Nigeria has one of the biggest and fastest growing telecoms markets in Africa.
Despite the oil sector’s poor performance, overall real GDP growth in Nigeria has been strong over the past decade thanks to strong non-oil GDP growth. While the oil & gas sector is expected to continue stagnating, strong performances are projected for construction, manufacturing and the services sector, boosted by a growing middle
class, increased availability of electricity, and government incentives and reforms. The accompanying graph shows some of the major drivers of the Nigerian economy in the fourth quarter of last year and first quarter of 2014.
Following rapid expansion in the fourth quarter of last year, growth in the accommodation & food services sub-sector slowed down somewhat in Q1 2014, but remained above 20% y-o-y. Impressively, expansion in the textiles sector was above 30% y-o-y in both quarters, while the entertainment and construction industries continued to exhibit rapid expansion. There were notable slowdowns in the broadcasting, and food & beverages manufacturing sub-sectors on a q-o-q basis, but overall these sectors maintain their upward momentum. Below, we discuss in more detail the performances of the telecommunications, manufacturing and agricultural sectors in recent times.
Telecommunications – This sector has boomed on the back of increased investment and dynamic growth in the mobile phone sector. The country has one of the biggest and fastest growing telecommunications markets in Africa, attracting substantial amounts of foreign direct investment. Investment in telecommunications in Nigeria has reached US$32bn, with some US$14bn invested during 2010-14 alone. The West African country has comfortably overtaken South Africa as the continent’s largest mobile market, and tremendous opportunities for further expansion exist.
Third generation (3G) mobile and WiMAX wireless broadband services are being rolled out at a swift pace, backed by new national and international fibre links. MTN hopes to have 3G in every state by the end of this year, though Akinwale Goodluck, a corporate services executive at the company, admitted that it does not currently make economic sense to roll these services out to rural areas. Total active mobile lines reached 127.6 million by the end of 2013, compared to less than one million in 2001. This is equivalent to a compound annual growth rate of 51.6%.