Nigeria gears up for ICT growth

Nigeria

Economic News

18 Sep 2014
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Information and communication technology (ICT) is set to become an integral part of daily life in Nigeria, following the pilot launch in August of a new nationwide electronic identity card programme, which includes e-payment functionality.

The e-identity initiative is expected to act as a stimulus for Nigeria’s economy in the coming years, improving transparency and galvanising growth for financial services, retail, telecoms and information technology. However, slow take-up of technology and low broadband penetration levels risk delaying the benefits of this and other e-government programmes.   

A mine of information

The biometric e-identity card forms a key component of the national identity management system (NIMS). Once the programme is fully rolled out, the card is expected to serve as the country’s primary identity and services document for all citizens aged 16 years or over. A total of 13m cards were issued in the initial programme launched on August 28, with the number set to eventually top 100m out of a population of 167m.

The e-identity card will feature two photographs of the carrier, together with a chip storing each individual’s biometric information, including 10 fingerprints and an iris scan.

The document will consolidate and coordinate vital information, including birth records, health insurance, tax history and driving licence details. Crucially, given efforts to increase cashless transactions, it will also have the capacity to act as a basic bank card through a service provided by Mastercard. Cardholders will be able to make deposits and withdrawals, access state payments and transfer funds for government services through a network of local banks.  

e-growth on the cards

Chris Onyemenam, director-general and chief executive of the Nigerian Identity Management Commission (NIMC) – which is overseeing the initiative – says the system will offer citizens a means of both interacting with government agencies and conducting transactions electronically.

“In close collaboration with both the public and private sectors to achieve the full potential of this programme, NIMC is focused on inclusive citizenship, more effective governance, and the creation of a cashless economy, all of which will stimulate economic growth, investment and trade,” he said at the e-identity card launch in Abuja.

Once the NIMS gathers momentum and new functions are added to the cards, the initiative is expected to open more doors for secondary ICT and support services providers. Demand for card readers and computers is expected to rise, while sales of the software required to access and process data held on e-identity documents, and financial transaction units, are also forecast to increase.  

Addressing the challenges

The impact of the e-identity card should be significant over the medium- to long-term, although in the short-term, the effect of the roll out of the NIMS is likely to be impacted by broader issues of penetration and infrastructure.

Boosting the number of registered bank users could be pivotal in accelerating the programme’s knock-on effects. “It breaks down one of the most significant barriers to financial inclusion – proof of identity – while simultaneously enabling Nigerians to access the global economy,” said Daniel Monehin, MasterCard’s division president of sub-Saharan Africa. He added that a wider impact will also come from enabling the previously unbanked – estimated at 46% of the population, according to the Central Bank of Nigeria – as well as those who have poor access to services normally offered by retail banks, to gain access to the mainstream economy.

In a presentation given in September, minister of communications Omobola Johnson said the federal government is targeting wireless broadband coverage (3G/LTE) coverage of 80% of the country and to link some 16% of the population to a high-speed broadband fibre network. However, for Nigeria to properly exploit the e-identity card system broader constraints will need to be addressed including a current broadband penetration rate of 6%. The World Economic Forum’s (WEF) 2014 Global Competitive Index, which measures the competitiveness of 144 economies, has also stated that Nigeria was still struggling to take full advantage of the ICT revolution, citing weaknesses in infrastructure and security concerns while also pointing to a slow take-up of information technology.

However, despite these constraints, the ICT sector has become a significant contributor to the economy. According to the National Bureau of Statistics (NBS), the sector accounted for 10.4% of GDP last year. Its contribution is expected to rise as demand, driven, in part, by the expansion of the NIMS programme and related investment, brings improvements in ICT service delivery.

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