Satellite, fintech and end-point security to drive Nigeria's digital economy

30 July 2018 4 min. read

As Nigeria’s economy gradually migrates to the digital sphere, the country’s telecom, digital services and cybersecurity sectors are expected to balloon in the near future. Frost & Sullivan reports that the combined value of the three sectors is likely to surpass the $18,000 mark up until 2022.

Nigeria is the largest economy in Africa, and one of the most rapidly developing as well. The wave of digitalisation sweeping across the continent, therefore, finds its epicentre in the mammoth West-African economy. The UK’s Foreign Commonwealth Office is looking to invest just over $1.5 billion in economies of Nigeria’s calibre to help them overcome some challenges to economic growth, most significantly the development of a digital economy.

To this end, the agency has commissioned market research and consulting firm Frost & Sullivan to study a handful of emerging markets across the globe with respect to their progress in the digital sphere, particularly in the telecommunications, digital services and cyber security segments.

Nigeria telecommunications market revenue forecast 2017-2022

Alongside analysis of Kenya, the firm’s African analysis covered the key economies of South Africa and Nigeria, with a number of key findings emerging for the latter. Infrastructure in Nigeria’s telecom sector, for instance, falls substantially short of the required levels, specifically in terms of the number of mobile towers.

The country currently has 30,000 mobile towers and needs at least 100,000 to adequately offer network coverage to the entire population. To fill this gap, there is an increasing tendency in the economy towards satellite usage to improve network coverage, although this might be hindered by slow economic growth in the country.

The report notes that this shortage of towers presents an opportunity to develop hybrid power systems for relatively remote areas, which, combined with the opportunities in the satellite development domain, is expected to take the telecom market in Nigeria past the $12 billion mark by 2022.

Nigeria digital services market revenue forecast for consumers and businesses 2017-2022

The digital services market is perhaps the most versatile areas in terms of economic opportunities. Ecommerce is one such opportunity, given that Nigeria’s ecommerce sector is among the fastest growing segments in all of Africa, both in terms of product offerings and payment systems.

In order to facilitate the advent of online payments, the Fintech market is also growing at a rapid rate across the country, despite relatively reluctant adoption of this technology from a large portion of the country’s population. Lastly, the combination of digital maturity and English proficiency on the continent make it a lucrative market for BPO services.

Nigeria cyber security market revenue forecast 2016-2022

So cloud-computing, ecommerce and Fintech represent the biggest digital service opportunities in Nigeria, which, as per the report, will require engagement with local state-owned enterprises. At any rate, the market is expected to surpass $2 billion each for consumers as well as for businesses.

Lastly, an increasing amount of financial activity online brings with it the need for enhanced cyber security capabilities, which represents a number of opportunities for those active in the segment. The oil & gas, business and financial services and public sectors are likely to generate the most demand for cybersecurity services as per the report.

Cybersecurity services that are currently driving the market across the globe, and are likely to do so in Nigeria, include cloud-based, network and end-point security systems. Overall, the cybersecurity market is expected to surpass $700 billion by 2022.