Can Nigeria’s Tech Sector Drive Inclusive Growth?

The digital economy is most commonly defined as the portion of economic production derived from digital technology and businesses whose models depend on digital goods or services. In Nigeria, the digital economy has had an increasingly substantial contribution to economic growth. Since the dramatic influx of foreign investment into startups in 2022, the performance of digitally enabled business in the country has been auspicious. At the end of 2022, Lagos’ startups were estimated to be worth over $8.4billion and the Information Communication Technology (ICT) sector nationwide contributed over 19.78 per cent of Nigeria’s total GDP in 2024, an estimated 20 per cent increase from the previous year. Moreover, the sector has been projected to generate $18.3 billion by 2026, affirming the expectations of the digital economy being a key driver of growth for Nigeria and Africa at large.

In a proactive response to this, the Nigerian government has implemented major policy and regulatory reforms to actualize the economic potential of the digital economy. By October 2022, the Nigerian Startup Act was passed, as a way of ensuring regulatory and financial support for the country’s growing tech ecosystem. Subsequently, in 2023, the newly refurbished Ministry of Communications, Innovation and Digital Economy released a strategic plan targeted at leveraging technology to accelerate economic growth, diversify Nigerian exports and place Nigeria as a global leader within the digital economy space.

However, digital connectivity is not a silver bullet for growth and can exacerbate existing social inequalities without complementary investments in skills, finance, and regulatory systems to realize the promise of digital technologies for all.

—William Maloney, in a report titled ‘Wired Digital Connectivity for Inclusion and Growth’

Despite this momentum, we must question whether economic growth should be the primary goal for Nigeria’s digital policies? While growth and increased revenue are in themselves important objectives, they cannot be the sole focus. Nigeria is no stranger to growth, but this growth has often not been inclusive of the entire Nigeria populace. Throughout its history, the West African giant has seen numerous periods of economic boom, and statistically, is currently experiencing one of the highest levels of production since its inception. If growth alone were enough, 73.7 million Nigerians would not be trapped in multidimensional poverty, Nigeria would not have a precarious middle class population, and the country’s institutions and infrastructure would not remain weak and unreliable. Clearly, economic growth is not the solution to the problems that plague Nigeria. The problem continues to lie in the quality of its growth.

Nigeria’s national income has historically been driven by natural resource exportation, agricultural production and exclusive service industries accessible only to a minority of the population. It is not labour-led, rather it is resource-led—leading to two significant consequences on its economy and its citizens.

Firstly, in terms of economic stability, resource dependency—primarily on crude oil—has left the country’s economic health vulnerable to global price shocks and recessions. A good example of this would be the 2016 recession that led to 112 million people falling below the poverty line, largely due to a 60 per cent fall in the price of Nigeria’s main oil export from 2014 to 2016 as well as other factors.

Secondly, within the country’s labour market, wealth is concentrated in select industries that employ only a minority of the workforce. According to the National Bureau of Statistics, in 2013, the oil and gas sector employed 0.01 per cent of the total labour force despite contributing 70 per cent of government revenue. In contrast, sectors like agriculture contributed an average of 24 per cent to the national GDP while being the largest employer of labour, employing 36 per cent of the country’s labour force. What’s more, 92.2 per cent of the Nigerians have subsequently been left in an unregulated informal sector with low earning capacity and high rates of youth unemployment.

Resource-led growth has proven itself to be exclusionary, immiserating and unreliable to both the country’s economic performance and its working class. This is telling of a need for a more sustainable kind of economic growth—one actively utilizes Nigeria’s massive human capital resource as a driver for increased productivity across all sectors of the economy as well as improves the economic bargaining power and participation rates for Nigerians. Nigeria needs inclusive, labour led growth which is a formidable goal considering the high levels of poverty, illiteracy and institutional demise rampant in the country. Achieving this will demand extensive emancipation programs, skill acquisition initiatives, and the social development of both workers and business owners.

The good thing is that African digital technology is already creating the social development required to drive sustainable inclusive economic growth. Its emergence has brought opportunities directly to mostly middle-class Nigerians and opened a pipeline for working, educated people to scale their businesses and create solutions for the majority of the population. It has redefined the existing labour market with the introduction of specialized tech-related and tech-augmented roles. These roles employ mostly youth and have significantly reduced youth unemployment in the country. A 2024 study on youth employment in Nigeria showed that 67.3 per cent of the reduction of youth unemployment resulted from the growth of the digital economy and digitally enabled jobs. This, along with the governments’ goal of training three million tech professionals by 2027, shows a premise of a future of reduced unemployment and sustainable job creation in the country.

