As of September 2024, telecom and ICT firms in Nigeria owed banks a total of N1.69tn, reflecting ongoing calls from telecom operators for an increase in subscriber tariffs for data and voice services.

According to data from the Central Bank of Nigeria (CBN) quarterly report, this amount marks a 3.9% decrease from the N1.77tn owed in September 2023, a result of the CBN’s interest rate hikes, which have made borrowing more expensive and discouraged further borrowing in the sector.

While the amount owed saw a slight increase of N31.61bn (1.9%) from August 2024, the year-on-year data highlights a year-long trend of fluctuating credit levels for the ICT sector.

In January 2024, credit to the sector reached N2.47tn, up by nearly 100% from January 2023. However, by February, it dipped to N2.35tn, and continued decreasing in the following months, stabilizing at N1.66tn in April before experiencing further declines in June and July.

By September, the figure had dropped to N1.69tn, showing a year-on-year reduction of N68.04bn.

This decline in credit can be attributed to the CBN’s strict monetary policy, particularly the consistent increases in interest rates throughout 2024. The CBN, under Governor Yemi Cardoso, raised the Monetary Policy Rate (MPR) multiple times, reaching 27.50% in November, in an effort to curb inflation.

These rate hikes, totaling 875 basis points, have significantly impacted borrowing, especially for capital-intensive sectors like ICT. Other factors such as exchange rate volatility and rising operational costs have also compounded these borrowing challenges.

Despite these financial constraints, the ICT sector remains vital to Nigeria’s economy, contributing significantly to GDP and employment. In Q3 2024, the sector contributed 16.35% to real GDP, a slight decline from the previous quarter but still an improvement over the same period in 2023.

The sector’s real growth rate stood at 5.92% year-on-year, largely driven by the telecommunications sub-sector, which contributed 13.94% to real GDP. The telecom industry is a key player, supporting various other sectors of the economy.

However, the sector’s nominal contribution to GDP declined from 11.57% in Q3 2023 to 11.30% in Q3 2024. Despite this, nominal growth was recorded at 14.51% year-on-year, a decrease from the 40.27% recorded in the same period of 2023, yet still showing growth compared to the preceding quarter.