The third quarter of 2024 saw an 87% drop in foreign investments in Nigeria’s telecommunications sector, a sharp reduction from the year’s first two quarters.
The National Bureau of Statistics (NBS) most recent capital importation statistics support this.
According to NBS data, the sector only brought in $14.4 million in capital imports in Q3, a significant drop from the $113.42 in Q2 investments.
Compared to the $64.05 million recorded during the previous year, the Q3 2024 capital imports for the telecom sector also reflect a 77% decrease year over year.
A brighter year for Nigerian telecoms
The telecom industry has fared better this year than in prior years in terms of foreign investments, notwithstanding the third-quarter dip.
- According to NBS data, the sector received a capital inflow of $191.5 million in the first quarter of this year, a 769% rise over the $22.05 million received in the same period in 2023.
- The sector’s total investments for 2023, which came to $134.75 million, were exceeded by the investments made in the first quarter alone.
- This followed years of steady investment declines despite a massive infrastructure gap that would have cost billions of dollars to close.
- FDIs in the sector was $113.4 million in Q2 2024. This reflects a staggering 339% growth over the $25.81 capital inflow recorded during the same period last year, even though it is less than the inflow from the previous quarter.
Things that work against investing
Forex instability is still a significant issue that must be resolved to attract additional investments in the telecom industry, according to Mr. Gbolahan Awonuga, Executive Secretary of the Association of Licensed Telecommunications Companies of Nigeria (ALTON).
“Until the issues facing the industry are resolved, we might not witness a consistent increase in investments. There are still problems with Right of Way charges, multiple taxes, and most importantly, the currency instability that keeps affecting the operators’ ability to import equipment,” he said. Â
Engr. Ikechukwu Nnamani, the CEO of Digital Reality and the immediate past president of the Association of Telecommunications Company of Nigeria (ATCON), stated that he anticipated the government would make the sector appealing by establishing a stable and favourable environment.
In his opinion, a steady atmosphere would indicate that the administration is adhering to its policies. Nnamani also noted that many international investors who are interested in the nation’s telecoms have been deterred by the volatility of the FX market.
Evidence of a drop in investment
According to the Nigerian Communications Commission’s (NCC) 2022 telecom industry report, the industry received $399.9 billion in total investment that year.
- Compared to the $753 million reported in 2021, this indicates a 47% decrease.
- Although the $753 million recorded in 2021 was more than the $417.4 million recorded the year before, the increase was due to the COVID-19 epidemic in 2020, which caused a sharp decline in economic activity worldwide.
- Before that, the telecom sector received $942.8 million in capital inflow in 2019, meaning the 2021 inflow was lower than the pre-COVID-19 year.
- Even though maintaining telecommunications necessitates regular investment in infrastructure for network growth and optimization, the operators have been reducing their capital expenditure (CAPEX) due to the diminishing investment.
- The 2022 report, which revealed that the industry’s CAPEX fell by 30% over the year, supported this.
- The research claims that operators’ CAPEX expenditures in 2022 totaled N785 billion, up from N1.1 trillion in 2021.
