Nigeria’s digital economy currently occupies a crucial position. The Information and Communications Technology (ICT) sector has contributed approximately 20% to Nigeria’s Gross Domestic Product (GDP) in the second quarter of 2024. Digital technology possesses the potential to catalyse economic growth and diversification. Nonetheless, significant challenges in essential sectors such as education, manufacturing, and the public sector pose considerable threats to this advancement. Effectively addressing these challenges is imperative for Nigeria’s progress and for attracting foreign direct investment (FDI), essential for supporting the nation’s digital future. 

Education Sector: Bridging the Digital Divide 

Despite Nigeria’s youthful population and potential technological talent, the education sector confronts enduring digital challenges. Basic infrastructure is deficient in numerous schools, particularly in rural regions where unreliable electricity and limited internet access significantly obstruct learning. Digital literacy rates remain low due to insufficient investment in technology training for both educators and students. Alarmingly, the low secondary school enrollment rate is approximately 30%, with only about one-third of eligible children graduating from secondary school. This chronic underperformance culminates in inadequate numeracy and literacy skills and diminished interest in STEM fields, presenting a concerning trend for a nation that necessitates skilled ICT workers. 

These educational deficiencies engender a divide between Nigeria and more digitally advanced countries; for instance, nations such as South Korea and Estonia integrate digital skills into early education, while Nigeria struggles to provide even basic resources in various classrooms. Consequently, a talent pipeline emerges that is insufficiently prepared to meet the digital economy’s demands. Without immediate reforms, ranging from curriculum enhancements to investments in school connectivity, Nigeria risks forfeiting future technology-driven employment opportunities and dissuading foreign investors seeking a proficient workforce. 

Manufacturing Sector: Technological Lag and Infrastructure Woes 

Nigeria’s manufacturing sector is a vital pillar that requires enhancement to support a flourishing digital economy. It confronts considerable challenges, including elevated operating costs and antiquated methodologies, exacerbated by inadequate infrastructure. Ongoing power shortages compel factories to rely on costly generators, while broadband internet, essential for modern “Industry 4.0” manufacturing, is often unavailable on factory floors. These conditions impede manufacturers from adopting automation, robotics, or digital supply chain management. Global investors are acutely cognizant of these shortcomings. Indeed, analysts note that leading international manufacturers frequently disregard Nigeria as a viable investment destination due to low purchasing power and insufficient infrastructure (e.g., unreliable power supply). This technological stagnation jeopardises local producers by putting them at risk of falling behind as competitors in other emerging economies enhance their production capabilities with cutting-edge technologies. 

Moreover, Nigeria’s manufacturing sector accounts for only a relatively small share of the Gross Domestic Product (GDP) and exports, constraining its attractiveness for foreign direct investment (FDI). Nigeria must tackle essential challenges to reshape this situation—ensuring a stable power supply, improving transportation and internet infrastructure, and offering incentives for adopting technology within the sector. If factories incorporate digital tools and enhance efficiency effectively, Nigeria could position itself as a desirable location for foreign manufacturing companies and potentially evolve into a regional hub for digitally enabled production. 

Public Sector: Slow Pace of Digital Transformation 

The public sector in Nigeria, which encompasses government services and administration, encounters significant challenges in the digital era. Despite the initiation of e-government initiatives, progress has been inconsistent. Numerous government services depend on manual or paper-based processes, resulting in bureaucratic delays that hinder citizens and businesses. A fundamental challenge is the lack of universal citizen data; millions of Nigerians do not possess formal identification documents, preventing them from accessing various online government and financial services. This identification gap undermines efforts to establish inclusive digital platforms for public services and social programs. 

Moreover, the disparate Information and Communication Technology (ICT) capabilities among public sector employees impede the adoption of new systems. While certain agencies have successfully digitised their processes, others remain behind due to inadequate training and resources. Infrastructural deficiencies significantly affect the public sector; without dependable electricity and connectivity, even the most well-designed digital systems cannot function effectively outside major urban centres. These vulnerabilities intensify Nigeria’s challenging business environment, as investors experience difficulties in efficiently acquiring permits or information. International rankings regarding the ease of doing business have historically mirrored these systemic issues. If these matters are not addressed, the slow pace of governmental digital transformation may deter foreign companies from investing, considering that efficient governance and robust digital record-keeping are frequent prerequisites for establishing business confidence. 

Call to Action for Policymakers 

Policymakers in Nigeria must acknowledge the challenges presented by the digital economy as a matter of urgent priority. The government’s National Digital Economy Strategy recognises the necessity for improvements in infrastructure, skill development, and services; consequently, it is imperative to accelerate the implementation process. Policymakers should prioritise electrification and expanding broadband access in underserved communities, ensuring reliable online connectivity for educational institutions, manufacturing facilities, and government offices. Additionally, educational curricula require reform to emphasise digital competencies and STEM subjects, while collaborations with technology companies to enhance educator training should be significantly increased. In the manufacturing sector, incentives such as tax reductions or grants can encourage factories to invest in automation and upskill their workforce. Public-private partnerships may facilitate the establishment of technology hubs or special economic zones dedicated to high-tech production. Importantly, digitising the public sector must be viewed as a fundamental element: initiatives to provide every citizen with a National Identification Number (NIN) and migrating government services to digital platforms will improve transparency and efficiency. 

Nigeria has the potential to enhance its business environment by implementing regulations conducive to investment and addressing bureaucratic challenges. The success of these initiatives necessitates political will and coordination; nevertheless, the prospective benefits are significant. 

A workforce proficient in digital skills, modernised industries, and efficient governance will cultivate domestic growth and attract the essential foreign direct investment required to fulfil Nigeria’s aspirations within the digital economy. The time for Nigeria’s leaders to undertake decisive action is now, closing the existing gaps to guarantee that the nation can fully participate in the forthcoming digital revolution. 

Olabode Olanusi is a dynamic digital transformation strategist with a wealth of experience in the private, public, and intergovernmental sectors.
He is passionate about driving innovation and crafts effective solutions and strategies that propel digital transformation initiatives to new heights.
He can be reached at olabodeolanusi@gmail.com.