Recently, there has been an increasingly common view that the technology industry in Nigeria could be the nation’s new oil. However, there are still ongoing discussions whether this prediction is accurate, and it is too early to view the technology sector in this light. To objectively answer how much faith should be put in tech regarding the Nigerian economy, the Telecommunications and Technology Sustainability Working Group (TTSWG) conducted a study into the industry. This research examined available data on Nigeria’s Gross Domestic Product (GDP) in recent years, the increase in venture capital, the influence of technology solutions on businesses in other sectors, and the rise in profitability.

Previous studies have found that the economic growth of developed countries, in the long term, is driven by the expansion of technological activities. This trend is currently being observed in the emergence of the fourth industrial revolution. As companies seek to foster innovation, they are strengthening the relationship between physical and digital platforms. In other words, the integration of technology into traditional industries is becoming increasingly important for economic growth.

As technology encompasses more than just advanced weaponry, but rather a population’s collective understanding of how the world functions, we are witnessing a surge in mass innovation and the introduction of novel approaches to tools and processes for development for economic advancement. This is particularly important in developing nations such as Nigeria, where technology provides the prospect of bypassing conventional development stages and distributing knowledge and prosperity more swiftly than ever before.

An example of this is Rwanda, which has developed the world’s largest civil-operated drone network (Zipline). Since 2014, Zipline has been instrumental in delivering medical supplies and other products to remote and hard-to-access communities in the country. This has had a positive impact on trade and commerce, especially in rural areas, and has spurred economic growth. Furthermore, the drone network has resulted in cost savings by replacing costly modes of transportation.

The increasing trend of innovation in Africa is enhancing the continent’s reputation as a centre for homegrown innovations that possess global appeal, of Nigeria is positioned as a key cornerstone to this movement. Moreover, Africa’s digital economy is burgeoning, with a market size of around $115 billion and projections of growth to $712 billion by 2050. By this time, the continent will be home to one-third of the world’s young people, and it is urbanising faster than other regions.

In 2021, Nigeria’s Gross Domestic Product (GDP) was reported by the World Bank to be $440 billion. The ICT sector as of Q1 2021 was the largest contributor to Nigeria’s GDP, contributing over 4 trillion to the 40 trillion national GDP. This accounted for 9.91% of the total Q1 GDP while the oil sector accounted for 9.25% of the aggregate real GDP.

Statista data indicates that the country has a significantly higher number of start-ups than Kenya (five times more) and Egypt (over fifteen times more), with approximately 3,330 start-ups operating in Nigeria in 2020 and technology has played a key role in fostering a supportive environment for these start-ups and increasing their viability. With the help of internet marketing tools, these businesses are now able to reach a wider audience and do so on a small budget, leading to increased profitability for start-ups.

Technology is presently at the forefront of driving Nigeria’s economy, bringing up startups, providing a lifeline for the financial sector through fintech, supplying blood to e-commerce, and giving impetus to the creative industry thereby producing young technopreneur millionaires.  It is said that growth in the non-oil sector as well was driven mainly by Information and Communication Technology. Thanks to technology, there’s been a significant increase in online shoppers, online payment systems, and the penetration of digital marketing resulting in the bloom of e-commerce and the retail sector.

According to the Nigerian Minister of Communications and Digital Economy, Dr. Isa Ali Ibrahim Pantami, the Nigerian ICT sector has experienced consistent proliferation due to well-designed policies that have enabled the industry to thrive. Notably, the sector experienced a remarkable 6.47% growth in the first quarter of 2021, making it the fastest-growing sector of the Nigerian economy. Its upswing has also been boosted by an inflow of over 600 million in venture capital to the country’s tech companies in the first quarter of 2022. This investment has led to the creation of new jobs, innovative solutions, and the expansion of the tech industry.

In addition, the boom of digital financial services has also had a significant impact on the economy by promoting financial inclusion. More Nigerians can now access formal financial services which have been impeded in the past by the lack of physical infrastructure and high costs. Businesses are now better able to conduct transactions effectively, and transaction costs can as well be cut. The evolvement of financial inclusion has led to a rise in economic activity, causing a rise in the country’s GDP.

Nigeria’s tech industry has grown significantly in recent years and shows great potential for the future. Despite ongoing discussions about the reliability of this forecast, the evidence indicates that the tech sector is transforming traditional industries, promoting innovation, and providing a platform for the introduction of novel approaches to process development for economic advancement. The sector is set to become an even more significant engine of economic growth in Nigeria thanks to a growing digital economy, a sizable youth population, and a supportive governmental policy. Although challenges remain, such as improving digital infrastructure and addressing the skills gap, there is no doubt that Nigeria’s tech economy is on an upward trajectory and is a force to be reckoned with.

Click the link below to access the full research publication on the growing tech economy in Nigeria by TTSWG.