IMPI encourages govt to focus spending on service sector

A group, Independent Media and Policy Initiative (IMPI) has called on governments at all levels to focus spending and policy reinforcements on the service sector, saying that they must do this without neglecting the agriculture and manufacturing sectors.

WESTERN POST reports that IMPI gave this advice in a statement issued by its Chairman, Omoniyo Akinsiju, on Wednesday.

The group said that with the right investments and policy frameworks, ICT has the potential to solidify its role as Nigeria’s economic growth engine, adding that the sector has the propensity to propel the country toward a more digital and connected future.

IMPI explained that the importance of ICT in GDP growth was further evidenced by the N2.55 trillion paid in taxes in the first half of 2024 by foreign digital companies operating in the country, including Google, Microsoft, and TikTok.

It stressed ” The service sector is a key part of any economy’s development, and its role is growing. It is the most significant part of the global economy’s business activity and a major driver of economic growth, especially in developing economies.

” In 2019, services accounted for 55% of GDP in developing countries and 75% in developed countries. Compared to other postulations, services are also a significant source of jobs, especially in developing economies. In 2019, services accounted for 45% of employment in developing economies and 50% of global trade in value-added terms.

“Compared to other sectors like agriculture, though a traditional economic mainstay, its growth remains modest at 1.14 per cent in the third quarter of 2024. Crop production, the primary driver of the agriculture sector, lacks the dynamism seen in ICT. At the same time, the manufacturing sector, with a third-quarter growth rate of 2.18 percent, also lags behind it in both growth and GDP share, emphasizing ICT’s importance as an engine of Nigeria’s economic activity.

“Nigeria’s ICT performance aligns with broader trends in sub-Saharan Africa, where digitalization rapidly transforms economies. However, the country’s growth rates show that the government is deliberately driving this digital revolution by leveraging its large population and youthful demographics. Indeed, the ICT sector, particularly telecommunications, is the cornerstone of Nigeria’s economic performance in the first three quarters of 2024.

“Despite declining nominal growth rates and quarterly volatility, the sector demonstrates resilience and remains a critical contributor to GDP. When the sector’s performance is deeply analyzed, the principal indication is that telecommunications dominates the ICT landscape, accounting for the largest share of the sector’s output. Its consistent contributions underscore its role as a foundational element in Nigeria’s GDP. In this context, it establishes, for instance, a correlation between internet penetration and GDP growth.

“Indeed, a 10 per cent increase in mobile broadband penetration in Africa can increase GDP per capita by 2.5 per cent. A 10 per cent increase in internet penetration rate can increase real GDP per capita by 0.57 to 0.63 percentage points. Regarding the Nigerian economy’s actuals, the third quarter’s GDP growth of 6.78 per cent in telecommunications was robust, driven by expanding mobile and broadband penetration, indicating sustained demand for telecom services despite economic challenges”.