Nigeria’s tech-driven banks have recorded 7.8% growth in financial exports underscoring the positive economic impact of undersea cables that landed the nation’s shores, according to a Facebook-backed study.
But there are flip sides on the national scale as only a handful of urban centres like Lagos and Abuja have benefitted from the promises of undersea cables in economic development due to their close proximity to terrestrial distribution infrastructure that is yet to extend into Nigeria’s hinterlands.
“Economic Impacts of Submarine Fiber Optic Cables and Broadband Connectivity in Nigeria”, a Facebook-sponsored study carried out by an independent, nonprofit research institute, RTI International, discovered that despite the promises of undersea cables, the impacts on the local economy have been a mixed bag.
Authors of the study that include Nigeria’s technology market research pioneer, Fola Odufuwa, discovered that the economic rewards of undersea cable connectivity recorded significant impacts on job creation and banking.
“We found that subsea cables have increased the likelihood of being employed by 7.8% in areas connected to Nigeria’s terrestrial fiber infrastructure. This means that for each one million people living in these areas, 78,000 additional people tend to become employed, after controlling for such things as technology trends, population characteristics, industries, and other important factors”, according to the authors.
“We also found signals that firms in connected areas are experiencing positive outcomes by leveraging the internet for business. For example, the financial services sector, generally one of the most ICT-intensive sectors, saw its exports increase 1,100% by 2017. Thus, the economic development reward for solving the connectivity challenges is significant”, the authors say.
“Economic Impacts of Submarine Fiber Optic Cables and Broadband Connectivity in Nigeria” was also able to reveal a major concern for the nation’s private sector ecosystem looking to goverment to match words with action in its vision to promote widespread access to high-speed internet services across the country.
The report authors say they “analyzed the economic impacts of subsea cables by pairing rigorous economic analysis approaches with interviews with experts in Nigerian internet connectivity.
“In doing so, not only were we able to understand the impacts of past improvements in connectivity, but also the implications of (and barriers and facilitators to) improvements in connectivity going forward.”
According to them, “experts interviewed for this work note that network operators face a high-cost, high-risk environment that presents strong disincentives to network expansion. The new national broadband strategy has good ideas for addressing the country’s challenges, but the plan from 2015 went unimplemented and there are concerns that the same fate could befall the one from 2020.”
Though terrestrial fiber and wireless networks connect users to subsea cables’ landing stations, the study’s quantified impacts “for the international connectivity associated with subsea cables and not domestic connectivity.”
The reports says that “increasingly, nationally hosted internet exchanges, local content delivery networks, and data centers are bringing data resources on shore. Despite this trend, for many emerging economies such as Nigeria, the vast majority of cloud services and data resources accessed domestically are stored abroad. This makes international connectivity critical.”
The report concludes that connectivity delivered by undersea cables has boosted employment and business growth in fiber-connected areas.
“On the average, people here experience a 7.8% increase in the likelihood of being employed.”
Same cannot be said of undersea cables’ contributions to overall GDP as the report was “unable to detect positive impacts on GDP in the short-run, such impacts may be seen in the long-run if subsea cables continue to facilitate growth and fiber infrastructure is built out.”
According to the authors, “evidence of positive impacts on employment and firms in connected areas and on financial services, nationally, are indicative of the promise for more widespread impact on a national scale. This finding is important because it implies that if the terrestrial fiber network expanded to more areas across the country and more people were connected, there would be greater economic opportunity for them.”
They say the conclusion is consistent with recent reports from the Nigerian government, World Bank, and others about the critical role connectivity plays in Nigeria’s economy.
“If connectivity is not built out more robustly across the country, regional disparities between connected and unconnected areas will be further exacerbated. While the exact impact potential for currently unconnected areas is unknown, improving access country-wide while maintaining broadband quality still seems to be among the most effective potential strategies for economic growth and employment”, the report says.
Authors advise the Nigerian government to advance policy that improves better connectivity that also considers the impacts on individuals and on industries in the short-term.
“While the average person and firm in fiber-connected areas appear to benefit from subsea cables, evidence regarding how effects vary across individuals based on their demographics is less clear.
Furthermore, economic change and transition can affect some industries more than others. Connectivity could provide a catalyst to some, or headwinds to others. Thus, policy makers need to consider trade-offs (and mitigation plans) between job creation, widening of socioeconomic disparities, and any consequences for the different industries.”
Odufuwa and other authors of the “Economic Impacts of Submarine Fiber Optic Cables and Broadband Connectivity in Nigeria” study suggest that it is time for Nigerian policy makers to take immediate next steps by mustering the political will “to invest in the country by making long-term decisions to create the environment in which Nigerians and their businesses can realize the potential greater internet connectivity promises.”
According to them, “This can be done by lowering fees and permitting barriers, easing right-of-way constraints, addressing challenges in infrastructure protection, and promoting infrastructure sharing.
“Experts in the country know how to do this—the country has a solid national broadband plan—but questions remain about the ability and willingness to execute this plan to achieve the vision. It is an excellent time for Nigerian policymakers to harness potential and implement their broadband plan to accelerate growth and development.”