INVESTMENT into the telecommunications sector has tumbled to a nine-year low, according to the data from the National Bureau of Statistics.
Investments in the form of foreign direct investment and foreign portfolio investments dropped from a previous low of $114.43m in 2018 to $107.46m in 2021. This was according to an analysis of data obtained from the NBS reports on capital importation of the last two quarters of 2013 to 2021.
Capital importation data for 2021 showed that the sector did not attract any investment in the last quarter of the year. Prior to this, the sector had always attracted some form of investment.
In the third and fourth quarter of 2013, telecoms attracted $535.78m; for the four quarters of 2014, it attracted $994.33m; for the year ended 2015, it attracted $938.13m.
For the year ended 2016, the telecoms sector attracted $931.2m; investments were recorded at $544.6m in 2017; investments fell to an all-time low of $114.43m in 2018; recovered to $944.05m in 2019; and fell to $417.47m in 2020.
In 2021, investments into the sector tumbled to $107.46m. According to the statistics body of the nation, data for capital importation is obtained from the Central Bank of Nigeria and it takes into cognisance imported physical capital, such as equipment, and financial capital importation.
The NBS added that capital importation is divided into three main forms of investment: foreign direct investment, portfolio investment, and other investments.
Over this time period, the annual outflow of capital is estimated at $22.1bn. According to the Nigerian Communications Commission in its ‘National Policy for the Promotion of Indigenous Content in the Nigerian Telecommunications Sector’ document, the annual outflow of foreign exchange from the telecoms sector is about $2.6bn.
A source in the Association of Licensed Telecommunication Operators of Nigeria had said the fall in capital inflows into the sector was due to the scarcity of foreign exchange, and inconsistent government policy.
The source was quoted as saying, “The lack of forex has impacted on how we can import equipment into the country. This has reduced investments too. There is also the issue of end-user certificates. This is so because for us to import some equipment into the country, we need the certification of the security agencies, especially the National Security Adviser’s office.”
A recent report by Agusto & Co said the unstable macroeconomic environment in Nigeria was threatening the success of the telecoms industry.
It added, “In the span of five years (2016-2020), Nigeria has gone through two economic recessions while the naira has continuously lost value against the world’s major currencies, negatively impacting purchasing power and the ability to maintain quality network equipment and services.
“In addition to the fragile macroeconomy, the telecommunications industry has also had its fair share of unfavourable regulatory changes through onerous tax regimes, delayed approvals, and heavy regulatory penalties.”
