Is Nigeria Kicking Itself In The Foot With Another MTN “Scandal”?

 Did MTN in Nigeria breach corporate governance issues?

mtn logo
mtn logo

Nigeria’s government risks damaging its investment climate with it’s Central Bank demanding $8,1 billion (R115 billion) allegedly paid as a dividend to MTN to be refunded to it.

The move seems like an uninspiring way of encouraging any would be investors to see Nigeria as a destination for investment.

In the short-term, the $8,1 billion (R115 billion) which is being demanded by the Nigerians, over claims the money was taken out of the country unlawfully, could be the quickest way to get funds for the central bank. 

The Nigerian economy is struggling to recover from its first contraction in a quarter century in 2016 when the price and output of oil fell the most in decades.

The seemingly continuous attacks on MTN by the Nigerian authorities may spook investors. 

In 2016, MTN was slapped with a $5.2 billion fine, which was later reduced to $3.9 billion and is still paying the Nigerian authorities.

Allegations and claims cannot continue to emerge every time Africa’s largest mobile phone operator stabilises its business in Nigeria and when the country’s economic growth stumbles. 

MTN is one of the biggest investors and employers in Nigeria and deserves certainty for its investment in the country.

It is possible the underpressure Nigerian government sees MTN as a quick way to get much-needed income for its fiscus.  Or is it a case of them wanting to prove a point that they can stand up to a South African behemoth?

I am in no way suggesting that the rule of law must be sidestepped if the allegations are true. That said, maybe MTN deserves what is happening to it in Nigeria. 

Is it possible that the mobile phone operator is abusing its power and not adhering to corporate governance issues? 

The company’s past doesn’t really paint a great picture. Its previous executives failed to adhere to subscriber registrations regulations, which resulted in the $5.2 billion fine being imposed in 2016.

One hopes that the new allegations are not true. 

The big question to ask is: why so many issues of wrong-doing keeps on cropping up for the company or does it comes with a territory of being a giant global company?

Either way, the standoff between MTN and the Nigerian authorities is not good for anyone. 

Today, the company’s share price crashed more than 23% after it confirmed that the Nigerian authorities were demanding the $8.1 billion allegedly taken out of the country illegally to be paid back to its central bank.

The latest allegations also impact various banks including Standard Chartered was fined 2.4-billion naira ($7.86m), Stanbic IBTC Bank 1.8-billion naira, Citibank 1.2-billion naira and Diamond Bank 250-million naira.

We’ve known all along that Nigeria is a tough market to do business. But up to this point that hasn’t mattered much. 

Maybe its time for MTN to think hard about whether it still makes sense for it to continue being invested in Africa’s biggest economy.

On the other hand, the Nigerian authorities may have to make it clear that MTN is no longer needed in the country.
Some pundits may say this will be a knee-jerk reaction from both sides.

While this might be true but the past few years have proven that there is serious animosity between MTN and the Nigerian authorities. A clearer direction of what needs to happen will be good for everyone.

I have stated before that MTN needs Nigeria and Africa’s biggest economy needs the investment of the continent’s biggest mobile phone operator. For more read: Is the standoff between MTN and Nigeria good for Africa?

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