Despite a broad-based rally in total capital inflow into Nigeria, the country’s telecommunications sector may be facing a severe funding drought.

Recent data released by the National Bureau of Statistics (NBS) revealed that long-term foreign direct investment (FDI) into the telecom space has taken a sharp dip, raising intense concerns over the industry’s ability to sustain capital-intensive upgrades like 4G expansion and nationwide 5G deployment.

NBS informed that capital importation into the telecom sector dropped to $7.24 million in Q1 of the year, which was 0.07 per cent of the $10.37 billion total inflows recorded during the period.

The analysis of the data showed a 91.04 per cent year-on-year decline from $80.78 million in Q, 2025 and a 92.99 per cent drop from $103.36 million recorded in the preceding quarter.

Recall that the telecom sector attracted $496.27 million in capital importation in 2025, $456.59 million in 2024, $134.75 million in 2023, and $456.83 million in 2022. The flow of funds showed a fluctuating pattern of investments.

Largely, from the NBS, foreign inflows into Nigeria have heavily skewed toward short-term, high-yield financial tools rather than long-term productive infrastructure.

While overall capital importation into the country spiked significantly to $10.37 billion, driven predominantly by a staggering 95.1 per cent concentration in portfolio investments, FDI remained remarkably weak.

Total FDI into the country stood at a meagre $135.08 million, representing just 1.3 per cent of the total aggregate inflows. Within this shrinking space, the once-lucrative telecommunications sector has borne a significant brunt of the decline, plunging by up to 58 per cent year-on-year in recent cyclical reporting periods.

Industry stakeholders pointed out that this contraction stands in stark contrast to earlier years when telecommunications was a primary engine of Nigeria’s non-oil economic growth. The rapid drop-off in foreign capital highlighted a deeper, systemic anxiety among international investors regarding the macroeconomic realities of operating within the Nigerian digital space.

Industry experts and independent analysts attributed the drop in the telecom sector investment to a combination of rigid structural barriers, regulatory friction, and deteriorating operational economics.

Foremost among these challenges is the persistent issue of multiple taxation across different tiers of government. Telecom operators currently navigate dozens of distinct levies imposed by federal, state, and local government authorities. This fiscal fragmentation is compounded by astronomical right-of-way (RoW) charges enforced by various state governments, which significantly inflate the cost of laying fibre-optic cables and building base transceiver stations.

The Nigerian Communications Commission (NCC) had earlier disclosed that about 15 states in Nigeria have waived or eliminated RoW fees for telecom operators to boost broadband deployment.
Further, rising insecurity and the systemic vandalism of vital telecom infrastructure have driven up maintenance costs, draining local operators’ capital reserves and making the sector less attractive to foreign risk capital.

In April, data from the NCC revealed that sophisticated criminal networks looted 656 critical power assets in 2025. A total of 152 generators and 504 batteries were stolen within the year. Last year, there were also cases of cable and diesel thefts. This is even as fibre cuts entered another level. There were 1, 344 cases of diesel thefts, 49 cases of vandalism and sabotage

The investment strike is also tightly linked to a prolonged margin squeeze. For years, telecom operators under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) have voiced concerns that the fixed-tariff regime was completely unsustainable against the backdrop of soaring inflation and massive foreign exchange volatility.

Because the sector relies heavily on imported technology and hardware, the devaluation of the Naira dramatically multiplied operating expenses while consumer pricing remained capped.