After weeks of allegations and speculation, the Central Bank of Nigeria is reportedly in talks with MTN Nigeria, Standard Chartered, Stanbic IBTC Bank, Citibank and Diamond Bank towards reaching an “amicable” and “equitable” resolution. The CBN had previously alleged that MTN Nigeria and four banks had been involved in the illegal repatriation of funds out of the country using irregular CCIs.
The telco had been adamant about its innocence, while CBN reportedly debited the accounts of the four banks. MTN continued its insistence and filed a suit at the Federal High court seeking an injunction against the CBN and the office of the Attorney General. Subsequently, the CBN filed its defence to the suit asking that the case is dismissed and that MTN Nigeria had intended to defraud the country in perpetuity.
Before the news of the apex bank’s defence in court, Emefiele had stated in an interview with the press that certain documents had been produced and that the decision could be reviewed. Finally, the latest reports show that the CBN may reduce the refund drastically or that there may be no refund after all.
Speculations on the CBN’s grounds have begun rising, with many questioning the basis of the apex bank’s initial allegations. The current sequence of events has caused experts, investors and industry watchers to question the sufficiency of the CBN’s ground to request for a refund in the first place.
Tunji Andrews, Lead Economist at the financial consultancy, Time, Trade and Commodities Africa says since the regulator understand that markets react to sentiment and crave predictability, two contradictory messages from the bank’s Governor in the space of mere days was always likely to cause consternation among already jittery shareholders. For him, this behaviour raises a series of questions.
“What evidence has been provided that was not originally available to the CBN before it took action? Isn’t it the CBN’s responsibility to act only once it has all the facts? Or did the CBN act without knowing everything?
“Is it possible that the CBN, which announced the sanction publicly, at the same time as notifying MTN and the banks, has acted on inaccurate information? If they have, what then for MTN’s shareholders who have lost value? Who can they turn to? If the CBN really has made a mistake, will it be big enough to apologise to the people who have lost billions?”
There is also a political component to consider as well, in light of the fact that this is the high election season – motivated business people who are looking at the situation as yet another indicator of the less than business-friendly posturing of the current administration. An unnamed official at a large audit firm said he was told by a number of foreign clients at an investor forum in London that “Nigeria was a no until Buhari leaves”
Governor Emefiele probably appreciates the implication of spooking investors more than most; his pre-CBN day job comprised of leading one of the country’s largest lenders. Thus, when he talks of the clash with MTN assuming a “global dimension” when the matter was “isolated’’ and no reason “for anyone to lose any sleep,’’ it hints at a naivete which is ill-suited to the smooth running of the continent’s largest economy.
Investors will not simply swallow platitudes and reassurances when MTN, perhaps the most prominent case study of how businesses are treated in Nigeria appears to be enduring a slow but gory death by a thousand regulatory knives.
If full confidence in the integrity of the regulator and its leadership and by extension the Nigerian investment story is to be restored, there might be only one clear option available to them: simply walk back.