Nigeria: Foreign Investments in Telecoms Sector Plunge by 87% – NBS

Foreign investments in Nigeria’s telecommunications sector dropped sharply to $14.4 million in the third quarter of 2024, marking an 87% decline from the $113.42 million recorded in the second quarter, according to data from the National Bureau of Statistics (NBS).

This represents a steep $99.02 million reduction quarter-on-quarter and underscores persistent challenges facing the sector, which, despite its potential for growth, has been hampered by infrastructure deficits, rising operational costs, and foreign exchange challenges.

Significant Year-on-Year Decline

The NBS report also highlighted a 77% year-on-year drop compared to the $64.05 million in foreign investments attracted during the same period in 2023. The decline signals mounting pressures on a sector crucial to Nigeria’s economy, contributing significantly to GDP and providing essential services to millions of citizens.

Fluctuating Capital Importation in 2024

• Q1 2024: Foreign investments reached $191.5 million, a 769% increase from $22.05 million in Q1 2023, exceeding the total capital importation for the entire year of 2023 ($134.75 million).
• Q2 2024: Investments fell to $113.42 million, although this still represented a 339% increase compared to $25.81 million in Q2 2023.
• Q3 2024: Investments plummeted to $14.4 million, reflecting a significant downturn amid sectoral challenges.

Challenges Facing the Telecom Sector

Key factors driving the decline include:

• Foreign Exchange Shortages: Difficulty in accessing foreign currency for operations and expansion.
• Policy Uncertainties: Inconsistent regulatory frameworks impacting investor confidence.
• Rising Operating Costs: Escalating inflation and infrastructure deficits continue to pressure profitability.

The sector, despite these challenges, remains pivotal to Nigeria’s economic growth. However, stakeholders warn that without intervention, the sustainability of the industry could be at risk.

Calls for Government Intervention

The Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON) have urged the government to address these issues. Key recommendations include:

• Policy Stability: Creating an enabling environment to attract investments.
• Tariff Adjustments: Increasing service tariffs to offset rising costs.

Gbenga Adebayo, Chairman of ALTON, stressed the need for a tariff review, stating that “current pricing structures are inadequate and unsustainable.” He warned that without adjustments, service providers may struggle to maintain operations, potentially jeopardizing the entire sector.