Hungry for US dollars, Nigeria may give MTN a naira ‘refund’ in latest fiasco

JOHANNESBURG — Looking at MTN’s woes in Nigeria — you have to start to ask whether it’s worth it for MTN to operate there any longer. This latest alleged foreign exchange violation by MTN Nigeria has some context around it. Back in 2015 (when the oil price was weak and getting weaker), Nigerian regulators interestingly decided to fine MTN $5.2bn in a debacle involving the mobile network allegedly flouting SIM-card registration rules in that country. That fine wreaked havoc on MTN (and especially its share price) and resulted in MTN’s group chief executive officer at the time, Sifiso Dabengwa, quitting his post. (Interestingly, Dabengwa became a board member at Eskom earlier this year.) Rob Shuter — formerly a CEO of the European Cluster at Vodafone Group and a veteran exec from Vodacom, Standard Bank and Nedbank – then took up the MTN CEO role officially from early 2017. But now it looks as if Shuter is experiencing similar problems to his predecessor with Nigeria becoming a thorn in his side. In both cases, it’s unclear whether Nigeria is actually policing transgressions or, more cynically, trying to ensure it hangs on to as many US dollars as possible amid a flagging oil sector in that country. Recent GDP stats indicated that Nigeria’s oil sector contracted by 3.95% in the first quarter of 2018. – Gareth van Zyl

By Emele Onu

(Bloomberg) – MTN Group Ltd. may receive a naira-denominated refund if Africa’s biggest wireless carrier returns the $8 billion that Nigeria says was illegally taken out of the country.

The South African phone company must bring back the cash after it and three banks “flagrantly violated foreign-exchange violations,” Nigeria Central Bank Deputy Governor Joseph Nnanna said by text message Sunday, reiterating a Wednesday order. The lenders have been hit with a combined $16 million fine for their role in the transactions, which happened over eight years through 2015.

News of a potential like-for-like naira refund answers one of the outstanding questions arising from last week’s bombshell, when the reserve bank handed down the order to the country’s biggest mobile-phone operator. How and when MTN should pay the money and what happens if the company doesn’t comply remain unanswered. MTN refutes all allegations.

MTN’s share price declined a further 3.4 percent to R86 as of 9:28 a.m. on Monday, extending a slump since the crisis erupted to more than 20 percent. The news came almost three years after Nigeria hit the carrier with a $5.2 billion fine – later reduced to about $1 billion – in an entirely separate dispute over SIM-card registration. That incident also weighed heavily on the share price.

MTN had agreed to sell shares in the Nigeria business in Lagos as part of the 2016 SIM-card settlement, but the latest censure has thrown those plans in jeopardy.

The crackdown on the company comes as Nigeria President Muhammadu Buhari seeks re-election for a new four-year term in a February vote. His administration has gone after companies for irregularities as well as tax-defaulters, part of a wider pledge to fight corruption in Africa’s most populous nation.