The push for greater local content in Nigeria’s telecommunications sector is gaining momentum as the country strives to enhance its self-sufficiency in producing telecom products.
This surge in advocacy comes in the wake of recent developments, including the ban on the importation of Subscriber Identity Module (SIM) cards and the growth of local manufacturing in the industry.
Industry players and government bodies are increasingly being called upon to encourage and prioritize domestic direct investment (DDI) over heavy reliance on foreign direct investments (FDI). Engr. Michael Onafowokan, Executive Director of Coleman Cable, is among those advocating for this shift. He emphasized that excessive dependence on foreign investment could hinder the growth of locally-made telecom products and services.
Onafowokan urged the government and regulatory authorities to formulate and enforce policies that create a conducive environment for local investments to flourish.
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Ban on Importation of Telecom Products
In 2022, the Nigerian government announced a ban on the importation of telecom products, especially those that could be produced locally. This move was part of a broader effort to promote local manufacturing and reduce dependency on foreign imports.
The ban on SIM card imports has yielded positive results. According to Prof. Umar Danbatta, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), investment in local SIM card manufacturing has reached an impressive N55 billion. The ban not only reduced the demand for foreign exchange but also generated significant business opportunities for local SIM card manufacturers, creating both direct and indirect employment opportunities.
Historical Import Data
Before the ban on imports, Nigeria heavily relied on foreign-sourced telecom products, including hardware and software. Data from the International Trade Centre (ITC) reveals that the nation spent a substantial amount on telephone importation. In 2019, imports amounted to $807.95 million, followed by $765.57 million in 2020 and $772.25 million in 2021. China was a major source of these imports, but products also came from countries like Hong Kong, Sweden, the United States, Netherlands, Vietnam, Mexico, and others.
In 2022, Nigeria spent $3.47 billion on importing phones, generators, electrical transformers, and various electrical equipment.
Rising Demand for Technology Devices
The NCC reported that approximately 63 million technology devices are sold in Nigeria annually, with device turnover averaging every six months. In 2020, there were about 132 million unique devices connected to the nation’s telecommunications network.
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Challenges and the Way Forward
While there is a consensus among government and industry stakeholders about promoting local production in the telecom sector, challenges remain. Experts emphasize the need to address these challenges to facilitate the development of local content.
Engr. Onafowokan stressed that organizations like the NCC and the Nigeria Office for Developing the Indigenous Telecom Sector (NODITS) should play pivotal roles in promoting local content. Reducing tariffs and offering incentives to protect local investors are key steps in encouraging domestic direct investment and ensuring the sustainability of the sector’s growth.
The drive towards increased local content in Nigeria’s telecom sector reflects a broader national effort to boost self-reliance, create jobs, and strengthen the economy by reducing reliance on foreign imports.