The Impact Of Information And Communication Technology On The Economic Growth In Nigeria

Project and Seminar Material for Economics

The Impact Of Information And Communication Technology On The Economic Growth In Nigeria


In recent years, progress in information and communication technology (ICT) has caused many structural changes such as reorganizing of economics, globalization, and trade extension, which leads to capital flows and enhancing information availability. Moreover, ICT plays a significant role in development of each economic sector, especially during liberalization process. Growth economists predict that economic growth is driven by investments in ICT. This paper examines the impact of Information and Communication Technology (ICT) use on economic growth using the ordinary least square estimator within the framework of a dynamic panel data approach and applies it to 159 countries over the period 1981 to 2015. The results indicate that there is a positive relationship between growth rate of real GDP per capita and ICT use index (as measured major house hold consumption government expenditure on telecom exchange rate and investment in telecommunication). I Have found a positive relationship between ICT and ecomic growth This implies that if these countries seek to enhance their economic growth, they need to implement specific policies that facilitate ICT use.

Table of Contents

  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Contents
  • Abstract

Chapter One

1.0 Introduction

  • 1.1 Background to the Study
  • 1.2 Statement of the Problem
  • 1.3 Research Questions
  • 1.4 Objectives of the Study
  • 1.5 Research Hypothesis
  • 1.6 Justification to the Study
  • 1.7 Outline of the Study

Chapter Two:

Literature Review

  • 2.2.1 The concept of Information and Communication Technology
  • 2.3 Theoretical Framework
  • 2.3.1 Theory of Economic Growth
  • 2.3.2 Robert Solow Theory of Growth
  • 2.3.3 Paul Romer Theory of Economic Growth
  • 2.3.4 The Impact of ICT on Sustainable Socio-Economic Growth
  • 2.3.5 Impact of Information and Communication Technology
  • 2.3.6 Vocational Opportunities in ICT
  • 2.3.7 Economic Benefits of ICT Policies
  • 2.4 The Relationship
  • 2.4.1 Social Benefit of ICT Policy
  • 2.5 Empirical Review

Chapter Two:

Research Methodology

  • 3.1 Introduction
  • 3.2 Model Specification
  • 3.3 Model Estimation
  • 3.4 Model Evaluation
  • 3.4.1 Apriori Criteria
  • 3.4.2 Econometrics Criteria
  • Coefficient of determination (R2)
  • Adjusted R2
  • F-statistics test
  • Durbin Watson Test
  • 3.4.3 Statistical Criteria (First Order Test)
  • 3.5 Sources of Data

Chapter Four:

Presentation and Analysis of Results

  • 4.1 Introduction
  • 4.2 Presentation of results
  • 4.3 Interpretation and Discussion of Results
  • 4.3 The R-squared
  • 4.4 Adjusted R-squared
  • 4.5 The F-statistic
  • 4.6 The Durbin-Watson

Chapter Five:

Summary, Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusions
  • 5.3 Recommendations
  • Appendix 1
  • References

Chapter One

1.0 Introduction

This is the chapter on introduction. It states the background to the study, statement of problem, research question and objectives. It covers the project hypothesis and justification as well the outline of the study.

1.1 Background to the Study

Information has always played a very important part in human life. However, in the mid-20th century, the role of information increased immeasurably as a result of social progress and the vigorous development in science and technology. Similarly, Trostnikov (1970) noted that, rapid expansion of a mass of diversified information is occurring, which has received the name “information explosion”. As a result, the need has arisen for a scientific approach to information and for elucidation of its most characteristic properties which has led to two principal changes in interpretation of the concept of information. The pace of change brought by new technologies has had a significant effect on the way people live, work, and play worldwide.

The world has become a global village with telecommunication being an indispensable tool in the entire process of globalization. However, it is not in dispute that Telecommunications and Information technology (IT) play essential roles in this process. This is obviously why development in this vital sector over the years has been phenomenal all over the world. In fact, this is why emerging trends in socio – economic growth shows high premium being placed on Information and Communication Technology (ICT), by nations, organizations and homes.

Nigeria, fortunately, has not been left out of this race for rapid development in the telecommunication industry. Unlike in the past, governments consider telecommunications service to be so vital to national interest and economic development that it was placed directly under their control in most countries until recently, when deregulation and competition were introduced (Lee, 2003).

The existing literatures on growth and development studies have shown that Information and communication technology (ICT) plays considerable role in the economy of a country. Put differently, one of the major drivers of economic growth and development is information and communication technology. Singh (2006) noted that ICT is a powerful tool when used in the right way as part of overall development strategy. In the same vein, Boating (2007) opined that ICT may not be a panacea to the world’s problems but it can be a powerful tool to facilitate and enable affordable solutions to basic human developmental problems. It is widely accepted by intellectuals that ICT has become an integral part of the social, economic and political paraphernalia of social interactions; hence countries all over the world are taking to ICT for various developmental initiatives (Moghaddam and Khatoon-Abadi 2013; Gnaniah 2004).

