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Foreign capital flows into telecoms sector tumble by 70%

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Foreign capital flows into the Nigerian telecommunications sector shrank by 70.5 per cent to $107.46m in nine months last year, compared to the same period of 2020.

Data obtained from the National Bureau of Statistics’ reports on capital importation showed that the foreign capital inflows stood at $364.3m from January to September 2020.

According to the NBS, capital importation data is obtained from the Central Bank of Nigeria and is inclusive of imported physical capital, such as equipment, and financial capital importation.

It added that capital importation is divided into three main investment categories: foreign direct investment, portfolio investment, and other investments.

Capital importation into the telecoms sector fell from $157.48m in first quarter of 2020 to $105.64m in Q2 and $101.18m in Q3.

In Q1 2021, foreign capital flows into the sector plunged from $56.28m in Q1 2021 to $0.34m in Q2 but rose to $50.84m in Q3.

The Minister of Communications and Digital Economy, Isa Pantami, recently described the Information Communication Technology sector as an important catalyst for the diversification and growth of the economy.

Going by recent developments in the sector, capital inflow is expected to increase as investments are directed towards increasing broadband penetration in the country.

MTN recently committed to invest N640bn (about $1.5bn) over the next three years to expand broadband access in Nigeria.

The Nigerian Communications Commission auctioned in December two of its available lots of 100 MHz TDD slots of 3.5 GHz band for the deployment of fifth-generation network for $547m.

According to the Global System for Mobile Communications Association, $500m and 6000 base stations will be needed for 5G rollout in 10 cities in Nigeria, driving the inflow of capital into the sector.

A source in the Association of Licensed Telecommunication Operators of Nigeria blamed the fall in capital inflows on the scarcity of foreign exchange, and government policy.

The source said, “Lack of forex has impacted on how we can import equipment into the country. This has reduced investments too. There is also the issue of end-user certificate. Because for us to import some equipment into the country, we need the certification of the security agencies, especially the National Security Adviser’s office.

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