Telecom Investment in Nigeria Nosedives Amid Economic Pressures
Foreign investments in Nigeria’s telecommunications sector plunged to a mere $14.4m in the third quarter of 2024, an 87 per cent drop from the $113.42m recorded in the preceding quarter, according to the National Bureau of Statistics (NBS).
This sharp decline, amounting to a $99.02m shortfall, marks a stark downturn for a sector considered vital to Nigeria’s economic growth but plagued by mounting operational challenges.
Concerning Trends
The latest capital importation report from the NBS, released on Friday, paints a troubling picture. Compared to the $64.05m attracted in the same quarter of 2023, Q3 2024’s figure represents a 77 per cent year-on-year drop, signaling waning investor confidence.
The sector’s trajectory in 2024 began on a promising note, with capital importation reaching $191.5m in the first quarter—a staggering 769 per cent increase from Q1 2023. However, this optimism waned as the second quarter brought $113.42m, followed by the precipitous decline in Q3.
Despite its enormous potential and contribution to GDP, the sector is reeling from infrastructure deficits, soaring inflation, and foreign exchange constraints.
Calls for Urgent Intervention
Telecom operators and industry bodies are sounding the alarm. The Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON) have called for decisive government action. They warn that without intervention, the sector’s sustainability could be at risk.
Gbenga Adebayo, Chairman of ALTON, has described the current pricing structures as unsustainable, given the rising costs of operation. “Service providers cannot continue to operate under these conditions, especially when the cost of delivering services is far higher than what is being charged,” he said in November.
The associations have advocated for tariff adjustments to offset inflationary pressures and ensure the industry’s viability. Adebayo cautioned that continued inaction could lead to widespread service disruptions and undermine the sector’s role in Nigeria’s economic framework.
Outlook
With capital importation dropping to its lowest levels in recent history, the challenges facing Nigeria’s telecom sector underscore the urgent need for reforms. Addressing the foreign exchange crisis, creating investor-friendly policies, and prioritizing infrastructure development are critical steps to restore confidence and drive growth in this pivotal industry.
As operators and policymakers navigate these challenges, the sector’s future remains uncertain, but its significance to Nigeria’s economic stability and technological advancement cannot be overstated.