As such, it can be argued that in the 21 century, the role of ICT in transforming the world into a better place for all (or at least for many) cannot be overemphasized. In fact, ICT has become the buzz word in academia, government, business, economy and many other social purview of human society, especially in the areas of sustainable development. ICT has over the last decade grown and became the driving force responsible for monumental changes and innovative development in the world.

Posu (2006) stated that the industrial revolution in Europe and America have been anchored on the technological breakthroughs. Similarly, during the late 1999s, Harchaoui (2002) noted that ICT was the largest contributor to the growth within capital services for both Canada and the United States of America. Nigeria is the largest economy in Africa after South Africa and Egypt. Nigeria is also a top oil producer with population of about 170 million people.
According to the World Bank, Nigeria’s GDP is 568.51 billion US dollars in 2014 which represents 0.92% of the world economy. With the return to civil rule in 1999, the Obasanjo led People Democratic Party government initiated and implemented liberalization policy particularly of the telecommunication sector of the Nigeria economy. The policies resulted in the establishments of National Telecommunication policy in December 2001. The mission statement of the government was to use ICT for education, creation of wealth, poverty eradication, job creation and global competitiveness (Posu 2006). The implementation of this policy brought about the adoption of Global System for Mobile-Communication (GSM) and its related components in Nigeria. The federal government issued a Global System for Mobile Communications (GSM) operating license. The telecommunication companies that got the operating license were: Zain (Econet) wireless and MTN communications, M-Tel, the NITEL counterpart was given an automatic license while in 2003 Globacom was granted operating license.

Nigeria is the most populous country on the African continent, according to the United Nations (UN) and United Nations Development Program (UNDP) Nigeria. The estimated population growth rate (average annual percentage) of the country from 2010 to 2015 is 2.5%; its urban growth rate from 2010 to 2015 is estimated at 3.8%; its rural population growth rate (annual average percentage) from 2010 to 2015 is 1.3%; its urban population in 2012 was 50.3%; its primary-secondary school gross enrollment ratios for both male and female per 100 persons in 2012 were 62.0% and 68.9% respectively; its telephone subscribers per 100 inhabitants in 2011 was 59.0%, while in 2010, it was 55.8%; and its Internet users per 100 inhabitants in 2011 was 28.4%, while in 2010 it was 55.8% UNDP Nigeria, 2012).

The country is approximately 923,768 square kilometers which is equivalent to 356,669 square miles(about the size of California, United States- US), and the literacy rate is 39%–51% (US Department of State, Nigeria, 2012; UNDP, Nigeria, 2012). Nigeria is divided into six geopolitical zones, namely; North-east, North-central, North-west, South-east, South-south and South-west. The Federal Executive Council approved the National Information Technology Policy in March 2001 and the implementation started in April with the establishment of the National Information Technology Development Agency (NITDA), in charge of the mission to make Nigeria an ICT-capable country in Africa and a key player in the Information Society, while using ICT as a catalyst for sustainable development and global competitiveness (ICT4D Nigeria Annual Report, 2007).

The liberalization of the country’s telecommunication sector in the year 2001 has led to the emergence of a Nigerian indigenous mobile telecommunication network, “Globacom”. The company currently provides mobile telecommunication services in the country and therefore, it is one of the global GSM operators. From 2001 when the mobile telecommunication services began a considerable penetration into the country, the progress has been monumental. The 2013Ministerial Report of Nigeria’s Federal Ministry of Communication Technology (FMCT), indicates that about 83% of the country’s 166.6 million people, are active mobile phone subscribers. In 2011 and 2012 it was 68% and 71% respectively. Similarly, the Nigerian Communications Commission (NCC) indicates that out of the 114.172 million active subscribers on the global system for mobile telecommunication (GSM) networks in the country, only 34.5 million, which is approximately 39.4%, of them use Internet data and it is expected to rise to 98% by the year 2015. On Internet accessibility and usage the statistics are 29% in 2011, 34% in 2012 and 36% in 2013 and it is expected to rise to 42% in 2015 (NCC, 2013). People get empowered with information, but when they lack it they often become isolated and ignorant about their rights and choices. That is to say, there could be lack of the basic knowledge about the political and developmental processes that shape their lives in society. Nowadays many people especially the poor and the uneducated more than ever before can have access to basic ICT services like mobile communication, mobile banking, online transactions and sending emails to donor agencies and receiving instant feedback.

1.2 Statement of the Problem

In Nigeria, provision of public infrastructure is grossly inadequate and poor. Necessary telecommunication services, as public infrastructure, needed for meaningful investment are lacking and, where found, are very expensive. Teledensity in Nigeria is still very low. The introduction of the GSM in Nigeria was to expand the teledensity in the country and to make telephone services cheaper and accessible to the common person as it had been introduced in some African countries like South Africa, Ghana, and Benin Republic among others. GSM is ICT based telecommunication that can contribute to the growth and development of any nation. These Telecommunication Networks have created significant effects on the gross domestic product (GDP) of Nigeria in terms of job creation, communication linkages, connectivity, security of lives, and reduced transport costs among other. Past studies on the developing economy have bothered on the challenges and roles of ICTs on economic growth (Ndukwe, 2003).

