SARB warns of 'systemic risk' if MTN repatriates funds to Nigeria
The SARB said the worst-case scenario would be for MTN to pull out of Nigeria, a situation that would increase the company’s exposure to reputational risk.
The South African Reserve Bank (SARB) has said MTN Group’s dispute with Nigerian authorities over $10.1 billion in repatriated funds and unpaid back taxes could increase systemic risk in South Africa’s financial system. The central bank disclosed this in its Financial Stability Review released on Wednesday in Pretoria, South Africa.
“The immediate, or at least near-term, repatriation of the funds to the Nigerian authorities could affect MTN Group’s ability to continue meeting its debt obligations, including those in the South African banking sector,” the South African Reserve Bank stated. “Given the interconnected nature of the financial system, this could increase systemic risk.”
The SARB added that the claims amount to almost all of MTN’s market value of about $12 billion. The worst-case scenario would be for MTN to pull out of Nigeria, a situation that would increase the company’s exposure to reputational risk.
In August 2018, the Central Bank of Nigeria (CBN) had ordered the telecom company to refund a total of $8.1 billion that the CBN said was illegally moved out of the country. The apex bank also placed a N5.8 billion fine on Diamond Bank, Stanbic IBTC Bank, Citibank and Standard Chartered for allegedly aiding MTN in the alleged illegal repatriation.
MTN filed an injunction in September in an effort to challenge the claim. Last month, a Federal High Court in Lagos adjourned the case till December 4. On Thursday, Justice Saliu Saidu also adjourned till December 3 the case on the claim for the non-payment of $2 billion in taxes made against MTN Nigeria by the Attorney-General of the Federation.
Reuters reported that the CBN has emailed invitations to the four lenders of the telecom company for a meeting on Friday to discuss the $8.1 billion fund transfer dispute.
In its financial results recently released, MTN reported a 17.4 percent year-on-year increase in service revenue and added 2.5 million subscribers to reach 225.4 million users during the same period. The telecom firm makes about a third of its annual core profit in Nigeria.
Most Popular News
- Details of President Muhammadu Buhari's "Budget of Change"
- Africa Internet Group rebrands online businesses to Jumia
- Nigeria’s inflation rises for second consecutive month to 11.44 per cent
- First Bank, Microsoft host capacity development summit for SMEs
- Flutterwave partners Visa to launch payment solution for Africa
- AFIG Funds acquires 29.9 per cent stake in NEM Insurance