The Nigerian telecom sector has experienced a significant resurgence in foreign direct investments, attracting $304 million in the first half of 2024.
This figure more than doubles the $134.75 million recorded for the entire year of 2023, as reported by the National Bureau of Statistics.
This uptick follows several years of declining investments, despite the sector facing substantial infrastructure challenges that necessitate billions in funding to address.
The NBS data revealed that the Nigerian telecom sector attracted $191.5 million in capital inflow during the first quarter of 2024, representing a remarkable 769% increase from the $22.05 million received in Q1 2023.
This substantial growth underscores the renewed interest and investment potential in the sector.
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.
Despite the recent increase in foreign direct investments, stakeholders in the telecom sector remain cautious.
They emphasize that significant governmental action is needed on the policy front to sustain this positive trend and address the losses experienced in previous years.
A telecom consultant, Mr.Wale Babalola noted that the investments recorded in the first six months of the year, while an improvement, remain insufficient to drive the growth the sector urgently needs.
“Yes, it’s good that the sector is doing better than last year and to an extent, the last two years, but that is not enough to bridge the existing infrastructure in the sector.
“Besides, many investors are still watching to see how the government will handle several policy issues still hanging. one of which is tariff regulation. Any country that wants to attract investors should be able to assure returns on investments.
“I don’t think that exists right now in the telecom market with the regulator preventing the telecom operators from reviewing their pricing to adjust for inflation and the rising operating costs,” he said.
The Executive Secretary of the Association of Licensed Telecommunications Companies of Nigeria, Mr Gbolahan Awonuga, said that the issue of forex instability is still a major problem that needs to be addressed to encourage more investments in the telecom sector.
“Whatever we are seeing now may be a flash in the pan 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.
Meanwhile, the CEO of Digital Reality and immediate past President of the Association of Telecommunications Company of Nigeria, Engr. Ikechukwu Nnamani expressed optimism that the government will enhance the telecom industry’s appeal by fostering a conducive and stable environment.
Nnamani stressed that a stable environment hinges on the government’s consistency in policy implementation.
He noted that fluctuations in the country’s forex market have deterred many foreign investors from engaging with the telecom sector, emphasizing the need for greater stability to attract and retain investment.
The Nigerian Communications Commission reported that total investment inflow to the telecom industry in 2022 was $399.9 million, reflecting a 47% decline from the $753 million recorded in 2021.
The previous year’s figure had represented a rebound from $417.4 million in 2020, a year significantly impacted by the COVID-19 pandemic, which caused a sharp decline in global economic activity.
Before the pandemic, capital inflow into the Nigerian telecom industry reached $942.8 million in 2019. Therefore, the $753 million recorded in 2021 represented a decline compared to the pre-COVID-19 levels, highlighting the ongoing challenges the sector faced in recovering from the economic impacts of the pandemic.
