Nigerian telecoms investment plummets 87% amid industry challenges

The Nigerian telecommunications sector witnessed a staggering 87 per cent decline in foreign investments during the third quarter of 2024, signaling a sharp downturn in capital inflow.

According to the National Bureau of Statistics (NBS), the sector attracted just $14.4 million in the third quarter, a significant drop from the $113.42 million recorded in the second quarter.

Year-on-year, this figure represents a 77 per cent decline compared to $64.05 million in the third quarter of 2023.

Despite the current downturn, the sector had shown promise earlier in the year. In Q1 2024, telecoms attracted $191.5 million in foreign investments, a 769 per cent increase compared to $22.05 million in the first quarter of 2023.

This remarkable growth in the first quarter surpassed the total foreign investments recorded for the entire year of 2023, which stood at $134.75 million.

However, the drop in the third quarter highlights the sector’s ongoing struggles.

The first quarter’s performance marked a rebound from years of declining investment levels, driven by an urgent need to address the sector’s substantial infrastructure deficit. Yet, the third quarter’s underperformance threatens to stall this progress.

Experts attribute the decline in foreign investment to several systemic challenges.

The Executive Secretary of the Association of Licensed Telecommunications Companies of Nigeria (ALTON), Mr. Gbolahan Awonuga, identified forex instability, high Right of Way (RoW) charges, and multiple taxation as primary barriers to investment.

“We may not see steady growth in investments until these challenges are effectively addressed,” Awonuga emphasized.

Adding to this, Engr. Ikechukwu Nnamani, CEO of Digital Reality and former ATCON President, called for a more stable and conducive business environment.

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“The inconsistency in government policies and instability in the forex market are major disincentives for foreign investors who would otherwise find the Nigerian telecoms industry attractive,” Nnamani explained.

The Nigerian Communications Commission (NCC) has documented a history of declining investments in the sector.

In 2022, total capital inflow amounted to $399.9 million—a 47 per cent drop from $753 million in 2021.

This decline came despite a modest recovery from the COVID-19-induced downturn in 2020, which significantly impacted global economic activities.

Before the pandemic, investment levels stood at $942.8 million in 2019, highlighting the long-term downward trajectory. Reduced investment has directly impacted the sector’s capital expenditures (CAPEX).

In 2022, telecom operators reported a 30 per cent drop in CAPEX, spending N785 billion compared to N1.1 trillion in 2021.

Industry stakeholders have urged the government to implement reforms to make the sector more attractive to investors.

The telecom sector remains critical to Nigeria’s economy, contributing significantly to GDP growth and employment. However, without swift policy intervention, experts warn that the sector may struggle to maintain its pivotal role in driving the nation’s digital transformation.