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Telecoms attracts $101.2m FDIs in Q3

INTEREST

Foreign investors’ interest in Nigeria’s telecoms market declined in the last one year, despite need for more investments

 

The telecommunications sector attracted a total of $101.2 million in Foreign Direct Investments (FDIs) in the third quarter of this year, New Telegraph has learnt.

 

This, however, represents an 88.5 per cent decrease in investments when compared with the $886 million recorded in the same period in 2019, according to the capital importation data released by the National Bureau of Statistics (NBS).

 

The sector also recorded less foreign interests in the third quarter of this year compared with the first and second quarters.

 

The NBS data revealed that the sector attracted a total of $157.4 million in the first quarter, while the foreign investors pumped in $105.6 million in the second quarter. The investment in telecoms represented 6.92 per cent of the total capital importation into the country for the period under review. According to the NBS data, the total value of capital importation into the economy stood at $1.46 billion in the third quarter of 2020, representing a 13 per cent increase when compared with $1.29 billion recorded in the second quarter.

 

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. This renewed interest had been sustained in the first half of this year despite the COVID-19. Until last year, the sector had witnessed a consistent decline in investments over the last four years. For instance, the $544.6 million attracted by the sector in 2017 was 42 per cent less than the $931.2 million recorded in 2016. The sector also witnessed a marginal decline in 2016 as the figure went down by 0.7 per cent from $938.1 million recorded in the preceding year.

 

In 2015, capital importation into the sector had decreased by 5.7 per cent from $994.3 million it got in 2014.

 

This was in spite of 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.

 

Specifically, the immediate past President of the Association of Telecommunications Company of Nigeria (ATCON), Mr. Olusola Teniola, had expressed worry that the lull in foreign direct invest ment was also affecting operators’ efforts at deepening broadband penetration in the country.

 

Meanwhile, the current President of ATCON and the Chief Executive Officer of Medallion Communications, Mr. Ikechukwu Nnamani, has said that Nigeria may not attract the needed investments in telecommunications infrastructure except the country’s foreign exchange regime is stable.

 

This is even as he declared that the current instability in the country’s forex market had been a major discouragement for many foreign investors who are interested in the country’s telecoms.

 

Speaking during a recent virtual forum, Nnamani said a lot  of foreign investors, who have seen the huge opportunities in Nigeria, were willing to invest but feeling concerned about the instability of the exchange rate.

“It has been estimated that the country would require $100 billion investments in the next 10 years to bridge the existing infrastructure gap in the telecom sector, but where is the money going to come from?

 

“The exchange rate situation in Nigeria is of serious concern for foreign investors, they are not sure of what the situation would be by the time they want to repatriate their returns.

 

Their returns on investments could be halved due to the fluctuations in the exchange rate. If we want to see the investors, we have to first address the foreign exchange situation,” he said.

 

Nnamani said another factor hindering foreign investment in the sector is the high cost of doing business in Nigeria. According to him, the investors would always look for markets where there is the ease of doing business and where their returns on investments are guaranteed.

 

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