High Operating Cost, Forex, Insecurity Threaten $70bn ICT Industry Growth

The Nigerian Information and Communication Technology (ICT) industry, valued at approximately $70 billion, is facing significant challenges that threaten its continued growth and stability, industry operators have said.

Operators at the Telecoms Industry 2.0 Forum, organised by Financial Derivatives Company, on Tuesday, in Lagos, cited high operating costs, foreign exchange (forex) shortages, devaluation of the naira, pricing of telecom services and growing insecurity in the country as some of the obstacles that could stifle the industry’s potential.

The CEO, MTN Nigeria, Karl Toriola, said the telecoms sector in Nigeria is now in an intensive care unit (ICU) gasping for breath, and he called on the   government to intervene.

“The telecom sector is facing a lot of challenges, of which if urgent action is not taken, it will dry up. The truth is that investors are not going to come to invest in the sector if the fundamental issues are not addressed. To rescue the sector from collapsing, there is a need to increase prices of telecom services,” Toriola stated.

On his part, the managing director and chief executive officer of Airtel Nigeria, Carl Cruz, listed the USSD debt, devaluation of naira and insecurity as major issues impeding the growth of the sector.

Cruz said, “The devaluation of the Naira moving from N420/dollar to N760/dollar in a month’s time, to about N1500/dollar today, had indeed affected the telecom industry which relies heavily on importation of infrastructure to grow the sector. This has led to dwindled investment in the sector.

“Another issue is insecurity. Until today, unfortunately, telecom infrastructure is not yet considered Critical National Infrastructure (CNI). Operators have to contend with issues like theft, loss of life and injury. For instance, Airtel Nigeria can have over 1,000 fibre-cut cases within a month. On the high cost of operation, HIS, for instance, relies on power to sustain the base stations. The price of diesel is very high. Worse still, operators are paying over 50 kinds of charges, levies and taxes. These issues have led to limited investment in the sector.”

The chairman, Association of Licensed Telecom Operators of Nigeria (ALTON), Engr. Gbenga Adebayo, said the sector had become a victim of its own success, noting that the government sees the sector as a source of income.

“Today, many people are complaining about the quality of service. One thing we need to realise is that the quality of service is tied to government policies. There are 54 agencies of government that are always on our neck for one levy or the other. Unfortunately, telecom operators are now seen as a major source of government revenue. With this trend, the sustainability of the sector cannot be guaranteed,” Adebayo said.

The minister of Industry, Trade, and Investment, Doris Uzoka Anite, said for the sector to be sustained, there is a need for Nigeria to leverage its youthful population to achieve high double-digit growth.

Anite, who was represented by John Uwajumogu, emphasised the role of telecoms as a linchpin for digital transformation and called for robust public-private partnerships to drive progress.

According to her, the government is committed to creating an enabling environment through initiatives like the National Broadband Plan and investments in digital infrastructure and human capital.

She averred, however, that true success lies in robust public-private partnerships.

“As the world becomes increasingly interconnected and decentralised, the lines between public and private sectors blur. Collaboration is essential to drive progress. I am eager to explore opportunities for such partnerships,” she stated.

Managing director of Ministry of Finance Incorporated (MoFI), Dr. Armstrong Takang, emphasised the government’s role in creating an enabling environment through digital infrastructure projects and public finance management reforms.

Takang, however, expressed concern at the decelerating investment inflow and job creation within the sector, and called for a comprehensive assessment of the industry’s trajectory.

“It’s imperative to assess whether this trajectory is acceptable. We must determine if we are adequately preparing for the Fourth Industrial Revolution, where telecoms will be a cornerstone. Artificial intelligence and other emerging technologies hold immense promise, but we need to ensure this sector is primed to capitalise on them. While technology may disrupt jobs, history shows that it also creates new opportunities. The world’s largest companies are testaments to this,” he added.

CEO of Chapel Hill Denham, Bolaji Balogun, emphasised the necessity for deliberate interventions to realise the sector’s full potential and promote national development.

He said, “Nigeria’s telecom industry has a lot of potential. Prioritising domestication and localisation is essential if we are to reach this potential.”

Balogun demanded a change in paradigm from one that relies heavily on imports to one that encourages the domestic manufacture of telecom equipment.

“Local manufacturers must be supported by government policies and incentives. Significant investments in network expansion are essential. As broadband is crucial for promoting digital inclusion and economic growth, it should be prioritised,” he added.

He also advocated public-private partnerships to accelerate infrastructure deployment, even as he stressed the value of nurturing talent.

“The development of the industry depends on our ability to invest in our local talent. We must encourage STEM education and better industry-academia cooperation,” Balogun added.