The Nigerian telecoms sector attracted a significant $304 million in foreign direct investments (FDIs) in the first half of 2024, more than doubling the $134.75 million recorded for the entire year of 2023.
According to data from the National Bureau of Statistics (NBS), the sector saw a capital inflow of $191.5 million in the first quarter, marking a 769% increase from $22.05 million in Q1 2023.
In the second quarter, the sector received $113.4 million, a 339% rise from $25.81 million in the same period last year, despite a quarter-on-quarter dip.
Industry stakeholders have expressed cautious optimism about the recent surge in FDIs, noting that more government policy interventions are needed to sustain and expand this growth. Telecom consultant Mr. Wale Babalola highlighted that while the growth is positive, the current investment levels are still insufficient to address the sector’s infrastructure deficit. He also stressed the importance of resolving key policy issues, such as tariff regulation, to ensure attractive returns for investors.
Similarly, the Executive Secretary of the Association of Licensed Telecommunications Companies of Nigeria (ALTON), Mr. Gbolahan Awonuga, emphasized that forex instability remains a significant barrier to further investment.
He added that challenges such as Right of Way charges and multiple taxation are still hindering the sector’s growth. Awonuga warned that without addressing these issues, the recent inflows may only be temporary.
The Nigerian Communications Commission (NCC) reported a 47% decline in telecom investments in 2022, with the sector receiving $399.9 million compared to $753 million in 2021. This decline was part of a broader trend following the COVID-19 pandemic, as telecom operators scaled back capital expenditure (CAPEX) amid shrinking investments. The sector’s CAPEX dropped by 30% in 2022, highlighting the need for continuous funding for infrastructure development.
To address the investment gap, the Nigerian government has launched a national fibre project aimed at expanding broadband access through the installation of an additional 90,000km of fibre optic cable.
Minister of Communications, Innovation, and Digital Economy, Dr. Bosun Tijani, revealed that talks are underway with financiers like the World Bank to secure the estimated $2 billion needed for the project. The timeline for the project’s completion is projected to be two to three years.