Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Engr. Gbenga Adebayo has said that the challenge of multiple taxation in the telecom industry is one of the major factors discouraging further investments in the industry.
This is coming on the heels of the Capital Importation data released by the National Bureau of Statistics (NBS) which shows a plunge in Foreign Direct Investments in Nigeria’s telecommunications sector in the second quarter of 2023, attracting only $25.81 million as against $153.50 million recorded in the same period last year, representing a 494 per cent decline year on year.
The NBS data also revealed that the telecom sector accounted for 2.51 per cent of the total capital inflow into the economy in the second quarter of 2023, which stood at $1.03 billion.
Reacting to the report, Adebayo said telecom operators are currently paying a total of 39 taxes and levies, and governments at different levels in the country keep coming up with different charges.
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He said the undefined tax regime in the industry has made planning and projections very difficult for players in the industry, adding that potential investors are also on the lookout for these factors and are still watching.
Expressing a similar view, the immediate past President of the Association of Telecommunications Company of Nigeria (ATCON) another umbrella body of players in the telecom industry, Engr. Ikechukwu 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.
“It has been estimated that the country would require $100 billion in investments in the next 10 years to bridge the existing infrastructure gap in the telecom sector, but where is the money going to come from? The exchange rate situation in Nigeria is of serious concern for foreign investors, they are not sure of what the situation will be by the time they want to repatriate their returns. Their returns on investments could be halved due to the fluctuations in the exchange rate. If we want to see the investors, we have to first address the foreign exchange situation,” he said.
While there has been a general downtrend in FDI in the country’s economy since the outbreak of the coronavirus (COVID-19) pandemic in 2020, the telecoms sector has been recording a consistent decline in investments over the last 5 years.