By Chinenye Anuforo [email protected]
Foreign direct investments into Nigeria’s telecommunications sector recorded a decline of $322.8 million, compared to what obtained in 2022.
The latest data from the National Bureau of Statistics (NBS) showed that the sector attracted a total of $134.75 million in FDIs in 2023. This amount marks a significant drop from the $456.83 million recorded in 2022. It also represents a 70.5 per cent slump.
FDI is an ownership stake in a foreign company or project made by an investor, company, or government from another country.
An analysis of quarterly data further showed the downward trend in capital inflow. In the first quarter of 2023, the foreign investment in the telecom sector amounted to $22.05 million, down from $57.79 million in the first quarter of 2022.
The fourth quarter of 2023 also saw a decrease, with telecoms receiving $22.84 million in capital importation, compared to $168.27 million in the same period of 2022.
The downturn in foreign investment in Nigeria’s telecommunications sector coincided with the ongoing implementation of the Nigeria National Broadband Plan (NBP 2020-2025), which aims for a 70% broadband penetration by 2025.
To achieve this ambitious goal, the country is seeking increased foreign investments. Industry experts estimated that achieving the NBP’s objectives would require at least $3.4 billion in investments in fiber infrastructure.
Despite the critical need for these investments, there has been a general decline in FDI across Nigeria’s economy.
Specifically, the telecoms sector has experienced a consistent decrease in investments over the past six years.
Stakeholders in the industry point to a combination of factors behind this declining trend. Chief among these is the issue of multiple taxation, which complicates the financial planning for businesses in the sector.
Additionally, the instability of Nigeria’s foreign exchange market poses a significant concern for foreign investors. The fluctuating exchange rate raises uncertainties regarding the potential repatriation of returns, making Nigeria a less attractive destination for investment.
Growth in foreign investment in the sector also has been hampered by insecurity challenges.
However, the total foreign investment into Nigeria dropped by 80 per cent to $3.9 billion in 2023 from the $5.3 billion that was invested in the country in 2022, analysis of a report of Capital Importation into Nigeria has shown.
The report NBS showed that Nigeria attracted $1.1billion in Q1 2023, $1.03 billion in Q2, $654.6 million in Q3 and $1,08 billion in Q4.
In 2022, $1.57 billion was imported into the country in Q1, which reduced to $1.53 billion in Q2. It further went down to $1.15 billion and $1.06 billion in Q3 and Q4 respectively.