Analysts react to Nigerian ‘shakedown’ of MTN
Analysts have labeled Nigeria’s central bank action against MTN and several banks a “shakedown” which will have a negative effect on the country’s already unstable banking sector.
The bank demanded that MTN return up to $8.1 billion in dividends which it moved out of the country.
It has also fined a number of banks including Standard Bank, Stanbic, Citigroup, and Diamond Bank for their role in facilitating the movement of these funds out of the country.
Stanbic stated that it is not a beneficiary of any remittance made on behalf of clients and denied that it acted illegally in facilitating MTN’s movement of dividends out of Nigeria.
A source close to the bank told the Sunday Times that the central bank’s demands are concerning as it did not ask for the money to be returned to the company which it originated from.
“The odd thing in all of this is that the [central bank] wrote to the banks and to MTN, but they don’t say the money must be refunded to the company that paid it, they say it must be refunded to the central bank,” said the source.
Share price drop
Deloitte MD of emerging markets and Africa Martyn Davies reportedly said that while the Nigerian administration was initially regarded as friendly, it has turned out to be hostile towards business.
“It’s not just the fine, but the exorbitant nature of these fines,” Davies said. “$8.1 billion is bigger than a large number of African countries’ GDPs.”
Speaking to the Sunday Times, an MTN source said the operator would not consider leaving the Nigerian market, however.
MTN’s share price fell more than 20% – to below R90 – after Nigeria issued the order to return the money, before making small gains late on in the week.
Nigeria is MTN’s biggest market and is home to more than 54 million customers out of the company’s 221 million customers worldwide.
It comes as the latest blow in a long line of punches MTN has had to endure in Nigeria, culminating in the group having to settle a $1 billion fine related to disconnecting unregistered customers.
Negotiations over that penalty went on for almost a year and weighed heavily on the share price, from which it has not recovered.
As part of the settlement, MTN agreed to list its local unit in Lagos and is planning to do so before the end of the year.
Read: MTN shares tank on Nigeria demands for $8.1 billion payback
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