Lagos, June 10, 2014 – Bismarck Rewane, the Managing Director of Financial Derivatives Company Limited (FDC), has called for more new investments in the Nigeria’s telecom sector.
He said investments in the sector had dropped by 47 percent in the last two years which had crippled the market efficiency.
Rewane made the call in a Lagos Business School publication where he attributed the situation to Nigeria’s economic challenges, inflation, exchange rate pressures, regulatory burden, right-of-way conundrums and multiple taxation.
He said the way out is to boost investments in the sector.
Rewane advised that the regulatory environment and macro-fundamentals must also be supportive to incentivise such new investments.
The financial expert also said that the telecom sector was fast losing its spark which might adversely affect remote banking services in the country, improved accessibility and customer service.
According to him, industry players have consistently shown positive top-line performance over the years, but have experienced slower growth in the last two years.
“Bottom-line performance, hampered by huge FX losses and squeezed margins, slow pace of profit growth gradually weighs on shareholder’s value and investor sentiment,” he said.
Although the sector’s growth outperforms annual Gross Domestic Product (GDP) growth, after discounting for inflation, it becomes evident that the sector is stagnating as revenue and margins decline.
Rewane, however, said that all hope was not lost as the sector might regain its growth trajectory given its strong linkages with other critical and job-elastic sectors of the economy, including manufacturing, agriculture and trade.
