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Telecoms record 725% increase in foreign capital investment in 2019

The National Bureau of Statistics (NBS) has disclosed that foreign capital investment in the telecommunications industry rose by 725% in 2019.

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Internet World Stats, Nigerian Communications Commission remittance, Network operators in Nigeria, Telecoms companies in Nigeria, MTN Nigeria, Airtel Africa, Globacom data, 9mobile court case, Top 10 states in Nigeria with the highest Internet subscribers , Telecommunications: The bright spot in a fragile economy, Telcos add 5.64 million voice and data subscribers in Q3 2019 - NBS , Alleged N200bn Debt: EFCC, DSS to probe telcos, Network glitch, as poor internet speed continues to impede banking services, Telecoms record 725% increase in foreign capital investment, as GDP contribution hits N6 trillion, Coronavirus: Instant messaging platforms, Telcos raking in funds from the work-from-home policy, Telecoms: Bright spot amidst the gloom, Nigerians lambast MTN, Airtel for offering free SMS, ignoring request for free data, airtime

The National Bureau of Statistics (NBS) has disclosed that foreign capital investment in the telecommunications industry rose by 725% in 2019 from the $114.43 million recorded in 2018; which was the lowest annual investment in the sector in more than five years.

NBS report disclosed that in 2019, when the telecoms industry experienced a significant 725% increase, about $829.62 million was invested into the industry, increasing the foreign capital to $944.05 million.

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The telecoms industry in 2018 attracted $87.25 million in Q1; $11.12 million in Q2; $11.42 million in Q3, and $4.64 million in Q4. But in 2019, the industry enjoyed a boost in the first quarter of 2019, as foreign investors invested $32.35 million in Q1; $4.5 million in Q2; N886.03 million in Q3, and $21.17 million in Q4.

The decline in the 2018 foreign capital investment made the telecoms industry fall behind banking, financing, services, production, agriculture, trading and oil and gas sectors, all of which recorded more foreign capital.

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[READ MORE: Telecoms operators fined N2.9 billion over infractions)

However, telecoms industry moved to fifth position after an impressive inflow of foreign capital investment in 2019. This positioned the telecoms industry behind the banking sector which had $7,658.49 million; financing which attracted $6,281.21 million; services with $5,335.30 million, and production, which attracted $1,297.32 million, in the same year.

Why the investment increased? The 725% increase in foreign capital investments in 2019 was driven by the procurement of equipment. The purchased equipment were not readily available in the country. Note that public listing on the Nigerian Stock Exchange (NSE) had also occurred in 2019, with MTN Nigeria and Airtel listing their shares.

Also, during the periods when mergers and acquisition occur in the sector, there is often huge capital inflow into the country.

Worth of telecoms to Nigeria’s GDP: MTN, Airtel, Globacom and other telcos contribute over N6 trillion to Nigeria’s Gross Domestic Product (GDP) each quarter annually despite poor power supply, multiple taxation and insecurity that have eaten into their revenues.

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The number of active mobile subscribers climbed to over 184 million in Nigeria. The likes of MTN and Airtel have their highest African subscribers in Nigeria, boasting of over 55 million and 35 million respectively. The domestic network rival, Globacom, accounts for over 29.2 million subscribers.

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Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: fakoyejo.olalekan@nairametrics.com.

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Business News

Naira set for recovery as ABCON issues guideline to members on forex sales resumption

It is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times.

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COVID-19 could save naira from depreciating further, Many odds against the naira, Naira forwards and parallel market crash puts pressure on official exchange rate, Naira appreciates to N386.94 to $1 at investor and exporters window. , Naira set for recovery as ABCON issues guideline to members for forex sales resumption

The Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON) have finalized arrangements for the resumption of forex sales to Bureau De Change operators (BDCs).

Following this finalisation, the more than 5,000 BDCs spread across the country are now expected to help curb the downward spiral of the naira, thereby checking the activities of foreign currency speculators.

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Recall that the naira has recently been facing major challenges, no thanks to the COVID-19 pandemic. Unfortunately, currency speculators took advantage of the situation by making spurious demand for dollars with the hopes of making good returns from the rising gaps between official and parallel market rates.

Meanwhile, Governor Godwin Emefiele of the CBN and ABCON President, Aminu Gwadabe, have repeatedly spoken against the illicit business of currency speculators and the dangers they pose to the economy and naira’s stability. They have also warned the speculators about the looming danger for their trade if they refuse to retrace their steps; they Could incur losses estimated at over N10 billion in the next few months, especially now that the CBN is enabling BDCs’ full return to the forex market after nearly six weeks of inactivity.

(READ MORE: Devaluation’s drum beats louder)

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Governor Emefiele had also appealed to industrialists who patronize the parallel market to stop such practices in the interest of the economy and for the sustainability of their businesses. Failure to do this might result in them incurring the same huge losses as currency speculators.

Naira hits N570 to $1 at forwards market, pressure on the naira climbs up, Naira set for recovery as ABCON issues guideline to members for forex sales resumption   

Both Emefiele and Gwadabe have extensive experience in the market, enough to predict what follows after every major crisis. During the 2016 currency crisis, the market got a major relief after the BDCs began getting dollar allocations from the CBN. That same scenario will soon play out as the BDCs countdown to resumption.

In the meantime, it is obvious that the CBN has come to realize that BDC operators can be the difference between naira recovery and depreciation during volatile times. This is especially true now that the local currency has come under intense pressure, driven mainly by speculative demand for the dollar.

Note that the BDCs are essentially operators who help to get dollars across to the end-users, no matter where they are. The BDC operators have, for decades, proven their relevance in stabilizing the naira. While commenting on the recent moves by the apex bank to resume dollar sales to the BDCs, Gwadabe said:

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The CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels as well as global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.

