The Nigerian telecommunications sector experienced a dramatic shift in foreign investment trends in 2024, with early-year gains giving way to sharp declines, raising questions about the sector’s long-term sustainability.
According to the latest capital importation report by the National Bureau of Statistics (NBS), the telecom sector recorded an alarming 87 per cent decline in foreign investments in Q3 2024, attracting just $14.4 million. This marks a steep drop from the $113.42 million recorded in Q2 2024 and an even more significant 77 per cent year-on-year decline from $64.05 million in Q3 2023.
However, the first quarter of 2024 painted a brighter picture, with the sector recording $191.5 million in capital inflows. This was a remarkable 769 per cent increase compared to Q1 2023’s $22.05 million and exceeded the total investments for the entirety of 2023, which stood at $134.75 million.
The surge in Q1 was seen as a potential turning point after years of dwindling foreign investments in the telecom sector. Investment inflows in 2022 were just $399.9 million—a 47 percent drop from the $753 million recorded in 2021. Despite the brief resurgence in early 2024, the sector’s performance in Q3 suggests that structural issues may still be deterring investors.
The telecom sector’s infrastructure deficit, requiring billions of dollars in investments, remains unaddressed. Operators have slowed down capital expenditures (CAPEX) due to reduced foreign inflows. In 2022, CAPEX fell by 30 percent, with telecom operators spending N785 billion compared to N1.1 trillion in 2021.
While Q1 and Q2 2024 hinted at recovery, the stark decline in Q3 raises concerns about the sustainability of investment growth in the sector. Analysts suggest that addressing policy uncertainty, strengthening investor confidence, and resolving infrastructure gaps will be critical to reversing the long-term decline in foreign direct investment.
As the sector navigates these challenges, its ability to maintain network expansion and optimisation may determine its trajectory in the years ahead.
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