SHAKEDOWNS VS HANDSHAKES
Nigeria is at a crossroads. Africa’s most populous and largest economy must decide: does it want to be a modern democracy and a free market, anchored by the rule of law and institutions in which every man and woman can perform to the best of their ability? Or does it want to remain a Third World basket case in which the worst forms of behaviour thrive, to the detriment of future generations?
If Nigeria chooses to be the old Africa, where investors need brown envelopes stuffed with cash just to clear their path out of the Murtala Muhammed airport in order to do business, it is doing a great job if its treatment of the MTN Group* is anything to go by.
This is not an attempt to excuse MTN’S serious violations of regulations, most importantly its failure to ensure all its users are registered with the authorities. But the conduct of the Nigerian state is helping to cement a reputation of a market where a shakedown has replaced a handshake as the basis of a corporate relationship. This is a far cry from the red-carpet treatment that capital- and jobs-hungry states extend to investors. Rwanda is a fine example.
Merely a week after the listing of the telecommunications group’s local unit on the Nigerian Stock Exchange, the country’s economic and financial crimes commission pounced and requested information and documentation on the listing. This shocked investors, who panicked and dumped the shares, causing a slump of more than 7% on May 27. The stock has still not recovered.
This, according to Bloomberg News, followed complaints by brokers that the shares of MTN Nigeria were unavailable for purchase. The unit, in which
MTN owns 78.8% of the stock, listed on May 16 — not to raise new capital, but to make amends with the authorities and to allow local investors to participate in
the largest foreign direct investment into the country.
This purported investigation is the third major official probe of the company in the past four years. At the end of every one of those, MTN has had to part with hundreds of millions, just to be allowed to go back to the business of enabling Nigerians to communicate.
In December MTN agreed to pay a $53m fine to the Central Bank to close another flimsy investigation in which the bank demanded the group bring back
$8.1bn in dividends it had repatriated out of Nigeria over a period of 10 years.
Enabling the warlords
This came a year after the reduced $1.7bn fine (from $5.2bn) MTN had paid the Nigerian Communications Commission (NCC) for its failure to register cellphone users. On this MTN was undoubtedly guilty of neglecting its back office stuff, which allowed Boko Haram warlords to remain on its network, beyond the reach of what’s left of the country’s security apparatus.
Another shakedown attempt is continuing in Nigeria’s courts, where the attorney-general will continue on June 26 to extract billions in allegedly unpaid taxes going back to 2007. This case has not been brought by the Federal Inland Revenue Service and Nigerian Customs Service, whose task it is to collect taxes.
Still, one has to wonder: where was the NCC when, over nearly 20 years, MTN amassed more than 100million customers without registering many of them? Where was the Central Bank when MTN “illegally” repatriated billions in dividends over a decade through the banks?
Now with the listing that has made it a giant on the stock exchange, MTN has made itself even more vulnerable to shakedowns. The company will be loath to expose its investors to the volatility and value destruction such stunts can cause.
MTN has had to part with hundreds of millions, just to be allowed to go back to enabling Nigerians to communicate