Business
Forex crisis, declining investment threaten Nigeria’s 70% broadband target
Forex crisis, declining investment threaten Nigeria’s 70% broadband target
Nigeria’s efforts to achieve a 70% broadband penetration by 2025 are facing significant challenges due to the ongoing foreign exchange crisis, which is affecting further investments in telecom infrastructure.
The capacity of operators to invest in equipment has been diminished by the declining value of the Naira, coupled with a consistent decrease in Foreign Direct Investments (FDIs) into the telecom industry.
According to recent data released by the National Bureau of Statistics (NBS), FDIs in the telecom sector experienced a sharp decline of 70.5% in 2023.
The Minister of Communications, Innovation, and Digital Economy had last year declared that the country would need an estimated $2 billion investment to lay fiber optic cables nationwide to meet the broadband target. However, in the same period, the telecom industry managed to attract only $134.75 million in FDIs.
Local operators are also struggling to import new equipment for network improvement and expansion, as the dollar-to-naira exchange rate soars.
Impact of forex instability
According to Mr. Gbolahan Awonuga, the Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), the significant rise of the dollar from about N460 last year to over N1,600 this year has disrupted the operators’ plans for importing equipment.
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Furthermore, the Chief Financial Officer of MTN Nigeria, Mr. Modupe Kadri, discussed the company’s infrastructure investment plans for this year, noting the difficulty in justifying new investments to shareholders due to the forex issue. He stated,
- “The reality is that as a business, you continue to explore your options. We have a strict capital allocation framework that allows us to determine where we allocate our CapEx. However, the ultimate bottom line is the return to the shareholders.”
- “Now, if there is no investment case due to the terrible macroeconomic conditions we face, it becomes challenging to justify the necessary investments at the governance level. Nonetheless, we have made significant investments in enhancing our 4G and 5G networks, and our fiber assets are also increasing,” he added.
Kadri also lamented the current instability in the country’s forex market, emphasizing the critical need for forex stability to enable businesses to plan effectively and mitigate the impact of forex fluctuations on their bottom line.
Declining FDI
In a conversation with Nairametrics regarding the dwindling investments in the telecom industry, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engineer Gbenga Adebayo, expressed significant concern. He pointed out that the telecom sector in Nigeria requires increased investment to thrive.
- “As indicated by last year’s National Bureau of Statistics (NBS) report, which highlighted a decline in Foreign Direct Investment (FDI), we are apprehensive that this trend may persist. The dynamics of the exchange rate are influencing many aspects of the industry,” he explained.
Adebayo elaborated on the investment downturn, noting,
- “The current investment figures are a clear indicator of the challenges facing the industry. This is adversely affecting the expansion of network infrastructure, and we fear that FDIs may continue to decline, further impacting the performance of operators.”
He also mentioned that, apart from the reduction in investment, the limited access to foreign exchange is impeding the operators’ capability to expand and implement more broadband infrastructure.
70% broadband penetration doubtful
With diminishing investments and the current forex issues confronting telecom operators and businesses across the board, it appears improbable that Nigeria will meet its broadband penetration target by next year.
According to the latest figures from the Nigerian Communications Commission (NCC), broadband penetration in Nigeria was 43.71% at the end of 2023.
This indicates that the country must boost penetration by nearly 27% from now until next year to achieve the 70% target outlined in the National Broadband Plan (NBP 2020-2025), a goal that necessitates swift infrastructure deployment nationwide.
Given the declining Foreign Direct Investments (FDIs) and the forex challenges operators are facing, achieving this target within the remaining 21 months of the Broadband Plan’s timeline seems unattainable.
When the Plan was initiated in March 2020, penetration was at 39.85%, as per NCC data. This means that over the past four years, the country’s broadband access has only improved by 3.86%.
Why it is important
A World Bank report has demonstrated that every 10% increase in broadband penetration can enhance a country’s GDP by at least 4.6%.
This significant finding underscores the importance of swiftly expanding broadband services in Nigeria, aiming to tackle a variety of socio-economic challenges, such as economic growth, broadening the tax base, and enhancing digital literacy and educational standards.
- This rationale motivated the Nigerian government to formulate a second National Broadband Plan (NBP 2020-2025) after successfully reaching a 30% penetration milestone with the first plan (NBP 2013-2018).
- The NBP 2020-2025 sets ambitious objectives, including achieving internet speeds of 15Mbps in rural areas and 25Mbps in urban areas by 2025.
- Additionally, it aims for the interconnection of 90% of all Local Government Areas by fiber and seeks to attain 70% population penetration. Another goal is ensuring that 100% of tertiary institutions are within 5km of a fiber Point of Access.
Moreover, the plan targets reducing the average cost of data to N390/Gb or less and establishing at least one local assembly or manufacturing plant for smart devices within Nigeria, further promoting the nation’s technological advancement and self-sufficiency.
Forex crisis, declining investment threaten Nigeria’s 70% broadband target
Aviation
Disaster averted as bird strike hits Abuja-Lagos Air Peace flight
Disaster averted as bird strike hits Abuja-Lagos Air Peace flight
An Abuja-Lagos flight was on Thursday aborted following a bird strike on the airplane belonging to Air Peace, forcing the authorities to ground the aircraft.
The bird strike experienced in the early hours reportedly prompted a ramp return to ensure the safety of passengers onboard.
All the passengers quickly disembarked and were calmed down before they were moved into another plane for the one-hour journey.
