The prolonged foreign exchange crisis is making it difficult for Nigeria to attain its goal of 70% internet penetration by 2025 and is impeding further investments in telecom infrastructure.
The depreciating value of the Naira combined with a steady decline in foreign direct investments (FDIs) into the telecom sector has reduced operators’ ability to invest in equipment.
The National Bureau of Statistics (NBS) recently released data showing a significant fall in foreign direct investments (FDIs) in the telecom industry of 70.5% in 2023.
In order to fulfil the broadband objective, the Minister of Communications, Innovation, and Digital Economy stated last year that the nation would need to invest an estimated $2 billion to install fibre optic lines across the entire country. But over that same time frame, the telecom sector only brought in $134.75 million in foreign direct investments.
Due to the sharp increase in the dollar-to-naira exchange rate, local operators are finding it difficult to import new equipment for network growth and improvement.
The operators’ intentions to import equipment have been interrupted, according to Mr. Gbolahan Awonuga, Head of Operations of the Association of Licenced Telecommunications Operators of Nigeria (ALTON), by the notable increase in the value of the dollar from approximately N460 in the previous year to over N1,600 this year.
Additionally, MTN Nigeria’s Chief Financial Officer, Mr. Modupe Kadri, talked about the company’s intentions for infrastructure investment this year, pointing out that the currency problem makes it difficult to convince shareholders to approve additional investments.
He said, “The truth is that, as a company, you never stop looking at your choices. We may choose how to divide up our capital expenditures thanks to a rigorous capital allocation methodology. The return to the stockholders, however, is the final bottom line.”
“Now, it becomes difficult to justify the necessary investments at the governance level if there is no investment case because of the dire macroeconomic conditions we face. However, we have increased our fibre assets and made considerable investments in improving our 4G and 5G networks,” he went on to add.
Kadri also bemoaned the nation’s current state of volatility in the foreign exchange market, highlighting how crucial it is for there to be stability in the market so that companies can make informed plans and lessen the negative effects of changes on their bottom line.
