The Nigerian telecommunications sector recorded an 87% decline in foreign investments for the third quarter of 2024, marking a significant downtrend from the previous two quarters of the year.
This is according to the latest capital importation data released by the National Bureau of Statistics (NBS).
The NBS data shows that the sector attracted only $14.4 million in capital importation in Q3, a sharp decline from the $113.42 investments recorded in Q2.
Year-on-year, the Q3 2024 capital importation for the telecom sector also represents a 77% decline when compared with the $64.05 million recorded in the same period last year.
Still a better year for Nigerian telecoms
Despite the decline recorded in the third quarter, the telecom sector has had it better this year in terms of foreign investments compared with the previous years.
- The NBS data showed that the sector attracted a $191.5 million capital inflow in the first quarter of this year, marking a significant 769% increase compared with $22.05 million received in Q1 2023.
- The investments recorded in the first quarter alone surpassed the total investments recorded by the sector in the full year 2023, which stood at $134.75 million.
- This came after years of consistent decline in investments even with a gaping infrastructure gap requiring billions of investments to bridge.
- In Q2 2024, FDIs in the sector stood at $113.4 million. While this is lower than the inflow recorded in the preceding quarter, it represents a whopping 339% increase over the $25.81 capital inflow recorded in the same period last year.
Factors militating against investments
According to the Executive Secretary of the Association of Licensed Telecommunications Companies of Nigeria (ALTON), Mr Gbolahan Awonuga, the issue of forex instability is still a major problem that needs to be addressed to encourage more investments in the telecom sector.
“We may not see a steady growth in investments until the industry challenges are addressed. Issues of Right of Way charges are still there, likewise multiple taxation and above all the forex instability that continues to affect the operators’ ability to import equipment,” he said.
- The CEO of Digital Reality and immediate past President of the Association of Telecommunications Company of Nigeria (ATCON) Engr. Ikechukwu Nnamani said he expected the government would make the industry attractive by creating a very conducive and stable environment.
- According to him, a stable environment would mean that the government is consistent with its policies. Nnamani also observed that instability in the country’s forex market has been a major discouragement for many foreign investors who are interested in the country’s telecoms.
Records of investment decline
The telecom industry report for 2022 published last year by the Nigerian Communications Commission (NCC) shows that total investment inflow to the industry in that year stood at $399.9 billion.
- This represents a 47% decline when compared with the $753 million recorded in 2021.
- While the $753 million recorded in 2021 came as an increase compared with $417.4 million recorded in the preceding year, the growth came as a result of the effect of the COVID-19 pandemic in 2020, which saw economic activities reduced drastically across the globe.
- Before that, capital inflow into the telecom industry stood at $942.8 million in 2019, which made the 2021 inflow a decline, when compared with the pre-COVID-19 year.
- Due to the declining investment, the operators have been slowing down their capital expenditure (CAPEX) even though maintaining telecommunications requires consistent investment in infrastructure for network expansion and optimization.
- This much was confirmed in the 2022 report, which showed that the industry’s CAPEX declined by 30% in the year.
- According to the report, the operators spent a total of N785 billion as CAPEX in 2022 compared with N1.1 trillion in 2021.
