Debt within Nigeria’s information and communication technology (ICT) sector, including telecommunications companies, stood at N1.69tn as of September 2024.
This figure highlights ongoing financial challenges as telecom operators advocate for higher tariffs on data and voice services to offset rising operational costs.
According to the Central Bank of Nigeria’s (CBN) quarterly statistical bulletin, this debt represents a year-on-year decrease of N68.04bn (3.9%) from the N1.77tn owed in September 2023. The decline reflects the effects of the CBN’s stringent monetary policies, including repeated interest rate hikes, which have discouraged borrowing across the sector.
Month-on-month, however, there was a marginal increase of N31.61bn (1.9%) compared to N1.66tn in August 2024. Throughout the year, credit to the ICT sector showed a fluctuating trend.
In January 2024, borrowing peaked at N2.47tn, a sharp 99.3% increase from N1.24tn in January 2023. By February, credit had dropped to N2.35tn, representing an 88.4% year-on-year increase. This downward trend continued, with credit falling to N1.67tn in March, marking a 30% rise from the previous year.
Starting in June, year-on-year figures began to show declines, with credit dropping by 4.7% in June and 6% in August compared to the same months in 2023. By September, the cautious borrowing trend culminated in a N68.04bn year-on-year decline, attributed to rising borrowing costs and economic uncertainty.
The CBN’s monetary tightening throughout 2024, led by Governor Yemi Cardoso, included six interest rate hikes totaling 875 basis points, bringing the Monetary Policy Rate (MPR) to 27.5% in November. These measures, aimed at curbing inflation and stabilizing the economy, have created financial headwinds for capital-intensive sectors like ICT.
Macroeconomic factors, such as exchange rate volatility and escalating operational costs, have further constrained borrowing activity.
Despite these challenges, the ICT sector remains a pillar of Nigeria’s economy, contributing 16.35% to the nation’s real GDP in Q3 2024. While this was a decline from 19.78% in Q2, it exceeded the 15.97% contribution in Q3 2023.
The telecommunications subsector led this growth, contributing 13.94% to real GDP. Dominated by companies such as MTN, Globacom, Airtel, and 9mobile, the telecom industry continues to drive technological advancements and economic activity.
Foreign investments in the sector have been uneven. In Q3 2024, capital importation fell sharply to $14.4m, an 87% drop from Q2. However, the sector saw significant inflows earlier in the year, with $191.5m in Q1, surpassing total investments for 2023.
Revenue pressures have also affected major players. Between January and September 2024, MTN Nigeria’s capital expenditure dropped by 27.79% to N217.64bn, while Airtel Nigeria’s revenue fell by 46.9% to $755m.
Telecom operators, through the Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON), have reiterated the need for cost-reflective tariffs. Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, emphasized that tariff adjustments are crucial for sustaining the industry. This policy shift aims to balance investment demands with the economic realities facing the sector.
