Edun: Govt targets telecom sector to boost economy

The Federal Government yesterday underscored the importance of the telecommunication sector towards boosting the Nigerian economy as the country looks towards leveraging on the opportunities offered by emerging technologies.

Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said the liberalisation of the telecom sector 25 years ago has ushered in a new era of private capital investment and competition.

Edun spoke at a forum tagged: Telecom Investment Forum 2.0 with focus on: The Next Investment Frontier in Nigeria organised by Financial Derivatives Company (FDC) in Lagos.

Edun was represented by Managing Director of Ministry of Finance Incorporated (MoFI), Dr. Armstrong Takang.

He said the phenomenal progress in the industry has been undeniable given the sector’s soaring contribution to Gross Domestic Products (GDP) and its profound impact on daily lives.

According to him, from mobile banking to online education, countless Nigerians have benefited from the opportunities brought by the liberalization of the telecoms sector.

He noted that telecoms would be the cornerstone for the Fourth Industrial Revolution and Nigeria must be adequately prepared to tap opportunities from the new horizon.

“Artificial Intelligence and other emerging technologies hold immense promise, but we need to ensure this sector is primed to capitalize on them. While technology may disrupt jobs, history shows that it also creates new opportunities. The world’s largest companies are testaments to this,” Edun said.

He however expressed concern over the decelerating investment inflow and job creation within the sector, calling for a comprehensive assessment of the industry’s trajectory.

He pointed out that a supportive policy framework could make the telecom industry even more attractive for investments.

“With the right regulations and enabling policies, the telecommunications sector has the potential to become a cornerstone of Nigeria’s economic future,” Edun said.

Group Managing Director, Nigerian Exchange Group (NGX Group), Temi Popoola underscored the significant impact of the telecommunications industry on capital market efficiency, transparency, and financial inclusion.

“The telecommunications sector is not just about connectivity; it is a vital cog in the machinery that drives market transparency and informed decision-making,” Popoola said.

He pointed out that two of the top five most capitalised companies on NGX are telecommunications giants, illustrating the deep-seated connection between the industry and the financial market.

Popoola emphasised that the influence of telecoms extends well beyond their primary services.

“Their contributions extend beyond connectivity; they facilitate the dissemination of real-time market data, which is crucial for enhancing market transparency,” Popoola said.

He pointed out the synergistic relationship between the telecoms industry and the capital market, which fosters a robust ecosystem benefiting suppliers, partners, and investors.

Popoola stressed the importance of fostering an environment that encourages innovation, which will drive further investment in infrastructure and talent development within the sector.

He called for continued collaboration between the telecommunications industry and the financial markets to unlock new opportunities that would enhance both sectors.

Mobile network operators (MNOs) and other stakeholders in the telecom sector meanwhile expressed deep concern over the drought in investment flow into the telecom sector.

The stakeholders included Chief Executive Officer, MTN Nigeria, Karl Toriola; his counterpart in Airtel Nigeria, Carl Cruz; Chief Executive Officer, Chapel Hill Denham, Bolaji Balogun and Chairman, Association of Licensed Telecom Companies of Nigeria (ALTON), Gbenga Adebayo.

They cautioned that prolonged investment drought will hurt telecom infrastructure expansion, job creation, contribution to national GDP and customer experience on the network.

Toriola who spoke virtually said the telecom sector is now in an intensive care unit (ICU) gasping for breath, adding that there was an urgent need to rescue the sector from total collapse.

The MTN CEO who differed with the position of his Airtel CEO counterpart, Cruz, who had expressed optimism that investment will continue to flow into the sector, said pricing increase has become an imperative; an absolute necessity in view of the crushing increase in cost of operation, due to inflation, cost of buying diesel to power base transceiver stations (BTS) and other costs.

Cruz said conversation around boosting investment in the sector in the country is something that should happen, adding that the industry also faces a myriad of challenges including insecurity of infrastructure.

According to him, Airtel suffers over 1000 optic fibre cable cuts every month while the industry battles with some 50 different taxes and levies by all the three tiers of government and non-state actors but expressed optimism that investment will continue to flow into the sector.

Adebayo said the actions of public officers are disincentive to investment, adding that tariff should be taken off the ambit of regulation because it is purely a commercial decision.

He frowned at the situation where the final cost of a finished product does not reflect its cost element.

He said a major part of the promise the federal government made during the liberalisation of the telecom sector was the supply of electricity from the national grid for at least 18 hours daily, lamenting that the promise has been kept consistently in breach.

Balogun said the sector has seen a significant investment over the years running to $70 billion. He said aside from the MNOs, data centres have sprung up just as tower companies (TowerCos). Others are cable companies (CableCos), internet service providers (ISPs) and infrastructure companies (infraCos).

He however identified areas for further investment to include complete or near universal coverage, service quality, small but growing number of smartphones, broadband quality and penetration, industry’s carbon footprint remains far too large and talent pool development which he said is limited largely in big operators.

Balogun emphasised the need for strategic interventions to harness the sector’s full potential and drive national development.

“Nigeria has immense potential in the telecommunications sector. To realise this potential, we must prioritise domestication and localisation,” Balogun said.

He called for a shift from an import-dependent model to one that fosters local production of telecommunications equipment.

“Government policies and incentives must support local manufacturers. Massive investments in network expansion are crucial. Broadband accessibility should be a priority as it is essential for driving digital inclusion and economic growth,” Balogun said.

He advocated for public-private partnerships to accelerate infrastructure deployment just as he emphasized the importance of talent development.

“Investing in our local talent is key to the industry’s growth. We need to promote STEM education and foster stronger collaboration between academia and industry.”

He highlighted the need for a conducive regulatory environment noting that clear and stable policies are essential for attracting investment and fostering innovation.

He added that efficient dispute resolution mechanisms and a supportive government role are crucial for creating an enabling business environment.

“Leveraging the telecommunications sector for financial inclusion was another key recommendation. “The sector can play a pivotal role in expanding access to financial services through mobile banking and other digital financial services,” Balogun said.

He urged the federal government to place tariffs on imported goods to protect local assembly or manufacture; co-invest in import through MOFI or NSIA; encourage financial transparency by mandating operators to publish financial statement; create differentiated tax rates or tax rebate for listed companies; and set a requirement for any concession-based company to be listed on the NGX.