LAGOS: Nigeria’s decision to order South African telecoms giant MTN to repay billions of dollars that it had allegedly illegally repatriated over a period of eight years could sour investor sentiment towards the country as it still struggles to recover from a deep recession two years ago, analysts say.
In a shock announcement last Wednesday, the Central Bank of Nigeria (CBN) ordered MTN to repay $8.13 billion because it had not obtained the necessary permission to repatriate the funds between 2007 and 2015, reports AFP.The four banks involved in transferring the funds from MTN’s bank accounts in Nigeria to those in South Africa were fined a combined 5.87 billion nairas ($16.2 million, 14 million euros).
With the economy still fragile after a deep recession in 2016 and elections looming early next year, many private sector players in Nigeria believe the move could dent investor sentiment at an already difficult time for foreign investment in the country, analysts said.
“Anything of that magnitude, particularly given the timing ahead of an election… is certainly going to raise suspicions from international investors,” said Alastair Jones, analyst at London-based New Street Research.
For Peter Takaendesa, Cape Town-based portfolio manager at Mergence Investment Managers, the situation was untenable.
“Investors want certainty in terms of laws. There’s no way MTN will find $8 billion to put in Nigeria. There has to be a resolution,” Takaendesa said.
For the time being, MTN does not appear to have any intention of reviewing its presence in Nigeria, which is by far its biggest individual market and makes up a huge chunk — 27 percent — of its revenues. It boasts double-digit growth rates there and has more than 52 million subscribers in 2017 — 42 percent of the Nigerian market.MTN Nigeria has already earmarked investment of 180 billion nairas ($497 million) this year for the expansion of its network. “Of course, Nigeria is their biggest market, they can’t leave today,” said Nonso Obikili, a Nigerian economist based in South Africa.