James Emejo report
He said: “To me, the action of the central bank is highly commendable and it should be an eye opener to regulatory agencies in ensuring those that do business in Nigeria comply with our extant laws or face severe sanction. What this has shown is that perhaps what was discovered may be a tip of an iceberg.
”Off-site regulatory supervision need to be further strengthened by CBN to deal with this and similar other infractions. Such kind of leakages are reasons why our foreign reserves will not get to reach its optimal potential of having the capacity to deal with shocks of price or output movements in crude petroleum market, our major foreign exchange earner. That kind of leakages does compel the government to borrow funds to finance critical infrastructure needs. This also has direct effect on capacity of real sector to grow as they face scarcity of foreign exchange to import critical inputs that will support growth and employment generation.”
He added: “The leakage also has negative effect on our GDP growth rate. The action of CBN will have positive effect on the economy as it send the right signal that businesses are welcome to Nigeria, but must operate within our established laws like in any other country. We should not, based on narrow prism of encouraging foreign direct investments, allow foreign businesses to exploit our weaknesses and break our rules with impunity.”
But, a Professor of Finance and Capital Market at the Nasarawa State University, Keffi, Prof. Uche Uwaleke, said the CBN sanctions on MTN could impair investor confidence as banks’ stocks had already been affected as a result.
According to him:”The CBN sanctions will obviously have some dampening effects on investor confidence in Nigeria especially in relation to banking stocks. Already, the share prices of the quoted deposit money banks among them namely FCMB and Diamond Banks have witnessed some declines since the news broke.
“There is also the possibility that this development will delay the plan that is afoot to get MTN listed on the Nigerian Stock Exchange.
“However, the impact may not be significant given the few number of banks involved relative to the total number operating in the country.
“Also, the fines are not such that could significantly affect the bottom lines of the banks or cause any systemic crisis.”
Also, in an interview with THISDAY, Chief Executive, Global Analytics Consulting Limited, Mr. Tope Fasua, further looked at the situation differently, accusing the CBN of regulatory lapses adding that it could impair the perception of foreign investors given the recurring issue with MTN.
According to him, “For the kind of volumes involved, it may amount to a self-indictment on the part of CBN because only a comprehensive systems failure could lead to months or years of falsification and fraud as claimed. $8billion is a lot of money.
“The entire story may not be palatable for foreign investors, given the frequent run-ins with MTN in particular. It wasn’t long ago that the company had to pay huge fines for not keeping proper records of its customers.
“However, we needn’t always be cowed by the prospects of losing foreign investments to the extent that our regulators will become afraid of doing their jobs.”
Also, speaking on CNBC Africa, Chief Executive, CFG Advisory, Mr. Tilewa Adebajo, described the development as “a major earthquake” adding that, “allegations are very serious and the consequences are very dire.”
He said: “It’s a major earthquake; the issues here are very serious. For the CBN to come up with all these allegations and these numbers, it has taken its time to review those numbers.
“The direct impact: as you know, MTN was supposed to do the listing on the Nigerian Stock Exchange, that will be stalled.
“And from the aftermath of the previous $1 billion dollar fine, MTN is still trying to recover from that and issues now around investor confidence in Nigeria and we need to look at how these would turn out. We need to look at more details. The allegations are very serious and consequences are very dire. “
With the MTN saga still very much on the front burner, 20 operatives of the Economic and Financial Crimes Commission (EFCC) on Friday, stormed the head office of Standard Chartered Bank, another foreign entity, ostensibly to arrest top executives of the bank.
The news of invasion immediately caused turmoil among the investor community as many operators in the nation’s Capital Market feared that the action would further hurt investors’ confidence and would further accelerate foreign portfolio flight from the economy.
It took the swift intervention of the CBN Governor Godwin Emefiele to bring the situation under control. THISDAY gathered that Emefiele made frantic calls to the EFCC Chairman, Ibrahim Magu who said he was unaware of the raid. Magu then called off EFCC’s operatives from the bank’s premises.
Emefiele insisted to Magu and the Attorney General of the Federation and Minister of Justice, Abubakar Malami that the issue with Standard Chartered Bank was regulatory and not criminal.