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Forex crisis, declining investment threaten Nigeria’s 70% broadband target

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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

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Toyota By CFAO showcases latest Land Cruiser Prado, others at P’Harcourt Open Day 

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Toyota By CFAO showcases latest Land Cruiser Prado, others at P’Harcourt Open Day 

Toyota By CFAO, the authorized distributor of Toyota vehicles in Nigeria, has commenced a three-day special display of the latest new Toyota models from the company at an Open Day organised in Port Harcourt, Rivers State, for residents of the city and its surrounding areas.

The Toyota By CFAO Open Day holds from Tuesday, November 26 to  Thursday, November 28, 2024, according to a statement by the company.

The event running from 9am to 5pm each day is taking place at the auto company’s showroom located at 184B, Trans-Amadi Industrial Layout, Port Harcourt.

It discloses that the exciting event will feature the highly anticipated 2024 Toyota Land Cruiser Prado, one of Toyota’s flagship models, alongside a range of other exceptional vehicles tailored for the Nigerian market.

This, it notes, is an exclusive opportunity for attendees to explore the latest in automotive excellence, discover new vehicle options, and benefit from Toyota By CFAO’s End of Year Bonanza.

General Manager of CFAO Mobility Port Harcourt, Julius Fasetire, encourages all residents to “come witness history in motion as we proudly unveil the All-New 2024 Toyota Land Cruiser Prado.

“Be among the first to explore this remarkable masterpiece and discover our full range of Toyota vehicles. Don’t miss out on the chance to experience automotive excellence and enjoy a free diagnostic check for your Toyota vehicle!”

The 2024 Toyota Land Cruiser Prado has already generated excitement across the country, following its recent unveilings in Lagos and Abuja.

The product is quickly becoming one of the most sought-after sports utility vehicles in Nigeria, appealing to both corporate and individual buyers.

With over 11.3 million units sold globally in more than 170 countries, the Land Cruiser Prado is renowned for its rugged off-road capabilities and comfort for everyday driving.

The firm says this year’s model comes in two distinctive editions – the Limited Edition (First Edition) and the Adventure Edition – both equipped with a 2.4L turbocharged gasoline engine and an 8-speed automatic transmission, ensuring superior performance both on and off the road.

Toyota By CFAO also says it ensures that genuine parts and a comprehensive 3-year/100,000 kilometre warranty are available for all customers.

In addition to the Land Cruiser Prado, the event will showcase a variety of other popular Toyota models including the Belta, Rumion, RAV4, Camry, and Hiace.

The Open Day, it stresses, promises to be a must-attend event for anyone interested in exploring the world of Toyota vehicles, from luxury to practicality, and experiencing firsthand the future of automotive technology.

The company says more details about the rich offering of Toyota in the Nigeria market can be obtained from https://www.toyotabycfao.ng/.

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Nigeria’s foreign reserves in marginal increase, now $40.88bn 

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Nigeria’s foreign reserves in marginal increase, now $40.88bn

 

Nigeria’s foreign reserves rose to $40.88 billion as of November 21, the Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has said.

Cardoso disclosed this on Tuesday at a press conference after the Monetary Policy Committee’s 298th meeting in Abuja.

He said the external reserves grew from $40.06 billion at the end of October to $40.88 billion in November.

The amount represents an increase of $82 million or 2.05 per cent in 21 days.

“The external reserves rose marginally to 40.88 billion as of 21 November 2024, from 40.06 billion at the end of October 2024, available to finance 17 months of imports,” he said.

However, from the apex bank’s website, the increase in Nigeria’s foreign reserves showed $40.27 billion on November 22.

Cardoso also said, “The process of getting us where we are in terms of reserves has been a long one”.

“It is a clear indication that the policies we have put in place are certainly yielding fruits,” he added.

“However, and it’s very important to make a distinction here and to reiterate the fact that reserves are there for a multiplicity of different purposes, not least of which is to create buffers in the event of unanticipated shocks.

“So they are not there to simply whittle away. They are there to be used to more or less defend yourself where that becomes necessary

“And when we talk about shocks that are not anticipated, I think we can see how the global economies are.”

Cardoso also said the bank would continue to intensify efforts to stabilise the currency and prices.

The CBN governor said, “The currency has been stable compared to what it was in June”.

But he said for the value of the country’s currency to be stable, there must be increased exports and diversification of the economy.

Cardoso said diaspora remittance had increased due to policies put in place.

He commended those in the diaspora for helping the country accomplish over $600 million in remittances.

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Naira rises to N1,755/$ in parallel market

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Naira rises to N1,755/$ in parallel market

The Naira yesterday appreciated to N1,755 per dollar in the parallel market from N1,770 per dollar on Monday.

Similarly, the Naira appreciated to N1,659.44 per dollar in the Nigerian Autonomous Foreign Exchange Market, NAFEM.

Data from FMDQ showed that the indicative exchange rate for NAFEM fell to N1,659.44 per dollar from N1,675.62 per dollar on Monday, indicating N16.18 appreciation for the naira. The volume of dollars traded (turnover) increased by 219.5 percent to $425.98 million from $108.79 million traded on Monday.

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Consequently, the margin between the parallel market and NAFEM rate narrowed to N95.56 per dollar from N117.38 per dollar on Monday.

 

Naira rises to N1,755/$ in parallel market

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