.
It explained the “Loss after tax was $13m driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in June 2023. This impact has been classified as an exceptional item.”
MTN Nigeria Chief Executive Officer Karl Toriola said: “The operating conditions in the first nine months of 2023 remained tough. This was in line with expectations following the removal of the fuel subsidy, the currency devaluation due to the liberalisation of foreign exchange (forex) management, and the impact of the 2023 Finance Act.
“This is supported by the government’s reform programmes aimed at creating an environment that enables businesses to thrive.
“Furthermore, the liberalisation of the forex management in June 2023 resulted in a 68.5 per cent upward movement in the exchange rate from N461/$1 in December 2022 to N777/US$ at the end of September, resulting in higher cost of doing business.”
But both MTN and Airtel anticipate the economic challenges in the country will bear long-term benefits.
However, Abuja plans to increase revenue from telecom by 100 per cent between now and 2027, and targets 22 per cent telecom contribution to GDP by the end of 2027.
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