The digital technology sector has also created more opportunities for upward social mobility. Upward social mobility is the ability for households to move to a higher social class. This can be achieved through a variety of ways including increased employment opportunities, encouraging more socio-economically diverse workplaces and institutional reform. Since Nigeria’s tech industry gained international popularity, many local and foreign opportunities have been made accessible to skilled lower to middle class workers—giving various people higher earning power and the ability to move upwards socially. For instance, Nigerians like Adebayo Akinola, who previously had unfulfilling, low-paying jobs have been able to find formal and informal employment opportunities in the sector that have significantly increased their income and quality of life.

More interestingly, the digital economy has created an avenue for the public to address long-standing challenges in sectors such as agriculture, education and healthcare—areas traditionally reserved for the government. Thus, providing essential services and filling in the gap left by the government. With companies like ThriveAgric, an agro-tech company who entered the market in 2018, making significant contributions to Nigeria’s agricultural sector by administering about $40 million in loans to more than 273,000 local farmers. This has resulted in smallholder farmers having the capital to grow high-yield competitive crops and improve income and employment for workers in the agricultural sector. The health sector has also been positively affected by the digital economy as seen with the rise of telemedicine and digital-based health insurance programmes, providing access to on-demand health care for Nigerians. For instance, healthcare startups like Clafiya are providing access to primary healthcare services by offering enabling financial services to Nigerians.

In 1970, the World Bank reported that due to systemic corruption, 80 percent of Nigeria’s oil revenue dispersed to only 1 per cent of its population. Sadly, decades later the reality of the degree of exclusivity of oil wealth remains stark. In 2021, Nigeria’s major oil export garnered about $45.6 billion in revenue while 63 per cent of the population experienced multidimensional poverty that same year.

Unlike oil wealth, which continues to stay in the one per cent, the revenue from tech continues to permeate all social classes, businesses and sectors of the economy. For low-income Nigerians, the tech sector has created jobs and increased access to capital: with startups like Moniepoint’s focusing on bridging capital gaps for marginalized business owners with their working capital loans. However, these benefits are still limited by infrastructural challenges, as only 55.4 per cent of Nigeria’s population has access to the internet.

The digital economy has also led to the growth of Nigeria’s gig economy. Over the last few years the gig economy has grown exponentially with the entry of ride-hailing and logistics platforms. Popular platforms like Uber, Bolt, In-drive and Chowdeck have hired well over 10,000 drivers each—democratizing access to income and employment for Nigerians. However, regardless of the income opportunities offered by the gig economy, gig workers often face a lack of social protections and support structures, which various startups like Gigmile and Snapshap have also tried to rectify by providing financial and training services for informal workers.

For middle to higher income earners in Nigeria, the tech sector presents the opportunity for running and scaling successful businesses that have the capacity to drive social and economic change across different social classes. For instance, Wecyclers, who has been operating since 2012, is driving essential social and environmental change by incentivizing recycling in less developed communities. Farmz2U, an agriculture startup, is improving the profitability and efficiency of commercial farming through data and providing farmers with access to key resources and Grocedy, a logistic startup, is focused on providing groceries to Nigerians at the lowest possible cost through strategic partnerships with producers and suppliers.

The opportunities for socioeconomic transformation created by the digital economy are immeasurable, and Nigerian leadership should be ardently invested in its actualization. Policy makers, entrepreneurs and the government must match their economic ambitions with a parallel commitment to social innovation, equity and digital empowerment to achieve a much-needed inclusive growth.

For Nigeria to achieve sustainable, innovation-driven growth, as seen in countries like Singapore, it must adopt digital policies that leverage its large labour force—enabling entrepreneurship, competition and skill development while strengthening the local startup ecosystem. More intentional actions and directives should be put in place to ensure that the forthcoming fourth industrial revolution will not just empower Nigeria but Nigerians themselves, by being a catalyst for increased social mobility, economic participation and more equitable access to opportunities across social strata. Moreover, strategic investment, regulation and tactical digital policies should also be employed to bridge pressing gaps in physical infrastructure, education and social innovation—without which, the digital sector cannot thrive to its full potential⎈