Nigeria’s ambitious goal of achieving a 70% broadband penetration by 2025 is facing formidable challenges, primarily due to the ongoing foreign exchange crisis hampering investments in telecom infrastructure.
The devaluation of the Naira and a steep decline in Foreign Direct Investments (FDIs) into the telecom sector have significantly curtailed operators’ capacity to invest in essential equipment. Recent data from the National Bureau of Statistics (NBS) reveals a staggering 70.5% drop in FDIs in the telecom industry in 2023.
Last year, the Minister of Communications, Innovation, and Digital Economy estimated that Nigeria would require around $2 billion in investment to deploy fiber optic cables nationwide to meet the broadband target. However, the industry only managed to attract a fraction of that amount, with just $134.75 million in FDIs during the same period.
Local operators are grappling with importing new equipment for network upgrades and expansion as the soaring dollar-to-naira exchange rate poses significant challenges.
Gbolahan Awonuga, Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), highlighted the disruptive impact of the sharp rise in the dollar-to-naira exchange rate, which has surged from approximately N460 last year to over N1,600 this year.
Modupe Kadri, Chief Financial Officer of MTN Nigeria, echoed these sentiments, emphasizing the difficulty in justifying new investments to shareholders amidst the forex crisis. While MTN Nigeria has made substantial investments in enhancing its 4G and 5G networks, Kadri stressed the importance of forex stability for effective business planning and mitigating the adverse effects of forex fluctuations on the bottom line.
In light of these challenges, stakeholders are calling for urgent measures to stabilize the forex market, enabling businesses to make informed investment decisions and sustain growth in the telecom sector.
