Nigeria’s dependence on telecommunications has become so deep that a major shutdown of the sector would bring significant parts of the economy to a standstill, renowned economist and Managing Director of Financial Derivatives Company, Bismarck Rewane, said.
He argued that the importance of telecommunications cannot be measured solely by its direct contribution to Gross Domestic Product.
According to him, the industry’s real economic value lies in the activities across other sectors that depend on reliable connectivity.
Rewane said there is a significant difference between the nominal contribution of a sector and its effective contribution to the economy.
While telecommunications may contribute about 14 per cent to economic output, he said that figure does not capture the businesses, services and transactions that depend on the sector.
“The nominal value shows you that it is 14 per cent, but the effective value tells you what happens when you consider all the linkages. That is where you begin to understand the real importance of the sector,” he said.
Those linkages, according to Rewane, now run through some of the country’s most critical economic activities.
Banking and financial services depend on connectivity for digital transactions, while healthcare increasingly relies on telecommunications for telemedicine and access to medical expertise.
Aviation, commerce and security operations also depend on functioning communication networks.
“If you look at the effective value, you will discover that the system will begin to grind to a halt.
“You will not be able to make payments, telemedicine will not work, airline bookings will be affected, and the consequences for security will be enormous,” he said.
Rewane therefore challenged Nigerians to consider what would happen if the country’s major telecommunications operators suddenly stopped providing services.
He specifically referenced MTN, Airtel and other major operators, noting that their absence would affect far more than telephone calls and internet access.
“Let us play the devil’s advocate. If MTN, Airtel and the others shut down today, will this economy survive 24 hours without chaos?” he asked.
He said the question becomes even more important when telecommunications is compared with other sectors that appear to have a relatively small share of GDP.
Rewane cited oil, which accounts for a single-digit share of economic output but remains critical to Nigeria’s foreign exchange earnings.
“People say oil constitutes only eight or nine per cent of our GDP, but if we shut down the oil wells today and stop exporting crude, within one week we will not have the foreign exchange to pay for anything. The country will come to a halt,” he said.
The economist said telecommunications should be viewed through the same lens because its importance extends beyond its headline GDP contribution.
Its networks support financial transactions, businesses, healthcare, transportation, commerce and other activities that keep the economy functioning daily.
“The sectors that are driven by this connectivity are very important. You cannot look at telecommunications in isolation because its real impact is in the linkages and outcomes it creates across the economy,” Rewane said.
