By Akeem Ogunlade
SOME Nigerian actions never cease to amaze. On Thursday, August 30, 2018, the country participated in the Africa Singapore Business Forum during which Ms Yewande Sadiku, Executive Secretary/CEO, Nigerian Investment Promotion Commission, NIPC, made a strong case for Foreign Direct Investment, FDI, into the country. Participants who witnessed the Nigeria-specific investor engagement session described the presentation as smart and compelling.
Then, while the networking session was going on, news filtered in that the Central Bank of Nigeria, CBN, had imposed penalties on four banks and the country’s largest telecom operator for alleged infractions pertaining to money remittances. It was an enormous anti-climax for the Nigerian contingent. The news was consequently beamed worldwide while the Singaporean investors the country went to court took note.
During the same period, British Prime Minister, Theresa May and German Chancellor, Angela Merkel, were in Nigeria to enhance trade and investment between their countries and Nigeria. Merkel came with a high profile business delegation. A debate about the consequences of the penalties on companies was then full-blown, and would have made some impressions on the visitors.
As it were, the apex bank ordered Standard Chartered Bank, Stanbic IBTC Bank, CitiBank Nigeria and Diamond Bank to pay fines totaling N5.87 billion, while MTN Nigeria was directed to refund the sum of $8.134 billion. Standard Chartered Bank was fined N2.4 billion, Stanbic IBTC N1.8 billion, Citibank Nigeria N1.2 billion and Diamond Bank N250 million.
CBN claims the fines were imposed after painstaking investigation and its inquiry was triggered by “allegations of remittance of foreign exchange with irregular Certificates of Capital Importation, CCI” between 2007 and 2015, in “flagrant violation of extant laws and regulations of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006.” CBN Governor, Godwin Emefiele, described the alleged offences as weighty and had attracted global attention.
Predictably, all the affected parties have issued statements to clarify their positions. The banks are reported to be engaging the CBN to state their sides of the story, especially as the apex bank vetted and approved the offending transactions. While virtually everyone agrees on the imperative of resolving the issues amicably, it appears that a media battle is now in full play, with the potential of inflicting more harm than good.
Since the matter broke, the values of the shares of the affected companies have been declining, triggering apprehension among shareholders and low confidence in the local capital market. While Stanbic IBTC and Diamond Bank are quoted on the Nigerian Stock Exchange, MTN is listed on the Johannesburg Stock Exchange.
MTN, in its response, stated that it adhered to all extant laws in the payment of dividends to its shareholders between 2007 and 2015. On its part, Stanbic IBTC Bank, reportedly stated in its official response to CBN that the conclusions reached by the regulator were based on ‘factually incorrect premises’. According to sources privy to the engagements, the bank reminded the CBN of the outcome of its findings on the same issue following a special examination that was conducted in March this year. The finding reportedly cleared the bank of any wrongdoing as its actions were in line with extant rules and regulations.
On the claim that the shareholders of MTN Nigeria invested the sum of $402,590,261.03 in the company from 2001 to 2006, Stanbic IBTC Bank stated as follows: “The twenty certificates of capital importation CCIs transferred to our bank by Standard Chartered Bank and which were in the above quoted sum, were re-issued from existing CCIs that had been issued by Standard Chartered Bank to the original investors in MTNN.” It added that “these CCIs were transferred to our Bank to facilitate the repatriation of the proceeds of MTN’s Private Placement which took place in February 2008.
While the matter festers, Nigeria’s quest for economic development via FDI will, once again, occupy the back seat. Whatever are the merits of the issues, one would have expected CBN, as regulator, to be more circumspect in its reaction. The manner with which its letter to MTN and the banks was leaked to the media leaves much to be desired. It is suggestive of an unstated agenda that detracts from a steady march towards sustaining a conducive atmosphere for investment and businesses to thrive.
CBN’s action brings to mind another regulatory action in which the Consumer Protection Council shut down the operations of a US confectionary firm, applying an unnecessary bravado. It is probably apt now for Nigeria, especially the current administration, to urgently retool the national regulatory template to eliminate unnecessary impediments to economic development. This is particularly fundamental if the goal of opening the economic space and attracting FDI will not be another wild goose chase. This will go some way in supporting the incumbent government’s drive towards economic stability and consolidation.
Some time ago, President Muhammadu Buhari had inaugurated the Presidential Enabling Business Environment Council, PEBEC, which has the Vice-President Prof. Yemi Osibajo as Chairman and Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah as Vice-chairman. The purpose of this initiative, according to Enelamah is “to attract investment into Nigeria and to ensure that the investments are protected.”
Internal engagement, as the accused banks have indicated, would have been a more appropriate approach to resolve the issues, instead of delivering a guilty verdict in the media. Keen observers of the unfolding events had expected that CBN, as regulator, would have adopted a more professional approach to dealing with any malfeasance in the industry. Engaging in a media battle leaves much to be desired. Whether this is designed to play into the political season or not, Nigeria would be left holding the wrong end of the stick.
Mr Ogunlade is of the Centre for the Promotion of Enterprise and Business Best Practice, Wuse 2, Abuja
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