Nigeria’s telecommunications sector attracted $3.9 billion foreign investments (portfolio and direct) between 2015 and 2020.
This is according to the 2021 Telecommunications Industry report released by Agusto & Co.
The report shows that the investments accounted for an average of seven per cent of Nigeria’s total capital importation during the period and that the industry has consistently remained one of the top five ranking economic sectors for foreign investments during the period.
It also expressed hope that the imminent deployment of 5G technology and the Federal Government of Nigeria’s broadband penetration target of 70 per cent by 2025, will support substantial additional foreign investments in the near to medium term.
According to the firm, due to key connectivity support the industry provides, telecommunications was one of the economy’s few bright spots in 2020 (along with sectors such as financial institutions, agriculture and health services).
Agusto & Co further noted that except during the 2016/2017 economic recession, the telecommunications industry’s real growth has consistently exceeded the country’s GDP growth.
But despite the aforementioned positives, the firm said the unstable macroeconomic environment in Nigeria poses a huge threat to successfully harnessing the vast potential of the telecommunications industry.
“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 macro economy, the telecommunications industry has also had its fair share of unfavourable regulatory changes through onerous tax regimes, delayed approvals and heavy regulatory penalties,” the report indicated.
It further showed that regulatory changes, with the initiation of the NIN-SIM verification exercise, drove a considerable decline in the industry’s growth rate to 6.3 per cent in Q1 2021 from 17.7 per cent in Q4 2020.