Nigeria is isolated from the global village because it lacks the critical drive strategies to harness the full potential of ICT for the socio-economic development of the country. ICT infrastructure in Nigeria is regarded as underdeveloped when compared with other developing countries like South Africa, Malaysia, Brazil and South Korea. Nigeria’s Internet penetration was less than 16% in 2012 (www.234next.com2012) while its Internet broadband penetration per 100household was between 4% and 6%(Nigeria’s National Broadband Plan,2013)which can be regarded extremely lower compared with for instance Malaysia’s 10.9% in 2006(UNDP/MDGs Malaysia 2010 Report).

1.3 Research Questions

  1. What are the determinants of economic growth and development?
  2. What is the effect of Information and Communication Technology on Economic Growth in Nigeria?

1.4 Objectives of the Study

The general objective of this study is to ascertain the impact of ICT on Nigeria economic growth and development.

The specific objectives are:

  1. To examine the impact of Information and Communication Technology on theeconomic growth of Nigeria.
  2. To identify the determinants of economic growth and Development.

1.5 Research Hypothesis

  • Ho: Information and Communication Technology does not have significant effect on economic growth in Nigeria
  • Hi : Information and Communication Technology has significant effect on economic growth in Nigeria

1.6 Justification to the Study

The significance of the study is primarily to contribute to the existing knowledge in the area of information communication technology and economic growth of a country. It will also be a reference point for further or future study on topical relevance. The study will offer new strategies on ways that the Nigerian government and policy makers can tap on the potentials in information and communication technology. It will reveal the investment opportunities in ICT and can be adopted by relevant governmental and non governmental agencies in designing entrepreneurship and empowerment programmes for the vast majority thereby reducing the level of unemployment in the country. The finding of the study will be useful to all relevant agencies of government saddle with the overseeing of the telecommunication sector. Scholars, students, Economists, Tax, Financial and Development Consultants, Central Bank of Nigeria, Ministry of Finance and National Budget, Communication, Information as well as Trade and Investments amongst others are potential beneficiary of the findings of this study.

1.7 Outline of the Study

The research comprises of five chapters. Chapter one covers the introduction. Chapter two focuses the review of relevant literature. Chapter three has the research methodology. Chapter four covers data presentation and result analysis and chapter five contains summary, conclusion and recommendations.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary

This Research work was embarked upon in order to look into the Impact of Information and Communication Technology on Economic growth in Nigeria. The contributions of information and communication technology to the growth of the Nigerian economy, which has brought about revolutions in the economy, since payments method which include the use of credit cards, electronic transfer of funds from one bank to another, smart cards widely used in supermarkets and other retail outlets contributions to the economy’s growth and development and their contribution helps to reduces operational cost in Areas such as personal management, administration, maintenance etc.

The research adopts an OLS method of regression analysis. The result shows a positive relationship which exist between ICT and economic growth. This indicates that Information and Communication Technology Leads to a sustainable economic growth.

5.2 Conclusions

Information and Communication Technology departments in banks also play some roles in the banking sector like helping in critical area such as End-user technical supports, Desktops management, Network management, voice and data communications, business applications and strategic technology planning. Information and Communication Technology (ICT) has helped in reducing the cost of doing business in the economy, banks all over the world are involved in certain time consuming and routine task on a daily basis and it dependent on internet banking to ensure that such technology is not abused and not used to encourage fraudulent and unethical banking practices, various standards have been set in the guidelines to which such technology must conform.

Also, banks must ensure that the Internet service provider(ISP) has implemented firewall to protect the banks website from unauthorized users and banks are also to ensure that they are properly configured and institute procedure for continued monitoring and maintenance arrangements.

Information and Communication Technology has contributed to other sectors like educational sectors, health sectors, transportation and lots more. Therefore, investing in areas of Information and Communication Technology can lead to a more better economy.

5.3 Recommendations

Knowing full well that information and communication technology cannot be separated from the economy, most especially the banking sector due to its immense contributions to the banking sector, therefore the following recommendation are made with the intent that if adopted would have positive effects on the real sector.

The government should improve more on its information technology provision and development so as to enhance its productivity.

The use of (ICT) in the banking sector should not only be restricted to the cities alone, rural banking should also be improved upon.

From time to time there should be enlightenment given to the general public through the various media on how to use some of the (ICT) equipment’s like the smart cards, ATM etc. and its importance should also be made known to the public.

Staff should be used side by side with ICT rather than reducing human capital which will in turn lead to unemployment in the country.

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