MTN shows why giants need to find common ground
When I delivered a lecture on relations between SA and Nigeria in Lagos in 2005, I was particularly shocked by the venom of the attacks levelled against SA telecommunications giant MTN, which was being derided as “Money Thieving Networks”.
At the time, MTN had barely been in the Nigerian market for four years, but was already the target of that much vitriol. Accusations that MTN’s mostly white managers used apartheid-style labour practices — including having separate staff amenities — did not help.
Nigerians have often accused SA firms of engaging in predatory and mercantilist behaviour in its market of 180million people, without opening up SA’s more saturated 57million market. These perceptions have often become reality. While many Nigerians would be surprised to discover their popular stout Guinness is Irish, MTN has never been able to develop a Nigerian identity.
After 1994, SA’s corporate community began to view Nigeria with great interest. It was ironically MTN that blazed the trail, spending $340m launching its mobile phone network in Nigeria in 2001.
Within three years, MTN Nigeria’s post-tax profit of R2.36bn surpassed MTN SA’s R2.24bn profit. By 2007, MTN had 16.5-million Nigerian subscribers, representing a staggering 29% of all its African subscribers, and more than its 14.8-million SA subscribers.
MTN’s success convinced other companies like Shoprite, Protea Hotels and Standard Bank to invest in Nigeria.
Relations between SA and Nigeria soured in 2016 following the fine of $3.9bn (down from an initial $5.2bn) imposed on MTN by Nigerian regulators for failing to disconnect 5.1-million irregularly registered cellphone subscribers. The usually mildmannered Nigerian president, Muhammadu Buhari, accused the company of having contributed to the deaths of thousands of Nigerian victims of terrorist group Boko Haram, through its failure to disconnect irregular SIM cards. The MTN fine was eventually negotiated down to $1.7bn, half of which has since been paid. The company lost over $10bn of its market value following the fine. Headlines in Nigeria screamed for an end to “MTN’s Impunity”.
Tension erupted again between Tshwane and Abuja when SA vigilantes burned and looted scores of homes and businesses belonging to Nigerians in Gauteng in 2017, alleging that they were drug dens and brothels. Many Nigerians were appalled by this xenophobia and there was retaliatory vandalism of MTN’s offices in Abuja.
Despite MTN investing $13bn in Nigeria and paying $5.5bn in taxes, in August Nigerian regulators demanded that it repay $8.1bn in dividends, which they claimed were illegally repatriated from the country between 2007 and 2015. Shortly after, the Nigerian government also demanded that MTN repay what Abuja claims is $2bn in decadeold tax arrears.
The company denied both accusations, but its share value fell 7.5% to a 10-year low. These spats are occurring when a quarter of MTN’s 240-million subscribers are Nigerian.
Several SA analysts have argued that Abuja is extorting MTN to raise more government revenue, as if Nigeria were some small, cash-strapped banana republic and not Africa’s largest economy.
With high oil prices at $77 a barrel, such arguments sound like sophistry. There is a widespread feeling that senior MTN officials regard Nigeria as a lawless country in which they can get away with actions they would never dare attempt at home. It is clear that MTN has an image problem in Nigeria.
Calm heads must, however, prevail in order to salvage Africa’s most indispensable bilateral relationship. President Cyril Ramaphosa — as chair of MTN between 2002 and 2013 — interacted closely with the Nigerian leadership elite and must play a more direct role in resolving this dispute.
Nigerian regulators must also show more restraint, acknowledge MTN’s role in opening up its telecoms sector and recognise the dangers of scaring away foreign investors.
NIGERIANS HAVE OFTEN ACCUSED SA COMPANIES OF ENGAGING IN PREDATORY AND MERCANTILIST BEHAVIOUR WHILE MANY NIGERIANS WOULD BE SURPRISED TO DISCOVER THAT … GUINNESS IS IRISH, MTN HAS NEVER BEEN ABLE TO DEVELOP A NIGERIAN IDENTITY