Central Bank of Nigeria (CBN) has reportedly surrendered some ground in its tussle with MTN Group Ltd., pledging that a dispute over the repatriation of $8.1 billion in dividends from the country will soon be resolved.
This after coming out all guns blazing and vowing repeatedly it would not buckle under pressure.
Examiners from the CBN are reviewing documents provided by Johannesburg-based MTN and four banks accused of moving money out of Nigeria without the CBN’s final authorization.
Godwin Emefiele, CBN governor, clarified that the regulator had initially wanted MTN to reverse the flows and that there was no liability on behalf of the lenders.
“We’ll resolve the matter,” Emefiele said. “Everyone will be happy” from MTN and the lenders to the Central Bank of Nigeria and the government, he added.
Nigerian authorities are changing their tone after coming under criticism that the impasse with MTN and lenders including Citigroup Inc., Standard Chartered Plc, Standard Bank Group Ltd. and Lagos-based Diamond Bank Plc threatened to spook investors. T
he regulator had initially demanded MTN and the banks refund the money, spurring the biggest collapse in MTN’s stock in 20 years.
Godwin Emefiele, CBN governor
“The erratic nature of the CBN -- and perhaps even the manner in which its position has been articulated in the MTN saga -- will at the minimum highlight concerns regarding the business environment in Nigeria,” said Ryan Cummings, a director at Signal Risk, which advises companies in Africa.
“And, at worst, illustrate that the country is a jurisdiction where state involvement could occur with detrimental consequences should there be political capital to derive from it.”
“The CBN now is trying to be as diplomatic as possible while at the same time they just shot themselves in the leg,” said Abiodun Keripe, head of research and strategy at Elixir Investment Partners in Lagos.
“They said these guys have erred and all of a sudden you are now talking about making them happy. All of these will form a precedent going forward, how they manage it is critical. It would be good if there is a soft landing just for the health of the economy and the capital market.”
The accusations against MTN -- including allegations by the attorney general’s office that it owes $2 billion of back taxes -- come as President Muhammadu Buhari’s administration faces criticism of its economic management in the run-up to the elections.
Two years ago, MTN negotiated a $5.2 billion fine down to about $1 billion plus a commitment to list its local business in Lagos. That penalty was related to subscribers that weren’t properly registered in the country.
“It’s a shoot-first-and-think-later scenario,” Kayode Omosebi, an analyst at Lagos-based Asset & Resource Management Co., said on the central bank’s handling of the MTN matter.
The CBN should “take their time and do some analysis before coming out to the market,” but at least investors now “know that things may not be as bad as the CBN put it initially.”
