Market News

From Adanna Nnamani, Abuja

The recent stability recorded in Nigeria’s foreign exchange market is reigniting confidence among investors in the telecom industry.

For them, improved economic conditions and a more predictable forex regime present a perfect ecosystem for sustainable investment and innovation.

With stability projected to continue this year, industry leaders are optimistic that the turbulent days of foreign exchange market volatility are behind them. They argue that it was not the declining value of the naira that posed the greatest challenge, but rather the unpredictability of the forex market, which made strategic planning a daunting task for many telecom operators.

By the close of last year, the official exchange rate at the Nigerian Foreign Exchange Market (NFEM) stabilized between N1,535 and N1,538 to the dollar. Similarly, the parallel market showed consistency, with rates hovering between N1,650 and N1,655, signaling a much-needed respite for the economy.

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“The main issue with the forex is the instability. In the last few months, we have seen some stability. Now that we have a kind of range—almost like a top and bottom ceiling—I think it’s enough for any organisation to plan and help us to attract more investments,” he said.

Emoekpere highlighted that sustained stability, combined with effective implementation of policies to stabilize the naira, could signal growth for the telecom sector.

“If we continue to see the kind of stability we saw towards the end of last year, it will be a good pointer for investors to come in,” he added.

>span class="s3">Reflecting on the challenges of 2024, Toriola said the worst of the volatility may have been over and a repeat of the instability is not expected in 2025.

“I don’t expect any repeat of the kind of volatility we experienced last year, which was driven by the move towards a more liberal foreign exchange market,” he stated.

Toriola believes that the sector can adapt to a gradually declining currency as long as stability is maintained.

“We don’t need a reversal. We just need a relatively stable currency. We can manage that and find other ways and sources of efficiency,” Toriola added.

According to the Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Mr. Gbolahan Awonuga, the significant rise of the dollar from about N460 in 2023 to over N1,600 in 2024 disrupted the operators’ plans for importing equipment.

He said this also made it difficult for telecom operators to obtain additional funding, as they struggled to generate returns amid the worsening exchange rate instability.

Highlighting the challenge of the forex instability from a data centre operator perspective, the CEO of Digital reality, one of the leading data centre companies in Nigeria, Engr. Ikechukwu Nnamani, said:

“If you come to Nigeria and you use an exchange rate of N1500/$1 for instance, to benchmark what you want to charge and that amounts to $500 but you are charging in Naira for the use of your service, then by next year, Naira depreciates to N2000,  if you convert back what you charge in Naira back to USD, you suddenly find out that you no longer selling your service at $500 but you are now selling it at $300 equivalent. 

“So, your total business case, the basis of which you got investment, gets thrown out of the window, not because the customers are not there; not because the metrics under which you went into the business were wrong, but 100% based on the valuation of the naira, which unfortunately, you have zero control.”

In its 2025 economic outlook, Centre for the Promotion of Private Enterprises (CPPE) the exchange rate had largely stabilized between July and December last year, driven by the series of regulatory reforms and the periodic intervention by the Central Bank of Nigeria (CBN) in the market.

According to the CPPE founder, Dr Muda Yusuf, based on sustained improvement in foreign reserves which is currently in excess of $40 billion dollars, the outlook for the exchange rate in 2025 is positive.

He added that the rate would be stable, hinged on improvement in accretion to reserves on the back of improved inflows from the IMTOs and diaspora remittances.

Yusuf said the improved capacity of the CBN to moderate rate volatility through periodic intervention would improve the market alongside the positive impact of the $2 billion Euro Bond proceeds on reserves.