Telecom
CBN May Be Shooting Itself with MTN Witch-Hunt- Expert
Tunji Andrews, a Lead Economist at Time, Trade and Commodities (TTAC), has said that the Central bank of Nigeria (CBN) may not be making the best decision after all with the harassment and heavy fines on MTN Nigeria.
Andrews was reacting in a letter as the debate over the tax compliance of MTN and the alleged illegal transfer of equity through four banks continued to dominate the tabloids.
He wrote “The findings were brought to public knowledge when the letters sent by CBN to the four banks in question were released to the public.
These accusations have caused serious turmoil for MTN and its operations, so much so that Paul Theron – Veteran TV host and CEO of Vestact, a financial asset management company, has called out the Nigerian government in a statement saying “You could expect this kind of behavior from really third-string countries, but Nigeria is supposedly a country that takes itself seriously — it doesn’t seem to be consistent at all.”
The letters revealed by the CBN detailed a number of transactions which may have violated foreign exchange laws, especially those regarding the repatriation of MTN assets via what has been called “illegal” CCIs (Certificates of Capital Importation).
What this means in layman’s terms is that MTN transferred some of its assets from its country of origin to Nigeria, courtesy of a couple of banks and CBN is looking into the situation to validate if this process complied with its foreign exchange policies.
These accusations have seriously hurt the market share of the telco giants, as recent reports show a plunge in the company’s share price with about $3 billion knocked off from its market capitalisation, after tumbling by 14 percent to a nine-year low of 2,030.76 NGN.
It is safe to say the last 2 weeks have been less than pleasant for MTN Nigeria, and CEO Rob Shuter has decried the “peculiar and coincidental timing” of what appears to be a regulatory assault on its business in the country, but also reinforced MTN’s stance in proving its innocence of all allegations.
The first part of this bizarre saga is how such high-level information has been able to become so public. Considering the media coverage that has followed this story, one may have confused this for a gossip feature. The “confidential” letters sent to these banks were rather unusually released to the public and the CBN further corroborated the story by tweeting about the investigations.
The second interesting aspect of this story is how quickly the story has developed. From rumors and leaks to outright fines and even debiting of bank accounts, the speed with which this story has taken a turn for the worse, particularly for the banks, has been rather uncharacteristic of our usual tepid government.
To provide a quick retrospective look and to put this into proper context, let’s look back at how the story has evolved since the CBN released those letters.
The regulator immediately asked MTN to refund the sum of $8.1 billion dollars which it claims may have been illegally repatriated by the telecommunication company. While the 4 banks (Stanbic IBTC, Diamond Bank, Standard Chartered and CitiBank) were slapped with hefty fines ranging from NGN 250 million to NGN 2.4 million dollars.
MTN on its part expressed its innocence explaining that the MTN Group and the original shareholders injected a total of $402, 625,419 into MTN Nigeria between 2001 and 2006 in the form of loans and equity. These initial inflows were the basis for the issuance of various legacy CCIs obtained from Authorized Dealers in accordance with regulations. All of these, including the inflow of capital, has long been confirmed by the CBN.
The subject of “illegally” obtained CCIs has also been addressed. The reality is that the CCI process is essentially in place both for the protection of investors as well as to provide the CBN with documentary evidence for monitoring capital inflows and outflows.
Although over time the CCIs have been reissued, consolidated and reconstituted to reflect the changing MTN capital and shareholding structure, the amount of NGN 402,625,419, has remained the same.
One aspect of the changing capital structure was the conversion of shareholder loans to preference shares, meaning the latest transfer of equity is in no way a violation of the law.
Section 15 (5) of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act 1995, states that, “The repatriation referred to in subsection (4) – which deals with foreign exchange imported into Nigeria and its remittance – of this section shall be communicated by an authorized dealer to the Central Bank, within fourteen days of the repatriation and the Central Bank shall furnish same to the Minister on a monthly basis for information and statistical purposes only.”
According to this law, this means that the dispute should be between the four banks and the CBN, not MTN, but once again, the brand’s name has been dragged through the mud without a proper investigation into the issue.
