Nigerian telecom sector rebounds with $191.5m FDI inflows in Q1’24

Joy Agwunobi

Nigeria’s telecommunications sector, once a hub for foreign investment, has faced a prolonged period of diminishing capital inflows, with the sector’s appeal diminished by the Naira devaluation that reduced operators’ financial capacity. This decline in investment has raised concerns among stakeholders, given the importance of the sector to Nigeria’s economic development and technological advancement.

However, the first quarter of this year marked a turnaround within the sector. According to recently released capital importation data from the National Bureau of Statistics (NBS), the telecom sector attracted $191.5 million in Foreign Direct Investments (FDIs), indicating a renewed confidence among foreign investors.The data indicated that the Q1 2024 figure surpasses the total FDI of $134.75 million recorded in 2023. Compared to Q1 2023, the sector saw a 769 per cent  year-on-year increase in capital importation, rising from $22.05 million to $191.5 million.

The transformation within the telecommunications sector was not just limited to a comparison with the previous year. Comparing the Q1 2024 figure of $191.5 million to the $22.84 million recorded in the preceding quarter, Q4 2023, the sector demonstrated a 738 percent growth rate.

This remarkable rebound in FDIs has been attributed to a series of strategic measures implemented by the Nigerian government, which aimed to enhance the sector’s appeal to foreign investors.

Cognizant of the critical role that the telecommunications sector plays in Nigeria’s economic development, the government undertook several proactive measures to create a more investor-friendly environment.

One of the most significant steps was the regulatory reform spearheaded by the Nigerian Communications Commission (NCC).

Committed to market transparency and fostering a level playing field for all stakeholders, the NCC initiated a comprehensive regulatory review process in May, holding a public inquiry to gather feedback on proposed revisions and updates to existing regulatory guidelines. The objective was to align the guidelines with international best practices and accommodate the rapidly changing technological landscape.

According to Aminu Maida, the executive vice chairman of the NCC, the review aimed to provide a clear and transparent mechanism for resolving conflicts within the telecom sector, promoting timely resolution, and ensuring fair treatment for all stakeholders. He emphasised that the instruments considered during the inquiry were vital to ensuring the communications sector meets the demands of the digital age.

In addition to the regulatory reforms, the National Broadband Plan (NBP) 2020-2025, spearheaded by the NCC, has been instrumental in attracting foreign investments to the telecommunications sector. Recognising the importance of broadband infrastructure as the backbone of the industry, the NCC has prioritised expanding broadband coverage as a core component of its strategic objectives.

To achieve these objectives, the NCC ntroduced several initiatives under the NBP, targeting ambitious goals of 70 percent broadband penetration and 90 percent population coverage by 2025.

Complementing the NBP, the federal government approved the establishment of a special purpose vehicle to facilitate the rollout of 90,000 km of fibre optic cable.

Bosun Tijani, the minister of communications and digital economy, explained that this project aims to strengthen Nigeria’s national backbone for internet access and optimise the utilisation of existing submarine cables.

Acknowledging the rise in foreign investments in the telecom sector, the minister said the investment is a positive indicator of the sector’s growth and the overall economy.

Tijani attributed the surge to the renewed confidence that the sector’s potential has instilled in investors. He praised the collective efforts of all stakeholders in the information and communications technology (ICT) sector for their hard work in reversing the sector’s previous slowdown, highlighting the sector’s critical role as a catalyst for growth in Nigeria’s economy.

“As we start the second half of the year, I’m looking forward to building on this momentum supported by the necessary reforms and policies that President Bola Ahmed Tinubu is putting in place to stimulate inclusive growth in the digital economy and the broader economy,” the minister added.