By 
By Dr. Patrick Ede, Director of Operations, PPC
Introduction
The novel Corona Virus COVID 19 is a global pandemic that reached an alarming proportion as at the last count having left economic casualty of over 380,000 death worldwide and over 6.5 million cases confirmed across the globe as at 03rd June, 2020.
Covid 19 initially began as a health crisis but suddenly expanded greatly to becoming crisis with high risk social implications on the fiscal and economic activities within Nigeria and other countries across the world.
Nigeria economy which is majorly oil-based economy and with about 55% drop in oil price, the impact of Covid 19 pandemic will be visible in all aspect of Nigeria businesses leaning on the fall in oil prices. This fall in the price of oil has created a sudden shock in all segments of the Nigerian economy including the ICT/Telecoms sector. This shock will be visible in the coming days and weeks considering that the 2020 Nigeria national budget was initially based on a $57 per barre. Today the oil prices hover around $35/per barrel showing a possible significant drop in the 2020 fiscal revenue projections. This drop will ripple into all other areas of the Nigerian economic life that will propel significantly drop the year 2020 GDP .
These Covid 19 effects are already being felt with exchange rate adjustment by the CBN from $1: NGN360 to now $1: NGN380. The rate of inflation is increasing significantly with all these changes happening and the projection is that inflation may reach up to 15 – 17% in the coming months within this year.
In the short and long term, there will be job losses. There is already disruption of services, trade and all the financial sectors of the national economy. The implication of these job losses is a major threat to social stability and the general economic growth. It is also a threat to political stability.
The economic losses informed and occasioned by the pandemic will obviously create social unrest, domestic violence, exploitation of all manners etc. The frustration from the economic losses is capable of creating very significant political unrests aligning and leading to regional / tribal element exploiting the situation in Nigeria.
Current Impacts and Business/Economic Changes In ICT/Telecoms
Considering the lockdown situation occasioned by the Pandemic, the Telecoms & ICT Sector worldwide has witnessed spike in demand of ICT services and fall of various proportions.
The WFH a new term meaning ‘’Work from Home’’ and Virtual transactions & activities has changed the way of doing business. Most businesses now are being carried virtually just as this and conversation and conference we are currently holding today. It is not only WFH that is utilizing a large chunk of the telecoms services, Virtual schools and or Study from home has taken shape with the existence of various platform which schools now have to use in teaching their students. Other businesses are latching on various platform to works and do their work.
Various telcos in Nigeria have their revenue increased in the last quarter significantly, averaging between 15 – 20%. A large chunk of this increase is attributed to rise in the demand for data services among others.
Incidentally, due to the sudden nature of this pandemic especially in the Nigerian eco-space, the development of new services and expansion of existing ones including all plan of new investment seem to have been suspended.
“WFH & Virtual transactions/ meetings and other online activities and opportunities have come to stay and this may become the greatest impact of Covid 19 in Nigeria”
The delivery of new hardware especially new products for the ICT seem to have taken a down turn as the supply chain has completely been disrupted because of closure of several Factories and Plants.
Looking Beyond the Covid19 Era
A. Looking forward in the coming years will be the springing up of many startups that will focus on the various areas with the boom which have hitherto not taken seriously in the Nigeria Telecoms / ICT market place. Some bigger player may be ramping up and begin to innovate on some new product areas with new initiatives by encouraging acquisitions of smaller businesses that has focus on the major demand areas of ICT/Telecom. This was rarely done in the Nigerian business environment but may be a possible way to engender business survival & sustainability. This will create bigger companies with the financial stability to deliver the new normal and allow business continuity and greater growth among other benefits.
It is important to reiterate and note the private sector’s willingness to partner with public sector of driving the digitalization of the economy. This will be in necessary in the areas of the broadband penetration delivering access to education, access to healthcare and improving security (country wide policing). This will be part of post Covid19 considerations to foster the ICT/Telecoms infrastructural development to support the ever increasing demand in Nigeria.
B. Some other organizations could tend towards sourcing for capital to recapitalize and expand their business toward the Telecoms/ICT Sector that guarantees values for new investment which have been highlighted above. The capital sources driven by low interest rate as currently encouraged in Nigeria banking sector for which the CBN is projecting to help business post COVid19 has the lending rates as low as 5%;the lowest ever in recent memory of the capital market with help some business grow and transition into prosperity over the course of time .
C. Following the Covid 19 effects, some business already initiated self-evaluation of their operations and structure considering the new realities and new opportunities, viability, their mode of operation, commercial activities etc. The effect of these evaluations will lead to a complete restructuring of some of these business in order to still stay in the market place and keep their operations active.
The Impacts, Effects and Opportunity Areas
With all that has been said above, the question now is;
- How has these events in the past 3 months occasioned by Covid 19 pandemic affected / fashioned our social life/livelihoods
- What are the Economic impacts?
- What are the Political impacts in short and long term?
- Our new thinking, the social restrictions and lockdown and new WFH has created some new thought that will make the software aspect of this Telecoms/ICT sector; the new driver of the Industry leaning on the new interests on virtual meetings, business, schools etc. Teleconferencing, Video conferencing and other related technology demand has spiked up, even in Nigeria. These ones are those in the positive trend of this sector.
- Some other IT services especially those supporting the transportation sector have suffered greatly and created a huge revenue loss and other economic woes. The Telecoms/ICT in transport is greatest with negatives gains due to Covid19.
- The highly developing area is cloud computing/Hosting – which are dependent on Data Centre Services. Investors will be looking at these areas, as most of the Services we have discussed are hosted remotely by the Service Providers. Hence we expect a bigger positive spike of demand coming to the Data Centre Service providers and in areas of Cyber Security and Data protection.
With these new trends and changes of the business and activities, the Digital transformation and Digital economy is imminent.
Business of all sizes will be demanding for ICT services post Covid 19, in all aspect of our existence in Nigeria.
The telecoms / ICT sector will be expecting a boom not a doom but most likely in the new demand areas that have highlighted above.
It is important for players in this industry to realize that WFH & Virtual transactions/ meetings and other online activities and opportunities have come to stay and this may become the greatest impact of Covid 19 in Nigeria and the world in general. Travelling will greatly be reduced and affected. Work from anywhere will be encouraged by most businesses.
Further to this development, the political scene and the government of the day in Nigeria will by its digital transformation agenda key in to this new regime in fast tracking the digital economy policies. These include all activities in the running of government and all its agencies and encouraging ease of doing business using the digital technology.
Finally
In the coming years, following these changes & impact /the effect of the Covid 19, Digital platforms will be the basic requirement for any transactions and prerequisite for staying and doing any business.
Having said this, the Nigeria ICT & Telecom sector understanding the outcome of the COVID19 transformation must be ready and be seen to be leading the way to the new normal desirable by all the other economic/business sectors to deliver their services.
The Impact is clear, the change has come and the Nigerian Telecom / ICT Sector must be prepared.
Thank you all.
This is the contribution by Dr. Patrick Ede, Director of Operations, PPC Limited, during a recent virtual meeting, organised by the Association of Telecommunications Companies of Nigeria (ATCON) on the sector’s challenges.