Even after all parties expressed their innocence and provided substantial proof, the attorney general, reprimanded MTN again and slapped the company with $2.0 billion fine.
The fine is due to alleged lack of tax compliance by the telco and this comes after the company has revealed its books detailing an assessment of the full period in question. The numbers indicate that the total payments made to the tax authorities in regard to these foreign imports and payments in aggregate are $700 million and also detailed the valid reasons for the differences between the actual payments and the Attorney general’s assessment.
Through it all, the brand has remained calm and consistent with CEO Rob Shuter quoted by Bloomberg as saying that, “We have a proud history of being a major partner to the people of Nigeria and notwithstanding our current difficulties are firmly resolved to continue to do so”.
One of the key talking points about this story is how MTN has once again become the scapegoat in yet another episode of what many are calling a witch-hunt. The banks who were involved in this saga have been relegated to a sub-plot in a story which MTN is front and center and continually being labeled a villain.
This would have been somewhat justifiable if the facts actually added up; but all indications suggest that the CBN may not have done proper investigations before name-dropping these brands.
On MTN’s side of the story, the telecommunications giant has been open with their books, revealing their tax payments over the course of their operations in Nigeria, and even detailing their $18 billion-dollar investment in the country since it began operations. This is in addition to the N2 trillion paid in taxes and levies since it began operation in Nigeria.
This is particularly worrying considering the latest revelations of dwindling foreign investment in Nigeria. In recent years, Nigeria’s FDI has been struggling. It reached a mediocre $981mn in 2017, a far cry from its previous peak of $5bn in 2008.
The plummeting FDI situation is worsened by a poor investment climate characterized by overly stringent or impromptu government policies, bureaucratic bottlenecks for securing permits, and a weak legal framework.
MTN is one of our most successful foreign investors and instead of encouraging the multi-national company, it seems like the government is hell-bent on frustrating the company.
MTN has been slammed with fine after fine for some rather ludicrous reasons. Such punishments cannot be encouraging for would-be investors, many of whom already hold the notion that they are regarded as cash cows for exploitation by African governments.
It is also noteworthy that Nigeria’s GDP hasn’t been impressive of late; the country has suffered a yearly dip since 2014 when it peaked at $568.5 billion. Even with the 0.82 percent increase 2017, the nation’s gross domestic output is still suffering from the inconsistency of oil prices. The real take away from these numbers is, looking at how much MTN has paid in taxes and levies (in excess of 2 trillion Naira), and realising just how big a contributor they are to Nigeria’s GDP.
MTN has directly and indirectly, provided 500,000 jobs in Nigeria and has contributed immensely to the economy and it’s somewhat bizarre that such a huge company is being dragged in the mud before an appropriate investigation is even carried out.
If MTN is guilty of these crimes then, by all means, they should face the penalty, but considering just how much facts have been provided by the telecom giant, they seem pretty convinced of their innocence.
Furthermore, neither the CBN nor the attorney general has provided a direct response to the facts provided by MTN, making this whole ordeal even more worrisome.
The reasoning for this inexplicable witch-hunt is up for anyone’s guess. This may be due to a lack of oversight by the government or to protect private interests. However, the fact still remains, if the government and its policies continue to deter foreign investors, it is only a matter of time before we lose these multinationals.
In a bid to protect its assets and investors against further action from the Attorney General of the Federation and the Central Bank of Nigeria, MTN on Monday, September 10th filed for an injunctive relief with the Federal High Court in Lagos.
In a statement issued by the company, Tobe Okigbo, MTN Nigeria’s Corporate Relations Executive was quoted as saying;
“MTN Nigeria Communications Limited (MTN Nigeria) continues to categorically and unequivocally deny all charges related to the Central Bank of Nigeria (CBN) and Attorney General of the Federation (AGF) investigations into the company’s CCIs and unpaid taxes respectively.
“The simple reality is that MTN Nigeria has never repatriated dividends on the CCIs referenced by the CBN and that MTN is fully compliant with Nigerian tax law.
“In order to protect MTN Nigeria’s assets and shareholder rights within the confines of the law, we have applied today in the Federal High Court of Nigeria for injunctive relief restraining the CBN and the AGF from taking further action in respect of their orders, while we continue to engage with the relevant authorities on these matters.”
