Experts say the Nigerian telecoms and ICT industry will keep bleeding as a result of lack of funding to sustain the highly capital intensive business of information and communication technology.
Although robust telecoms network is important for economic growth, especially at a time the government is looking to diversify from oil, Nigeria’s ICT sector is still struggling to get adequate investment needed to build the sector and impact the economy positively.
Giving an address at the Telecom Executives and Regulator forum organised by the Association of Telecommunications Companies of Nigeria (ATCON) on Thursday, Umar Garba Danbatta, executive vice chairman (EVC), Nigerian Communications Commission (NCC), said, “$68 billion investment in Nigeria is huge, but it is by no means adequate for one of the fastest growing telecommunications markets in the world.
“The capital intensity of the industry, the need for service providers to increase their infrastructure deployment to satisfy the ever increasing demand, creates room for double the size of this investment in the next ten years. We have about 40 million Nigerians yet to be reached with basic infrastructure and services and that is why the NCC put up a roadmap for broadband which has created new frontiers for investment.”
According to Danbatta, the quest for data and social media as well as increasing value-added services will create new frontiers for investment.
Speaking during a panel session to discuss ‘Funding telecoms and ICT investment in Nigeria: How would the deficit in the Nigerian telecom infrastructure be financed?’ Aminu Buhari, managing director/CEO of HD Technologies Limited, said foreign investors were hesitant to invest heavily in the sector due to lack of a clear roadmap and instability.
“All the intervention from the CBN including the universal service provision fund (USPF) is not more than $2billion meanwhile the telecoms sector needs more than $140billion. Original equipment manufacturers, telecom operators and the regulator all need to collaborate as an industry and come up with a comprehensive, transparent framework, so that investors can see exactly what they are putting their money into,” he said.
Yusuf Kazaure, CEO, Galaxy Backbone, who chaired the panel session, said it had become apparent that the sector was in dire need of both local and foreign investment. Therefore, there is need for public private partnership to ensure appropriate investments in the industry, he said.
Olivier Angot, CFO, IHS Tower Nigeria Limited, said the issue of foreign exchange instability and time of loan maturity was also a hindrance to getting funding.
“The market needs to show some stability and assurance to attract both local and foreign investment; the complexity of the market and risks involved will also hinder their interest. So it is not as if the money is not out there, it is just that there is a lot to do on the macro side to ensure that we get this funding into the sector,” he said.
Soji Maurice-Diya, chief commercial officer, ATC Nigeria said, “It is completely unsustainable to expect 22 percent interest on long time investments. So, we need to be able to go as an industry to the Central Bank of Nigeria (CBN) or PenCom. US investors are willing to wait 10-15years on a single digit return on their investment; we can’t see why some of our local pension funds can’t do the same. I don’t think there is any pension fund playing in the telecom space.”
In response to question, Mahammed Babajika, director policy competitors and economic analysis development, NCC said funding cannot be provided by government, however, the Federal Government will create an enabling environment and collaborate with necessary agencies and businesses to ensure that the sector is properly invested in.
“We are negotiating subsidy for licensed infrastructure companies to the tune of N65 billion and we are vigorously pursuing the approval of these subsidies.”
