Companies’ Nigeria debts ‘threaten’ SA

Billions of dollars in fines owed by South African companies MTN and Standard Bank to Nigerian regulators could increase the risk to South Africa’s financial system, the central bank said on Wednesday.

The Nigerian central bank in August accused telecom firm MTN and its lender Stanbic, a Standard Bank subsidiary, of illegally sending $8.1 billion (R113.2 billion) abroad.

The Nigerian government has also demanded $2 billion in related taxes from MTN. The mobile operator makes about a third of its annual core profit there.

The SA Reserve Bank (Sarb) said in its semi-annual review of financial stability the repatriation claim and tax amounted to 100% of MTN’s market capitalisation.

“Any potential impact on the SA financial system arising from this event will depend on the eventual resolution of the matters raised and MTN Group’s ability to continue meeting its debt obligations,” the bank said.

Some analysts have cited the concentrated foreign currency funding risk posed by MTN a threat to the bank’s foreign exchange reserves. – Reuters