The guys at MTN Nigeria must have really offended someone or everyone in this government. And that someone is angry enough to impose fines on the company that can bankrupt the company from Nigeria to South Africa. It’s entirely possible they have committed the offences the government charged them with. But the manner the fines have been hurled at them raises eyebrows and says something about the way our bureaucrats in government make decisions that affect business without thinking of the consequences.
MTN Nigeria is a really big company in Nigeria. One of the biggest success stories of the country in the past twenty years since Nigeria liberalized her telecoms industry . MTN South Africa took a risk on Nigeria when few wanted to. And has reaped the reward. In multiples.
Its success has led to normal envy. From competition who feel intimidated by MTN”s success. To nationalists who would have preferred it was a Nigerian company. Anger from some who think that South Africa has not provided Nigerian companies with same opportunities that were provided for MTN in Nigeria. South African economy is essentially locked out for the rest of Africa, including even its less fortunate population.
MTN was fined once the current government came to power in 2015. For failing to take the government order to identify all subscribers on its network. The government needed a scapegoat . MTN was a willing scapegoat. When they complained, government slashed the fine to less than $2B. That was still hefty . But was better than the initial $3.6B.
Fast forward two years later. MTN is in even deeper trouble. From being asked to repatriate $8.1B it remitted for dividends to being ordered to pay back taxes of $2b, all in quick succession. Sadly as the company was in the process of complying with one of the conditions of its first fine : listing the local entity on the Nigerian stock exchange.
The Economy and Investments
The Nigerian business community has been rightly alarmed. Nigerian economy has been in the doldrums due to poor government policy in the past three and half years. The MTN issue adds to the woes of the economy in addition to portraying the country as a bad place for investments. Its an irony that the week before the fines, MTN had announced a $600m investment to upgrade its Nigerian network. And while the announcement was being made, the Nigerien government was in China asking the Chinese to help it build a data center with a loan of about $250M.
The optics seems to suggest that Nigeria prefers borrowing to build infrastructure to bringing investments. The Buhari government has been borrowing heavily from China to rebuild Nigeria instead of an investment led infrastructure build out. Some of the questionable infrastructure being undertaken by the government reflect a mindset in government that favours government owning institutions we had taken for granted that the private sector can operate better. Take the recent case to invest in a national carrier. Despite its embarrassing suspension , I believe that government did not back out from conviction that its policy was wrong headed. Buhari even muted the idea of building a national shipping line.
It is against this background that you will worry about the attack on MTN. Is government worried about the size of the company and wants to cut it to size?Is telecoms the new oil and place for government officials to control and extort? And on the sinister side, is there a game being played that we are not aware of ,whose ultimate purpose is to make the country too hot for current owners of MTN Nigeria to force an ownership restructuring that could suit some fat cats connected to government?Sadly whatever game is being played could lead to the failure of MTN and the collapse of the Nigerian telecoms industry and the tech industry it has fostered.
I don’t know who stands to benefit from all this. It certainly does not look like its Nigeria. Otherwise how do you justify the attack on business and investment in a country that is wobbling out of recession, and at the risk of going back in?
MTN is possibly not a saint. And may have done somethings it should not do. As a subscriber to MTN since inception, I have a love-hate relationship with them. And some bit of envy I must say. I am sometimes at pains at the poor service I receive. Yet grateful for the profound effect their setting up service has had on business, life and everything in-between. They have become a part of our national infrastructure. A critical one at that. Punishing MTN is punishing ourselves. The millions of people who use the network to do business and live their lives. Should MTN fail , Nigeria will literally be in trouble .Those who knew when we had 450 thousand lines in Nigeria would know what I am talking about.
Those punishing MTN have not made a clear case on why the sudden urge to hit MTN twice in a row with punitive fines. However this plays out will not end well for Nigeria. MTN may lose money and may even pull out of Nigeria. But MTN is just a company in Nigeria. What is happening to MTN in Nigeria hurts Nigeria. Hurts businesses and ultimately hurts the millions of Nigerians who are getting poorer everyday because we are not growing the economy fast enough to pull people out of poverty.
Nigeria needs more success stories like MTN. If we can mint them locally, great. Otherwise , we need foreign investors to help create them . But if I am a foreign investor, I will look at MTN and wonder.