A bird strike is a collision between a bird and an aircraft, or other airborne animal, while the aircraft is in flight, taking off, or landing. And it can be a significant threat to aircraft safety.
Air Peace in a statement by its Head of Corporate Communications, Ejike Ndiulo, said the bird strike occurred at 6:30am, and all passengers disembarked normally.
The statement read, “We wish to inform our esteemed passengers that our Abuja- Lagos 06:30 flight experienced a bird strike before take-off, prompting a ramp return as a safety measure. All passengers disembarked normally.
“We have deployed a replacement aircraft for the affected flight in order to minimize disruptions, thus ensuring that passengers continue their journeys promptly.
“We appeal for the understanding of our valued passengers impacted by this development, as well as those on other flights that may experience delays.
“At Air Peace, we are committed to providing safe, comfortable, and reliable air travel for all our passengers.”
Business
NNPC achieves 1.8mbpd crude oil production
NNPC achieves 1.8mbpd crude oil production
The Nigerian National Petroleum Company Limited (NNPC Ltd) and its partners have revved up crude oil and gas production to 1.8million barrels per day (mbpd) and 7.4standard cubic feet per day (scfd).
The company which announced this at a press briefing said the feat was achieved in compliance with the mandate of President Bola Ahmed Tinubu.
Speaking on the development, the Group Chief Executive Officer, Mr. Mele Kyari, congratulated the Production War Room Team that anchored the production recovery process.
“The team has done a great job in driving this project of not just production recovery but also escalating production to expected levels that are in the short and long terms acceptable to our shareholders based on the mandates that we
have from the President, the Honourable Minister, and the Board,” Kyari explained.
Giving details of the efforts of the Production War Room, the Chief War Room Coordinator and Senior Business Adviser to the Group Chief Executive Officer, Mr. Lawal Musa, disclosed that the feat was achieved through the collaborative efforts of Joint Venture and Production Sharing Contract partners, the Office of the National Security Adviser, as well as government and private security agencies.
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He said the interventions that led to the recovery of production cut across every segment of the production chain with security agencies closely monitoring the pipelines.
He stressed that when the Production War Room team was inaugurated on 25th June 2024, production was at 1.430mbpd, but the team swung into action, culminating into sustaining the production recovery to 1.7mbpd in August and hitting the current 1.808mbpd in November.
“We are confident that with this same momentum and with the active collaboration of all stakeholders, especially on the security front, we can see the possibility of getting to 2mbpd by the end of the year,” he stated.
Also speaking on the development, Chairman of the NNPC Ltd Board of Directors, Chief Pius Akinyelure, who also congratulated the team, said he was happy to be part of the production recovery process, adding: “today, I will leave this place with my heart full of joy”.
He charged the Company’s Management to come up with a cashflow projection based on the new production figures to facilitate planning, stressing that he was looking forward to further production increase to 3mbpd.
On his part, the Honourable Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri, expressed satisfaction with the performance of the team and pledged the Federal Government’s support for the company to do more.
NNPC achieves 1.8mbpd crude oil production
Business
FG gets fresh $134m loan from AfDB for agric projects
FG gets fresh $134m loan from AfDB for agric projects
The Federal Government has secured a loan facility of $134million from the African Development Bank (AfDB) to help farmers boost seeds and grain production in the country.
This is contained in a statement issued by Anthonia Eremah, Chief Information Officer, Ministry of Agriculture and Food Security, on Thursday, in Abuja.
Minister of Agriculture and Food Security, Sen. Abubakar Kyari, made his know at the unveiling of the 2024/2025 National Dry Season Farming in Calabar, Cross River State capital.
Kyari explained that with the re-introduction of the national dry season farming to boost year-round agricultural production, the loan would be handy and guarantee national food security in the country.
The minister said the initiative is under the National Agricultural Growth Support Scheme-Agro Pocket (NAGS-AP) Project.
He said the federal government had declared an emergency on food production to enable all Nigerians to get easy access to quality and nutritional food at affordable rates.
Kyari also said government wants to use the agricultural sector for national economic revival through increase in production of some staple food crops such as wheat, rice, maize, sorghum, soybean, and cassava during both dry and wet season farming.
He added that 107,429 wheat farmers were supported under phase 1 of the 2023/2024 dry season, and 43,997 rice farmers under the second phase of the 2023/2024 dry season.
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The minister said recently, government supported 192,095 rice, maize, sorghum/millet, soyabean and cassava farmers under the 2024 wet season across the 37 States including the FCT.
He said Cross River was leading 16 other states in wheat production, adding that over 3000 wheat farmers have been listed to benefit from the support to grow the grain.
Kyari noted the Cross River government’s commitment to wheat production.
He said it informed why the federal government is partnering with the state to kick start the maiden wheat production and enlisting them among states commencing the current 2024/2025 dry season farming.
“The 2024/2025 dry season farming, the project is targeted to support 250,000 wheat farmers across the wheat-producing states with subsidised agricultural inputs.
“This is to cultivate about 250,000 hectares with an expected output of about 750,000 metric tonnes of wheat to be added to the food reserve to reduce dependence on importation of the product and also increase domestic consumption.
“Equally the programme will provide support to 150,000 rice farmers under the second phase to cover all the 37 states, including FCT, with an expected output of about 450,000 metric tonnes,” he said.
FG gets fresh $134m loan from AfDB for agric projects
(NAN)
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