Between 2015 and 2020, Nigeria’s telecommunications sector attracted $3.9 billion in foreign investments (portfolio and direct). The 2021 Telecommunications Industry report released by Agusto & Co, which revealed this, observed that this accounted for an average of seven percent of Nigeria’s total capital importation during the same period.
Agusto & Co. informed that the industry has consistently remained one of the top five ranking economic sectors for foreign investments during the period, according to a report in THE GUARDIAN newspaper.
It said it believes the imminent deployment of 5G technology and the Federal Government of Nigeria’s broadband penetration target of 70 percent by 2025, will support substantial additional foreign investments in the near to medium term.
According to the firm, due to the key connectivity support the industry provides, telecommunications was one of the economy’s few bright spots in 2020 (along with sectors such as financial institutions, agriculture, and health services).
Except during the 2016/2017 economic recession, the telecommunications industry’s real growth has consistently exceeded the country’s GDP growth.
“In the span of five years (2016-2020), Nigeria has gone through two economic recessions while the naira has continuously lost value against the world’s major currencies, negatively impacting purchasing power and the ability to maintain quality network equipment and services.”
“In addition to the fragile macroeconomy, the telecommunications industry has also had its fair share of unfavorable regulatory changes through onerous tax regimes, delayed approvals, and heavy regulatory penalties,” it noted.
According to it, regulatory changes, with the initiation of the NIN-SIM verification exercise, drove a considerable decline in the industry’s growth rate to 6.3 percent in Q1 2021 from 17.7 percent in Q4 2020.
“However, due to the sustained uptake in mobile Internet services and increasing diversification of value-added services by telcos, we believe revenue will grow, albeit by a lower rate of five percent in 2021 (2020: 14 percent).”
It noted that in Nigeria, the proportion of mobile Internet users to mobile phone subscriptions increased from 69.1 percent in January 2020 to 75.4 percent as of December 2020. Agusto & Co expects the country’s telecommunication consumption pattern to be sustained in the near term given lingering concerns around the emergence of COVID-19 variants.