Only time will tell how this story will eventually end; but if history has taught us anything, it is that MTN will persist through this just like they have in previous occasions or maybe, just maybe this may be the straw that breaks the camel’s back.
* Tunji Andrews, a Lead Economist at Time, Trade and Commodities (TTAC), writes from Lagos.
Federal government has abolished the five per cent excise duty on telecommunications services, a levy that had long sparked public concern over rising costs for subscribers.
Pic credit… Itedgenews
Aminu Maida, executive vice chairman, Nigerian Communications Commission (NCC), announced the development during an interactive session with journalists in Abuja on Tuesday.
Maida explained that the duty, which was earlier suspended, had now been completely removed by President Bola Tinubu under the new tax legislation.
“The excise duty, it was the 5 per cent or so, that is no longer there. Before it was suspended, but now the president has been magnanimous to remove it entirely. I was in a room when it was raised, and he said, No, no, no, we cannot put this on Nigerians. I was very pleased when the bills came out and we saw his words were followed through,” he disclosed.
Maida stressed that eliminating the charge would ease cost pressures on subscribers and enable wider industry growth.
He added that reforms within the sector were now guided by principles of transparency, accountability, and stronger consumer protection.
The EVC revealed that the regulator was moving beyond traditional rule-based supervision to incorporate behavioural economics, which includes providing more information for consumers and operators to make informed choices.
According to him, one key initiative is a nationwide public map of network performance, expected in September, that will provide independent data on download speeds, latency, and other service indicators.
“There will also be a quarterly network performance report based on user data. It extends accountability beyond mobile operators to also include infrastructure providers who play a critical role in reliability,” he said.
The NCC boss further emphasised the importance of corporate governance as a tool to attract investment and improve industry efficiency. He noted that the ultimate goal is to nurture a telecom company that is wholly Nigerian-owned, well-structured, and globally competitive.
He listed some of the NCC’s recent achievements, including the conclusion of the NIN-SIM audit, settlement of USSD debt disputes, transition to end-user billing, and the launch of a Major Incident Reporting Portal.
On call tariffs, he pointed out that competition had helped keep rates low, with the highest in the market today at about N18 or N19 per minute, compared to N50 per minute two decades ago.
Addressing frequent consumer complaints, he disclosed that the NCC and Central Bank of Nigeria (CBN) had developed a new framework to standardise electronic recharge processes. In addition, Tier-1 audit firms were hired to investigate billing systems after reports of unexplained data depletion.
The results, he said, showed no systemic manipulation. Instead, factors such as background applications, device settings, and complex tariff plans contributed to user dissatisfaction.
“We are not trying to punish anyone. We want the industry to grow, so consumers are happier, operators perform better, and the government benefits from a broader tax base,” Maida added.
In a strategic move to propel the Nigerian blockchain ecosystem, Roqqu, a prominent digital finance and blockchain solutions provider, has officially partnered with the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN).
This new alliance will leverage the combined expertise and resources of both organizations to foster innovation, drive development, and accelerate the adoption of blockchain technology across Nigeria.
The partnership comes shortly after Roqqu was welcomed into the SiBAN network as a corporate member, solidifying a joint commitment to building a more credible, transparent, and sustainable digital asset ecosystem.
The collaboration is designed to bridge the gap between rapid technological innovation and responsible adoption, while prioritizing user protection and ethical standards.
In a statement, the organizations detailed a range of initiatives to be launched as part of this collaboration, all aimed at promoting financial inclusion and responsible innovation.
Key initiatives to be carried out by the two organisations include jointly hosting events to educate both the public and industry professionals on blockchain technology, developing training programs to equip developers and the public with the skills needed to thrive in the blockchain space and actively engaging with regulators and policymakers to help shape a more informed and compliant blockchain community in Nigeria.
“We are delighted to have this collaboration. Our collective strength lies in the diversity and commitment that we both bring to the table and ultimately, contribute to the growth of the blockchain ecosystem,” said Obinna Iwuno, President of SiBAN in the statement.
