The most recent reports on foreign investments in the country show that there’s a drastic slowdown of inflow and that the factor responsible for this is the economic and political instability that the country is contending with at the moment.
The last report from 2017 revealed that the investments in telecommunications experienced a drastic decline by 80.8% from a record of $174.18m that was amassed in the second quarter of the same year. The depreciation trend may have begun in 2015 when it first recorded its first decrease of 5.7% from $994.3m in 2014 to $938.13m in 2015. Since then, it has continued to decline.
Experts say that the significant depreciation in value can be attributed to the instability of the country’s economic situation, which has further shooed foreign investors from the country. The country, according to the Chief Executive Officer of Pinet Technology, Mr. Lanre Ajayi enjoyed a substantial inflow of investors and huge profits because the economic situation was fair enough to benefit both parties.
He said further that a political stability and the strong regulatory regime played a vital role in the huge inflow of “several billions of dollars”. The exchange rate was fair enough until it skyrocketed to a level where investors were discouraged. Aside from the negative effect, this unfortunate experience has had with the technology industry, other sectors in the country have been affected in some way. If you recall, a major factor that contributed to the fall of Etisalat, a telecom firm was a shortage of dollars, resulting from the unstable economy.
The unstable economy is simply one of the other reasons behind the dwindling economy. Very recently, death trolls arising from the cattle herdsmen insurgency have been making the rounds on social media and this will only scare prospective investors. The issues of insecurity and political instability are the contributing factors of the dwindling economy. Thus, it’s almost uncertain to predict a safe environment for doing business.
Mr. Lanre said further: “We know that the dollar exchange for a long time wasn’t very stable. The regulatory environment is still as good as it was. There is no much difference because we still have a response regulator. Investors like predictability. They want to be able to predict the future and have a plan and achieve those plans as much as possible.”
The Chairman, Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo condemned the regulatory issues such as the imposition of multiple taxes and levies imposed on foreign investors by the federal and state government. In an insecure environment with a very unstable political setting, the prospective investors are greeted with outrageous taxes and levies.
Currently, there are about 26 taxes imposed by the Federal and State government on telecommunications firms that are still saddled with the responsibility of providing their own safety within the country.