Can Nigeria ramp up investment in telecom sector?

Foreign investments in Nigeria's telecommunications sector have plummeted, according to data released by the National Bureau of Statistics. The sector saw a significant drop from $113.42 million in the second quarter to just $14.4 million in the third quarter of this year. This decline has raised concerns about the factors contributing to this downward trend and what can be done to attract more investments in the sector. Tony Emoekpere, President of the Association of Telecommunications Companies of Nigeria, shed light on the challenges and potential solutions during a recent interview. Emoekpere highlighted the financial struggles faced by major operators in the industry as a primary reason for the decrease in foreign direct investments (FDIs). Reports have indicated that these operators are experiencing revenue losses, which can deter foreign investors from pouring capital into the sector. Despite some growth in Naira value, the performance in dollar terms remains lackluster compared to previous years, signaling a potential continued decline in FDIs. One of the key issues impacting investment attractiveness is the low tariffs in Nigeria, which rank among the lowest in Africa. The stagnant tariff rates over the past decade further diminish the earning power and appeal for foreign investors. Emoekpere emphasized the importance of addressing these tariff structures to make the market more appealing for both local and foreign players. For existing players in the Nigerian telecom sector, the lack of incentives for further investments poses challenges for future planning and infrastructure development. With declining FDIs, operators may focus on maintaining existing networks rather than expanding and upgrading infrastructure. This stagnation can hinder the sector's growth and exacerbate the infrastructure deficit in the country. Discussions with the government regarding tariff adjustments have been ongoing, with industry players advocating for tariff increases to stimulate investment. While conversations have progressed towards tariff simplification, the crucial point of tariff hikes to enhance earning potential and attract investments remains a sticking point. Emoekpere expressed optimism that as quality of service improves and regulatory KPIs are met, there may be room for tariff adjustments in the near future. Looking ahead, the telecom sector in Nigeria faces a critical period of balancing financial viability, regulatory alignment, and infrastructure expansion. The industry's ability to address these challenges and create a conducive environment for investments will determine its growth trajectory in the coming years.