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‘Capital importation may fall further in telecoms sector’

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Olusola Teniola, president of ATCON

Capital importation of telecommunications companies, which fell by 94 per cent in second quarter, may fall further, if the economy continues its steep fall.

Capital importation is divided into three main investment types: Foreign Direct Investment (FDI), Portfolio Investment, and Other Investments, each comprising various sub-categories.
 
The National Bureau of Statistics (NBS) report for quarter two (Q2) ended June 2018, showed a downward slope in the sector’s capital importation.

  
But experts, who dissected the matter with The Guardian, called for immediate efforts channelled towards revamping the economy for improved productivity.
   
The Chairman, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, said the Nigerian economy is still very much an oil dependent one, and heavily dependent on imports.

He said the telecoms sector is virtually 100 per cent dependent on capital inflow through FDI.

“Unfortunately, on the back of recession and uncertainty about government policies towards the sector, investors are no longer investing as they should.

This is coupled with a forex regime that does not provide any incentive for investors to increase their exposure.”
 
According to him, with the telecom sector being an important part of the growth of the Gross Domestic Product (GDP), data suggests that the growth is weak, and this is reflected in the increased use of Over The Top (OTT) applications used wherever possible by consumers.

This, he said, has tampered the impact of the industry’s revenue contribution to an economy that is struggling to get out of recession, and still heavily dependent on oil export receipts.
  
The fall in capital importation in the telecoms sector, confirmed an earlier report by The Guardian that there had been a 35 per cent drop in investment, which had subsequently hobbled rural telephony expansion in the country.

The development left about 200 communities, which house about 33 million Nigerians out of the telecoms revolution.
  
Like his counterpart at ATCON, the Chairman, Association of Licensed Telecommunications Companies of Nigeria (ALTON), Gbenga Adebayo, agreed that access to Foreign exchange is a contributing factor.

He added that the impact of multiple taxes, and delay in receiving the necessary Right of Way (RoW) and other approvals from authorities compound the challenges for operators.

 


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