Nigeria’s Broadband Ambitions Stifled: Forex Woes Impede Telecom Infrastructure Investments

2 min read

Nigeria’s ambitious goal of achieving a 70% broadband penetration by 2025 faces formidable challenges as the country grapples with an ongoing foreign exchange crisis, hindering further investments in the telecommunications infrastructure.

The dwindling value of the Naira, coupled with a consistent decline in Foreign Direct Investments (FDIs) in the telecom industry, has eroded operators’ capacity to invest in essential equipment. Recent data from the National Bureau of Statistics (NBS) reveals a sharp 70.5% decline in FDIs within the telecom sector in 2023.

The Minister of Communications, Innovation, and Digital Economy announced last year that the country needed an estimated $2 billion investment to lay nationwide fiber optic cables, a crucial component of the broadband target. However, during the same period, the telecom industry managed to attract only $134.75 million in FDIs.

Local operators are grappling with challenges in importing new equipment for network improvement and expansion due to the soaring dollar-to-naira exchange rate.

Impact of Forex Instability: Gbolahan Awonuga, the Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), highlights the significant disruption caused by the rising dollar exchange rate, which surged from about N460 last year to over N1,600 this year.

Mr. Modupe Kadri, the Chief Financial Officer of MTN Nigeria, discussed the company’s infrastructure investment plans, acknowledging the difficulty in justifying new investments to shareholders amid forex challenges. Kadri stated, “The reality is that as a business, you continue to explore your options. However, the ultimate bottom line is the return to the shareholders.” He emphasized the critical need for forex stability to enable effective business planning and mitigate the impact of forex fluctuations on the bottom line. Despite these challenges, Kadri noted significant investments in enhancing 4G and 5G networks and expanding fiber assets.

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