- November 8, 2018
- Posted by: Myles Freedman
- Category: More Africa News
MTN Group’s fight with Nigerian authorities over US$10-billion in repatriated funds and back taxes could increase risk in South Africa’s financial system depending on the outcome, the Reserve Bank said.
MTN, which is Africa’s biggest wireless carrier by subscribers and is based in Johannesburg, is facing mounting pressure to return $8.1-billion to Nigeria after its central bank argued that the South African company had repatriated funds illegally. Separately, the West African nation’s attorney-general’s office alleges the company owes $2-billion in back taxes.
“The immediate, or at least near-term, repatriation of the funds to the Nigerian authorities could affect MTN Group’s ability to continue meeting its debt obligations, including those in the South African banking sector, which, given the interconnected nature of the financial system, could increase systemic risk,” the South African Reserve Bank said in its financial stability review released Wednesday in Pretoria. The claims amount to almost all of MTN’s market value of about $12-billion, it said.
A “potential worst-case scenario” would be for MTN to pull out of Nigeria, which would increase the company’s exposure level to reputational risk, the Reserve Bank said.
Nigeria’s central bank alleged in late August that MTN and four banks — Standard Chartered, Citigroup, Stanbic IBTC and Diamond Bank — illegally repatriated the money from Nigeria. MTN sought an injunction in early September to buy itself time and fight the claim in its biggest market, which wiped 18% off its market value within two weeks.