December 24, 2024/CSL Research
According to the capital importation data from the Nigeria Bureau of Statistics (NBS), the telecoms sector attracted investments worth US$14.74 million in Q3 2024, a sharp 76.99% y/y decline compared to US$64.05 million in Q3 2023. On a quarter-on-quarter basis, foreign capital inflow into the sector plunged by 87.00%, down from US$113.42 million in Q2 2024.The NBS data also revealed that the telecoms sector accounted for 1.18% of the total capital inflow into the economy in Q3. Meanwhile, Nigeria’s total capital importation stood at US$1.25 billion in Q3 2024, reflecting a significant 91.35% year-on-year increase from US$654.65 million in Q3 2023. However, this figure marks a steep 51.90% decline from the US$2.60 billion recorded in Q2 2024.
The telecommunications sector continues to face economic challenges, as evidenced by declining industry metrics. The sector’s GDP growth rate dropped to 6.78% in real terms in Q3 2024, down from 7.74% in the same period of the previous year. Data from the Nigerian Communications Commission (NCC) highlights a significant decline in active mobile subscriptions, which fell by 29.07% to 157.60 million in October 2024, compared to 226.19 million in October 2023. Additionally, teledensity—a measure of active telephone connections per 1,000 inhabitants—decreased to 72.70% in October 2024, down from 102.49% in the previous year.
Telecom operators in Nigeria face mounting operational challenges, primarily due to the devaluation and scarcity of foreign exchange, which have significantly strained profitability. These issues, coupled with high energy costs and inflationary pressures have made attracting investors to the sector increasingly difficult. Despite these hurdles, the long-term outlook for Nigeria’s telecommunications sector remains promising.
Investors are positioning themselves to leverage the sector’s growth potential and its capacity to deliver substantial returns. This optimism is driven by the growing adoption of advanced technologies, a largely untapped internet market, an underserved rural population, and favourable demographics. As Africa’s largest mobile market, Nigeria’s telecom industry offers compelling growth opportunities, solidifying its position as a prime destination for investment.
