Investments in Nigeria IT Sector Falls by 71% to $21.68 Million in December 2020

Despite the intensive promotion of the nation’s technology sector, investments in the information technology (IT) services subsector tumbled from $74.74m at the end of 2019 to $21.68m as of December 31, 2020.

This is according to an analysis of the capital importation data from the National Bureau of Statistics (NBS).

This indicates a drop of $53.06m or 70.99 per cent in one year.

In the first quarter of 2020, investments in IT services had risen to $19.25m from $4.51m in the same period of the previous year.

It, however, plunged to $0.34m in Q2 2020 from $6.52m in the same period of 2019.

In Q3 2020, investments in IT services stood at $0.46m, down from $15.53m in Q3 2019.

In Q4 2020, investment in IT services fell to $1.63m from $48.17m in the corresponding period of 2019

The Federal Executive Council had in 2019 approved the renaming of the Federal Ministry of Communications as Federal Ministry of Communications and Digital Economy.

In 2020, the Nigerian Communications Commission approved the creation of a Digital Economy Department, responsible for promoting the digital economic agenda of the Federal Government.

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In December 2020, the Minister of Communications and Digital Economy, Isa Pantami, urged investors in the information and communication technology sector to invest in the country’s digital economy while delivering a keynote at the 2020 Africa Investment Forum, a side event at the GITEX Technology Week in Dubai.

He had said, “Nigeria is both a geographic and an economic gateway to sub-Saharan Africa. As a geographic gateway, we have a prime location between West and Central Africa.

“In other words, investing in Nigeria gives investors easy access to close to 550 million people – 200 million from Nigeria, another 200 million West Africans and about 150 million Central Africans.

“Investors in our digital economy can be assured of access to a large pool of youthful and skilful employees at a more cost-effective rate than it would cost to engage employees in other parts of the world.”

In the first three months of 2021, investment in IT services stood at $1.60m but dropped to $0.03m in Q2.

Reacting to this, an ICT expert and Senior Partner of e86 Limited, a software development company, OluGbenga Odeyemi, said that certain government policies might have discouraged businesses from investing in IT services subsector in Nigeria.

He said, “Primarily, investors are motivated based on government policies – what government does and what they don’t do in terms of making the environment friendly.

“What we have seen so far, for the most part, is that government’s approach to solving issues could have been one of the major factors in that decline.”