FDIs: Investment in telecoms declines by $310m

Sector records zero capital importation in Q4

Amid rising need for more investments, Nigeria’s telecommunications sector recorded one of the lowest foreign direct investments last year, New Telegraph has learnt. According to the data released by the National Bureau of Statistics (NBS), investments in the sector declined by 287 per cent last year.

Despite the impact of COVID-19 in 2020, the sector had attracted $417 million as capital importation in the year. In 2021, foreign investments in the sector stood at $107.5 million. A breakdown of the foreign investments attracted by the sector in the 12 months showed that $56.28 million was recorded in the first quarter, while the second quarter’s figure stood at a paltry $0.34 million.

In Q3’21, the sector attracted $50.84 million. However, in Q4, the sector attracted zero investment, according to the NBS data. Checks on the Capital Importation data for the sector since 2013 showed that the Q2’21 figure was the least quarterly investment the sector had recorded in the last eight years. Whiletherehasbeenageneral downtrend in FDI in the country’s economy since the outbreak of the Coronavirus (COVID-19) pandemic in 2020, the telecoms sector had been recording a decline in investments over the years. The decline in the sector, stakeholders said, is not unconnected with several challenges bedevilling the telecoms.

For the first time in five years, the sector had recorded an increase in FDIs in 2019, as it attracted $944 million against $114.43 million recorded in 2018. Until 2019, the sector had witnessed a consistent decline in investments for four years. For instance, the $544.6 million attracted by the sector in 2017 was 42 per cent less than $931.2 million recorded in 2016. The sector also witnessed a marginal decline in 2016 as the figure went down by0.7percentfrom$938.1millionrecordedinthepreceding year. In 2015, capital importation into the sector had decreased by 5.7 per cent from the$994.3millionitgotin2014. This was despite the government’s sustained efforts at wooing foreign investors into telecoms, with broadband infrastructure at the heart of various international campaigns.

Stakeholders had blamed the past years’ downtrend in the sector on several challenges confronting players in the sector, noting that the environment was no longer conducive for more investments. Meanwhile, a recent report by credit rating agency, Augusto & Co., revealed that Nigeria’s telecommunications sector had attracted a total of $3.9 billion between 2015 and 2020.

This is even as it declared that moves by the country to deploy 5G technologywoulddrawmoreforeign investments into the sector. Inits2021telecommunications report, the agency said that the amount attracted by the sector in the last six years represents an average of seven per cent of Nigeria’s total capital importation during the same period. While noting that the industry has consistently remained one of the top five ranking economic sectors for foreign investments during the period, it said this would be sustained as the country move into 5G.

“Agusto & Co believes the imminent deployment of 5G technology and the Federal Government of Nigeria’s targetbroadbandpenetration rate of 70 percent by2025, will support substantial additional foreign investments in the near to medium term,” the company stated in the report. It added that due to key connectivity support the industry provides, telecommunications was one of the economy’sfewbrightspotsin 2020 along with sectors such as financial institutions, agriculture, and health services. “Except during the 2016/2017 economic recession, the telecommunications industry’s real growth hasconsistentlyexceededthe country’s GDP growth.