- October 9, 2018
- Posted by: Myles Freedman
- Category: More Africa News
Nigeria’s central bank governor says the $8.1 billion it is demanding from MTN could be reduced.
The Nigerian central bank could reduce the $8.1 billion (R120 billion) it is demanding that MTN repatriate as part of an ongoing disagreement, central bank governor Godwin Emefiele told Reuters on Sunday.
MTN and the central bank have been in a dispute since August over the transfer of the funds which the bank said the company had sent abroad in breach of foreign-exchange regulations. The central bank alleged MTN used improperly issued certificates to transfer funds out of Nigeria after the telecoms giant converted shareholder loans in its Nigerian unit to preference shares in 2007. MTN denies the allegations.
“I don’t think it will be staying at $8.1 billion,” Emefiele said during a visit to London, adding he expected the issue to be dealt with “amicably and equitably”.
“I want to believe that the figures will reduce. Whether they will be dropped completely, I honestly cannot say at this time.”
Nigeria accounts for a third of MTN’s annual core profit and the fine is over three-quarters of MTN’s current market capitalisation of R157.9 billion.
Emefiele said the central bank had received documents some two weeks ago from MTN and four lenders involved in the case – Standard Chartered, Stanbic IBTC Bank, Citibank and Diamond Bank – and was in communications with all parties involved.
“The central bank will be examining these, then it will be escalated up to my level,” he said, adding he expected to get the results in a couple of weeks.
The two sides are also locked in a court dispute over the transaction. The central bank filed a counter-claim on 5 October to a court request by MTN, which is seeking to stop the bank from forcing it to bring back the money.
While asking a Lagos court to throw out MTN’s case, the central bank also requested the firm pay 15% annual interest on the $8.1 billion, according to court documents seen by Reuters.
“The improper depletion of our foreign reserves is a more serious problem for the entire country far above the claims of the Plaintiff (MTN) in its application,” the central bank’s lawyers argued in the document.
“MTN had gone to court, sued the central bank and the attorney general. The central bank has filed a response and a counter claim, meaning that nobody can resort to self-help in the matter any longer,” MTN’s lawyer, Wole Olanipekun, told Reuters.
“With this development everybody has now surrendered … the grievances to the court. Everybody has to wait for the decision of the court.”
MTN’s next move will be to file a reply to the bank’s claim, he added.
CBN’s spokesman Isaac Okorafor said the central bank “is aggressively engaging MTN and the banks, but he added “I’m hopeful that an amicable resolution will soon be achieved”.
Shares in MTN closed 4% down on Friday, after falling as much as 8.5% earlier in the day to R79.85, their lowest level since 21 September. MTN’s share price is down over 25% year-to-date.
The telecoms firm is also facing a $2 billion tax bill from Nigeria’s attorney general, the demand for which MTN has also asked the court to halt to protect its assets in the country. Olanipekun said MTN has received no response from the attorney general yet.
Nigeria has been battling to defend its currency and shore up its reserves of around $44 billion (R651 billion), hobbled by lower oil prices. At the same time, the oil exporter has suffered from high inflation, which edged up to 11.2% at its last reading – well above the central bank’s 6%- 9% target.
MTN’s most recent troubles in the West African nation come almost three years after MTN was initially hit with a $5.2 billion (R71 billion at the time) fine from the Nigerian Communications Commission (NCC) in October 2015. This after the telco failed to meet a deadline to disconnect 5.1 million unregistered SIM cards on its Nigerian network.
On 10 June 2016, MTN finally reached an agreement with the NCC and promised to pay 330 billion naira over three years – the equivalent of $1.671 billion or R25.1 billion at the time.
* Comment from MTN on the latest dispute is pending and an update will be added to the story once comment is received.