IMPACT OF TELECOMMUNICATION INDUSTRY ON NIGERIA ECONOMIC GROWTH

Abstract

This study is on impact of telecommunication industry on Nigeria economic growth. The total population for the study is 200 staff of Nigeria communication commission, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, administrative staff, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 CHAPTER ONE

INTRODUCTION

• Background of the study

Arguably telecommunication industry is today the fastest growing industry in Nigeria. The industry has remained a major driver of innovation and transfer of technology to Nigeria economy. The mobile telecommunications industry has grown rapidly over the last three decades representing one of the most intriguing stories of technology diffusion. Since 2002 mobile subscribers have exceeded the number of fixed lines globally. The process to achieve what fixed phones have struggled for more than 120 years took less than a fifth of the time for mobile networks. This cross-over time of mobile users has been even shorter for developing countries. At the end of 2009 the number of mobile telecommunications subscribers reached 4.6 billion, which is equivalent to 67 percent of the world population. This technology is particularly relevant in developing countries, where there are more than twice as many subscriptions (3.2 billion) as in developed countries (1.4 billion). While the determinants for the diffusion of mobile telecommunications have been extensively studied (e.g. Gruber and Verboven, 2001; Koski and Kretschmer, 2005; Gruber and Koutroumpis, 2010) relatively little is known about the impact of this technology at a macroeconomic level. The pervasiveness of the technology in terms of transforming the way economic activity is organized suggests that mobile telecommunications has features of what is referred to as general purpose technology  (Bresnahan and Trajtenberg, 1995; Helpman, 1998). In fact, mobile telecommunications deeply affect the way users interact and have significant externalities for the economic activities that they are used. There is widespread anecdotal evidence about the surge of new companies and business models with worldwide brands linked to the sector (e.g. Nokia, Vodafone) and the appearance of new modes of communication such as ‘personal reachability’. Because of the lower access cost to the user compared to wired telecommunications, linked with the solution of the problem of creditworthiness of customer through prepaid cards, the technology could reach completely new segments of population particularly in developing countries. Revenues of the mobile telecommunications account nowadays for a significant percentage of GDP especially in developing countries, where mobile telecommunications have also been an important and efficient means for tax collection. Moreover, telecommunications infrastructure has significant network externalities. In line with the network economics’ literature, one of their key characteristics is that the value of the network increases with the usage base. This has frequently been referred as a direct network externality (Economides and Himmelberg, 1995), with the implication that critical mass effects may occur when certain threshold levels of diffusion occur which can then trigger off additional benefits, such as the availability of new services. Ultimately one would expect increasing returns from the adoption of the technology. The implication suggests that high mobile penetration yields incentives for further investment, very much along the “success breeds success” paradigm. As a result low penetration countries, which typically are developing countries, could have a double disadvantage: they not only have a lower growth impact due to lower mobile diffusion; they also have lower incentives for further development of the mobile network. Hence, the economic cost in terms of foregone growth is highest in less diffusion countries.

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