With over $191 million recorded in the first quarter of 2024 alone, Nigeria’s telecom industry has already outperformed the total capital importation received in the entire year of 2023 ($133.75 million), according to data by the Nigerian Bureau of Statistics (NBS). This highlights a possible increase in the confidence of international investors in Nigeria’s economic landscape.

In Q1 2024, the total capital importation into Nigeria stood at US$3.3 billion. This is higher than the US$1.1 billion recorded in Q1 2023 and indicates an increase of 198.06%. The figure is also 86% of total FDI in 2023. 

In comparison to the preceding quarter, capital importation rose by 210.16% from US$1.08 billion in Q4 2023. Foreign Direct Investment (FDI) recorded the least with US$119.18 million (3.53%) of total capital importation in Q1 2024.

The telecom sector: a look at the numbers

In Q1 2023, Nigeria’s telecom sector recorded about $22 million in capital importation, which is $169 million less than in Q1 2024. 

The Q1 2024 figure is 5.67% of the total capital importation of $3.3 billion, which only went into three states: Lagos ($2.78 billion), accounting for 82.42% of the total capital imported. Abuja (FCT) followed with US$593.58 million (17.58%), and Ekiti with US$0.01 million.

The telecom sector, which has long been a cornerstone of the country’s economic development, is proving to be a significant catalyst for growth, according to a statement by Nigeria’s Minister of Communications, Innovation and Digital Economy, Bosun Tijani. 

“The data from the Nigerian Bureau of Statistics continues to show a positive growth trajectory for our sector and economy as a whole,” Bosun wrote on X. 

This upward growth comes at a critical time as Nigeria seeks to diversify its economy and reduce its stubborn reliance on oil revenues.

The minister attributes the impressive growth in capital importation to the hard work and dedication of all stakeholders within the Information and Communications Technology (ICT) sector. 

This growth in FDI is about confidence in the potential of our sector and a reflection of the hard work that all ICT stakeholders have put in to ensure that we reverse the slowdown in our sector so that it remains a catalyst for growth.

Nigeria’s Minister of Communications, Innovation and Digital Economy, Bosun Tijani

The substantial capital importation inflows are indicative of the growing recognition of Nigeria’s potential as a hub for digital innovation and the existence of a growing market. 

The IT sector recorded $171.70 million in Q1 2024, which is $44 million less than Q1 2023 – $216.06 million. Yet, this is a significant increase from Q4 2023, which recorded a paltry $9.08 million. The last three quarters of 2023 recorded only $10.31 million. 

However, almost similar to the telecom sector, it is 5.09% of total capital importation in Q1 2024. 

Looking ahead

As Nigeria enters the second half of 2024, the momentum generated in the first quarter is expected to continue. 

The minister says, “As we start the second half of the year, I’m looking forward to building on this momentum supported by the necessary reforms and policies that President Bola Tinubu is putting in place to stimulate inclusive growth in the digital economy and the broader economy.”

Despite the positive outlook, the telecom sector, like any other, faces its share of challenges. 

Issues such as inadequate infrastructure, regulatory hurdles, and market competition need to be addressed to maintain the sector’s growth trajectory. The government and industry stakeholders must work collaboratively to tackle these challenges and create an ecosystem that supports sustainable development.

One of the significant opportunities lies in expanding telecom services to rural and underserved areas. 

With a large portion of Nigeria’s population residing in rural regions, there is immense potential to drive economic growth through increased connectivity. Expanding network coverage and providing affordable services in these areas can unlock new markets and spur economic activities at the grassroots level.