After the financial woes of Etisalat, the telecommunication sector has become a subject of intense review and analysis. It contracted by 1.92% in Q2 and contributes only 9.5% directly to GDP. But this does not tell the full story. ICT is indirectly responsible for the payment and settlement system – the POS, ATMs and NEFT transfers. It also indirectly contributes approximately 30% of GDP.
Nigeria’s labour productivity is a function of internet penetration, mobile telephony and skill levels. While GDP is expanding at 0.55%, labour productivity is contracting by (1.9%). Any attempt to reflate the economy without dealing with labour productivity will be an exercise in futility.
As part of the economic reform agenda, the strengthening of institutions has been identified as a critical success factor. Nigerian policy makers seem determined to address this intractable problem, as evidenced in the new ease of doing business initiatives.
In this edition of the FDC Monthly publication, the FDC Think-Tank takes a deep dive into how institutional reform can serve as a catalyst towards accelerating GDP growth and attracting investments.
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