The directive by the
Nigerian Federal Government via the Central Bank of Nigeria to MTN to repatriate
$8.13 billion, illegally taken out of the country is a direct assault on the
attraction of foreign direct investment to Nigeria. The matter is further
compounded by the directive of the Attorney – General of the Federation to MTN
to pay a fine of $2bn in tax arrears on imported equipment and payment to

These new directives by the
Nigerian government have been widely observed by industry experts and members
of the foreign community as a shake down by the government. The Nigerian Telecommunications
Industry contributes about 11% to the country’s GDP and these directives only to
seek to cause unpredictable ripples in the industry as MTN, one of the biggest
players is now probably considering its long – term business goals and
relationship with Nigeria.

According to the CBN, the
first error was when the Certificate of Capital Importation (CCIs) at the time
of investment by MTN Nigeria showed $59.436 million as shareholders’ loan and
$343.153 million as equity, but turned to $399.594 million as shareholders’
loan and $2.996 million as equity investment as at December 2017. Contrary to
the CCIs issued by Standard Chartered Bank Limited, Citi Bank and Diamond Bank,
which constituted a rendition of false returns to the CBN.

MTN on its part has denied
the allegations and stated categorically that the company has committed no
wrong. The South African company also states that the transactions in question were
handled to the letter of the law and were eventually cleared by the CBN and the
National Assembly upon its investigation.

According to Bismsark
Rewane, the impact on MTN and its investors’ funds will be monumental. The
market capitalization of MTN in the Johannesburg Stock Exchange is $10 Billion,
therefore the government is asking MTN to remit 80% of its market capitalization.
Furthermore, MTN invests upto $2bn in the Nigerian telecommunication industry
every year, which makes up about 54% of the entire industry.

Furthermore, MTN lost
881,586 subscribers between June and July, according the latest industry
statistics released by the Nigerian Communications Commission (NCC)

This is not the first of MTN’s
challenges in doing business in Nigeria, three years ago, the telco, which has
the dominant share of the mobile telecoms market in Nigeria, was slammed with
a $5.2 billion fine for failing to disconnect 5.1 million subscribers
after the registration deadline.

 It is important to note that these fresh
sanctions to MTN will gravely impact Nigeria’s productivity, which is currently
at -0.4% which will lead to a major slow down on investments in this industry
resulting in a direct blow on Nigeria’s ability to attract Foreign Direct Investment
into the county.

Nigeria prides itself as one
of the biggest economies in Africa but continues to fail in providing a conducive
environment for businesses. Some of the companies that have withdrawn investments
in Nigeria include Sun International and recently Etisalat UAE.