Nigeria Faces Widening Digital Divide, EIU Report Finds

Digital technology is helping to drive Nigeria’s economic diversification, promoting innovation in financial services, consumer goods, retail, media and leisure, among other sectors. But there is a growing digital divide between urban and rural regions, according to a new report by the Economist Intelligence Unit (EIU).

Building a digital Nigeria, commissioned by Accenture, argues that access to mobile and internet has mushroomed among wealthier, more urbanised citizens, driving growth in non-oil sectors like fast moving consumer goods, financial services and media.

But lower income citizens, and those in rural or semi-urban regions, have more limited access due mainly to inadequate underlying infrastructure like fibre-optic cables and base transceiver stations.

Several factors account for this disparity. Incomes are lower and populations more geographically dispersed in rural Nigeria, making it harder for infrastructure providers to earn a decent return on investment.

Multiple fees owed to different tiers of government make entering new geographies additionally cumbersome.

Investment sentiment has also been hit by uncertainties about the overvalued currency and the future tax framework for ICT providers.

In an era of low oil prices, the sector is becoming an increasingly important source of public revenues.

Adam Green, editor of the study, said: “Digital technology has fast-tracked Nigeria’s diversification from oil, catalysing growth in ecommerce, entertainment, financial services and fast-moving consumer goods. But digital technology can only progress as far as the infrastructures on which it relies, like mobile networks and internet services. To build a dynamic digital economy, Nigeria needs to find creative ways of enhancing this infrastructure throughout the country”.

Streamlining charges and fees, a clear tax framework for the ICT sector, infrastructure-sharing between ICT providers, and more flexible approaches to Quality of Service requirements are among the recommendations made in the report, which also includes comparative case study evidence from countries including Bahrain, Azerbaijan and Bangladesh.