Roqqu has seen remarkable growth in recent years, establishing itself as a leading force in making cryptocurrency and digital finance accessible. With a focus on providing fast, reliable, and user-friendly services, the company has expanded its footprint beyond Nigeria into other key African markets, including Ghana, Kenya, and South Africa. This expansion, along with a virtual currency license to operate in the European Economic Area (EEA), positions Roqqu as a truly international fintech company.
Reacting to the partnership, the Chief Compliance Officer of Roqqu, Roimot Ajiboye-Ibitoye, said partnering with SiBAN is a natural step to make blockchain technology and digital finance accessible, safe, and beneficial for everyone, insisting that together, the two organisations are not just talking about blockchain adoption. Rather, actively building the frameworks, trust, and education needed for it to thrive responsibly in Nigeria.
“This collaboration represents a united front between innovators and industry advocates to create a credible, transparent, and sustainable digital asset ecosystem. By combining our expertise with SiBAN’s strong advocacy and regulatory engagement, we are setting the stage for a future where blockchain becomes a trusted driver of financial inclusion and economic growth across the globe,” he said.
This partnership highlights a shared vision between Roqqu and associations like SiBAN that play a crucial role in bridging the gap between industry innovation and responsible adoption to ensure the benefits of blockchain are accessible to a wider audience, creating a safer and more robust future for digital finance in Nigeria.
SiBAN as a body provides a platform where stakeholders can share knowledge and experiences, where companies can engage in constructive policy discussions with regulators, where communities can learn about safe, responsible participation in the blockchain space and where businesses can collaborate on solutions that serve both economic and social development goals.
Industry watchers believe that this partnership highlights a shared vision of creating a credible, transparent, and sustainable digital asset ecosystem. By working together, Roqqu and SiBAN aim to bridge the gap between rapid technological innovation and responsible adoption, ensuring that the benefits of blockchain are accessible to a wider audience while prioritizing user protection and ethical standards.
Nigerian Communications Commission (NCC) has said that it has successfully eliminated users of unregistered subscriber identity modules (SIM), from the Nigerian telecommunication network, a development that can boost national and cyber security.
Eng. Aminu Maida, executive vice chairman of NCC,
Eng. Aminu Maida, executive vice chairman of NCC, who disclosed the information at a media briefing in Abuja on Monday, said, however, that it was beyond the scope of the agency to control the names with which some customers used in registered their SIMs.
The NCC CEO pointed out that while the commission had successfully removed unregistered SIMs from its network, some strange names being attached to some of the subscribers reflect what the owners used while registering with their operators.
“No unregistered SIM is operating on the network as of today, but there may be people using names they did not register with, apparently to mask their identities. We cannot control the names attached to each SIM, as they reflect what the owners used at the time of registration with their respective operators,” the EVC said.
“While NCC cannot control that behaviour, it is to be noted that it is an offence to use fake names to make or receive calls in Nigeria,” Maida warned.
The EVC, however, said that the commission has put necessary measures in place to ensure sanity and stability in the industry so that every user can determine the best network operator to patronise based on performance, service delivery and charges.
He said the commission would, in September this year, launch a public map to show subscribers which of the telecoms networks provides the best service and tariff plan to determine which to patronise based on their locations.
Mr. Maida said for the industry to make the required progress and serve the interests of the people, there is a need for a fresh injection of capital from outside the industry, adding that the commission had already revised a series of good governance guidelines to guide operators in the industry.
According to him, the guidelines are aimed at promoting transparency, accountability and boosting investors’ confidence and customers’ trust in the industry.
He said, “The need for good corporate governance guidelines requires that operators in the industry must provide audited reports to boost investors’ confidence and earn the trust and confidence of their customers”.
The ECV explained that the commission approved the recent tariff hike for the industry due to the fact that there had not been any cost-reflective tariff adjustment for a decade, adding that the commission was mindful of the need to protect the interests of both the operators and Nigerian subscribers.
On the issue of threats to telecoms infrastructure nationwide, the EVC announced that he would soon meet with governors to discuss the need for them to team up with NCC to protect telecoms infrastructure in their domains and to also eliminate multiple taxes on the operators so as to improve service delivery and ensure national security.
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