In Praise of CBN
Contrary to the speculation in some quarters that the Central Bank of Nigeria (CBN) might soften the sanctions it imposed on four banks for helping MTN Nigeria Communications Limited illegally repatriate funds, CBN was reported to have gone ahead to debit the lenders’ accounts (namely, Standard Chartered Bank; Stanbic IBTC; Citibank and Diamond Bank) with the fines it slammed on them for the alleged violations.
The devil is the details. The CBN had announced that it had fined Standard Chartered Bank N2.4 billion; Stanbic IBTC, N1.8 billion; Citibank, N1.2billion and Diamond Bank, N250 million for allegedly assisting the telecoms giant to illegally move $8.13 billion abroad. It also ordered the lenders and MTN telecom giant to immediately refund the repatriated sum.
Following the public announcement of the fines, the four banks-lenders had separately issued statements, indicating that they were prepared to engage with the CBN to resolve the issue.
The CBN usually debits the account of banks when it imposes a fine or to implement aspects of its monetary policies such as Cash Reserve Requirements (CRR) if such lenders do not comply.
Of course, the lending banks had reiterated their positions that they did not breach any extant laws relating to Certificates of Capital Importation (CCIs) executed on behalf of MTN. They promised to, provide the CBN with documents and details to support their stance that the transactions on behalf of MTN were not illegal.
In other words, the corporate telecom giant at the heart of the matter has strongly denied any wrongdoing while the CBN insists corporate guilt and indeed emphasised that the telecoms company must comply with the directive.
The CBN has also dismissed reports that MTN may refund $8.1 billion demand in local currency. Isaac Okoroafor, CBN’s spokesperson, said MTN would not get a naira-denominated benefit to refund the $8.1 billion. He was quoted as saying: “The report is very clear, what we have here is in dollar terms and not naira.”
Still on the devil in some historic details; it will be recalled that this is the second time MTN Nigeria would be running into troubled waters with the Nigerian government since it began operations in Nigeria some 17 years ago. “In October 2015, the telecoms giant was fined N1.04 trillion by the Nigerian Communications Commission (NCC) for failing to disconnect around 5.1 million subscribers from its network for not having been registered as of September 2015, as prescribed by the regulatory agency. The total sum was based on a fine of N200, 000 for each unregistered subscriber. However, after prolonged negotiation with both the regulatory agency and the Federal Government, the company had the fine reduced to N330 billion. With the resolution midJune 2016, there was an agreement for settlement over a three-year period. As at last February, the Executive Vice Chairman of the Commission, Prof. Umar Danbatta, disclosed that MTN had paid N110 billion out of the N330 billion, meaning that the company still had N220 billion to pay to the regulator.”
So much for the devil in the above sordid details about alleged bank-lenders collusion in what some observers described as “MTN capital flight” from Nigeria! It’s time to revisit the Godliness in the principle of capital control for a developing (or is it under-developing?) economy like Nigeria.
The celebrated Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) in Beijing, China held from 3 to 4 September 2018.
The “star-take away” (Africans are always delighted at “takeaway”) by heads of state or heads of government from 35 African countries who attended this Summit was the sum of $60 billion pledged by the Chinese President Xi Jinping in financing for projects in Africa in the form of assistance, investment and loans.
The $8.1 billion allegedly illegally repatriated from Nigeria by just a single corporate telecom, MTN is about 20 per cent of the China’s celebrated pledge for the entire continent.
Indeed the amount CBN commendably orders MTN to repay is as much as $10 billion Chinese President Xi Jinping, promised to “encourage Chinese companies invest in Africa over the next three years”!
The money MTN repatriated is also twice the $5 billion China pledges “to buy imports from Africa.” It is self evident that Nigeria and indeed Africa is not short of investment funds if only it can tame and control the greed and almost criminal business behaviour of its multinationals. China generously offers Africa “$15 billion in grants, interest-free loans and concessional loans” and all Africans are clamping.
But half of that grants is precisely what MTN and its ally-lending banks in Nigeria at act of collusion takes out of the country.
The lesson of MTN’s corporate saga of repeated sharp practices in Nigeria is that we must revisit our assumptions about direct foreign private investment as drivers of growth and development.
First as a nation we must reject the assumption of capital inadequacy such that we are always cap in hand seeking for handouts from China and Europe. All we need to do is to tame and control huge capital multinationals such as MTN take out of an economy coming out of recession such as Nigeria. The real issue is capital application and capital control.
Only public control of capital through the CBN can make private capital economically responsible.
Foreign Capital, without control is capital on the loose; it can undermine and corrupt banking regulations and even undermine national growth as we are sadly reading about MTN’s alleged illegal capital flight of $8.1 billion.