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The naira has been exchanging at N461 to a dollar at the parallel market but will be upbeat once dollar sales to BDCs commence. The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators. It happened in 2016 and it will happen again in 2020. The return of the BDCs will immediately boost naira’s recovery and put the enemies of the economy to shame. We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable.”

(READ MORE: Naira depreciates at I&E window, forex turnover up by over 117%)

Naira crashes further at the parallel market due to dollar scarcity, lowest since 2017, Naira drops to N454, foreign investors and importers struggle for dollars, Naira set for recovery as ABCON issues guideline to members for forex sales resumption

Moving on, the CBN said it has taken steps to address the risks facing the naira. Asides other positive developments in the global economy (including oil price recovery thanks to OPEC+ output cuts and IMF’s $3.4 billion emergency funding to Nigeria), the CBN believes its measures will enable a rapid recovery for the local currency. Emefiele explained:

CBN has also officially reviewed the naira exchange rate to N380 to a dollar. Aside devaluing the naira, the apex bank also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378, all aimed at attracting Foreign Portfolio Investment and strengthening the local currency. The BDC operators are expected to buy dollar from the CBN at N378 per dollar.”

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For Gwadabe, the naira rate review and the CBN’s assurance to foreign investors on the easy repatriation of their funds from Nigeria, are positive indicators for naira’s continued recovery.

(READ MORE: Why the naira is falling)

He also noted that ABCON is reopening guidelines to all its members nationwide included on-boarding of the queuing crowd ticketing management application, known as ABCON 360°QSM portal, by all members. So far, over 80 percent of members registered nationwide.

He also disclosed that they updated all regulatory obligations during the lockdown, such as fumigation of members’ offices/markets, and distribution of second phase of face mask nationwide to our members. They also made provision for wash hand basins and sanitizers at distributions centres, even as members will explore school fees, mortgage, and subscription payments as part of their allowable scope post-COVID-19.

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Business News

Brent crude surges pass $36, as major oil producers stick to their pledge on oil output cut

Note that crude oil prices are still down by 45% since the beginning of 2020, a situation that had forced oil-dependent Nigeria to revise/readjust her 2020 national budget, as Nairametrics reported. 

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Brent Crude

Brent crude gained on Tuesday’s London trading session, upon clear signs that major oil producers are sticking to commitments to reduce crude supply, even as more automobiles get back on the road following the lifting of COVID-19 lockdowns around the world.

Brent crude futures gained about 0.7%, to trade at $36.25, 6.50 am Nigerian time adding to a 1.1% gain on Monday in thin holiday trading. Commenting on this, Will Sungchil Yun, a commodities analyst at VI Investment Corp., said the following to Bloomberg news from Seoul:

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“The market is starting to witness the effect of output cuts along with a reduction in inventories, while the global economy is on its path to recovery. Still, there’s caution with the absence of a cure for the pandemic as well as the possibility of a second wave of infections.” 

The energy market’s bullish run was boosted by comments from Russia which reported that its oil output had nearly plunged to its target of 8.5 million barrels per day for May and June. Daniel Hynes, a senior commodity strategist at Australia and New Zealand Banking Group, told CNBC that “there’s definitely a feeling those cuts have come through as well as you could expect. “With economies restarting, the focus definitely is on the improvement in the fundamentals, rather than what seemed like a complete collapse in demand only a few weeks ago.”

Meanwhile, Russia’s energy minister, Alexander Novak, explained that a surge in fuel demand should help reduce the present global surplus of around 7-12 million barrels per day by June or July. 

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Early next month, OPEC+ members are expected to meet to discuss whether to maintain their supply cuts which are intended at shoring prices. Note that crude oil prices are still down by 45% since the beginning of 2020, a situation that had forced oil-dependent Nigeria to revise/readjust her 2020 national budget, as Nairametrics reported.

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Economy & Politics

Africa day 2020: Buhari urges economic groups, CSOs and private sectors to drive peace for economic development

President Muhammadu Buhari has urged economic groups, CSOs and private sectors in Africa to strengthen collaborative efforts of the AU.

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COVID-19: President imposes lockdown on three states, Africa day 2020: Buhari urges economic groups, CSOs and private sectors to drive peace for economic development

As Nigeria continues to battle the rising insecurity fuelled by the COVID-19 pandemic, President Muhammadu Buhari has urged regional economic groups, civil society organisations and the private sector in Africa to strengthen collaborative efforts among member-countries of the African Union.

He added that stakeholders must take full ownership of the theme of this year’s celebration to  ‘silence the guns’, and allow for economic development in the continent.

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”Peace, security, unity, and harmony are prerequisites for development in Africa,” Buhari said, stressing the need for all economic groups to work together to achieve the peace required for economic growth.

This was part of the President’s message to African leaders to mark the celebration of the ”Africa Day 2020,” by the African Union Commission and the World Health Organization (WHO).

(READ MORE:Post Covid19: Global Leaders at UBA Africa Day Conversations Seek Economic Recovery)

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He noted that the selected theme for the year 2020, ”Silencing the Guns in the context of the COVID-19” provides a ray of hope in the seemingly bleak situation caused by the pandemic across the globe.

He stressed the need for African leaders to ensure that every effort is made to ensure the success of silencing the guns in the continent, emphasizing the need to sensitize Africans about the inseparable connection between peace and development.

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About the Africa Day

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Africa Day is observed annually on 25 May, in commemoration of the founding of the Organization of African Unity (OAU), which was founded on 25 May 1963 in Addis Ababa, Ethiopia and is now known as the African Union.

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