MTN Group announced that MTN Nigeria has applied to the Federal High Court of Nigeria for injunctive relief from the Central Bank of Nigeria (CBN) and the Attorney General of the Nigerian Federation (AGF)’s orders. As previously disclosed, the CBN has alleged improper dividend repatriations by MTN Nigeria and requested that $8,1 billion be returned “to the coffers of the CBN”.
At the same time, the AGF has alleged unpaid taxes on foreign payments and imports, and has demanded that approximately $2,0 billion in relation to these taxes be paid to the Federal Government of Nigeria (and now directed that the payment of the $8.1 billion is dealt with through his office rather than as directed by the CBN). MTN Nigeria strongly denies these allegations and claims.
The aim of MTN’s application to the High Court is to protect MTN Nigeria's assets and shareholder rights within the confines of Nigerian law while the company continues to engage with the relevant authorities.
MTN Group President and CEO Rob Shuter said “We believe that we have complied with all relevant laws, and in light of that, and the conflicting instructions from different organs of State, we have had no choice but to seek relief from the Courts in Nigeria. We remain firmly committed to the Nigerian market and will continue to engage with the authorities on these matters.”
A fortnight ago, the CBN announced it wrote the firm to refund about $8.134 billion (about N2.5trillion at N306.15 to $) repatriated illegally out of Nigeria.
On the other hand, the AGF had a few days after the CBN sanctions also accused MTN of not paying taxes on foreign payments and imports totaling about $2 billion to the Federal Government.
CBN's spokesperson, Isaac Okorafor, said the repatriation was facilitated by four commercial banks using irregular Certificates of Capital Importation (CCIs) issued on behalf of some offshore investors of MTN Nigeria.
The four banks, Standard Chartered Bank, Stanbic-IBTC, Citibank and Diamond Bank, were also asked to refund various amounts totaling N5.87 billion.
The amounts, which have since been deducted from the banks' accounts with the CBN, include N2.5 billion for Standard Chartered; Stanbic IBTC (N1.9 billion); Citibank (N1.3 billion and Diamond Bank (N250 million).
The CBN accused the banks of violating the country's laws, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 and the Foreign Exchange Manual, 2006.
MTN, which described the allegation as regrettable, rejected both sanctions, promised to vigorously defend its position that it did not do anything illegal an unlawful.
Zimbabwe’s new Finance Minister Mthuli Ncube may scrap the quasi currency bond note and liberalize exchange controls as part of reforms he plans to implement by end of this year, a state-owned weekly newspaper reported on Sunday.
The southern African nation, which dumped its currency in favor of the U.S. dollar in 2009 following years of hyperinflation, introduced bond notes in November 2016 in a bid to ease acute shortages of cash. The shortages have, however worsened while a black market continues to thrive.
The notes are backed by U.S. dollars loaned to the government by the African Export and Import Bank, and can be used like cash.
Officially, they are pegged to the dollar at a rate of 1:1, but on the street $1 fetches up to 1.50 in bond notes.
“I am very clear that there have to be currency reforms and the current currency approach is not working,” Ncube told the government-owned Sunday Mail.
He said he would explore three options: either Zimbabwe joins the South African rand union; uses only the U.S. dollar while removing bond notes from circulation, or reintroduces the Zimbabwean dollar.
Ncube however said a local currency would only be introduced when the country has enough foreign reserves and achieves macro-economic stability. Zimbabwe currently has two weeks import cover, according to central bank data.
Ncube, a former senior executive with the African Development Bank, was appointed by President Emmerson Mnangagwa on Friday and is expected to lead Zimbabwe’s economic recovery program.
He was not immediately available to comment when Reuters tried to contact him.
A dwindling supply of cash dollars has led to banks limiting daily withdrawals to as little as $30 in bond notes. Companies are struggling to pay for imports and foreign investors cannot repatriate dividends or profits.
There are $350 million worth of bond notes in circulation, according to latest central bank figures.
South Africa should avoid populist economic policies and prioritize strategies that lead to sustainable growth and job creation, according to the country’s Reserve Bank Governor Lesetja Kganyago.
“The central problem is avoiding the temptation to pursue economic policies that have short-term, populist benefits but long-term costs,” Kganyago wrote in an opinion piece in the Johannesburg-based Business Times. Such decisions result in higher public or private debt to finance consumption, which is contributing to recent market contagion, he said.
Africa’s most industrialized economy entered a recession in the second quarter, with the rand weakening to a two-year low.
The currency’s rapid depreciation reflects a perception that “South Africans are discussing policies that risk undermining the macro framework rather than inducing stronger economic growth and job creation,” according to Kganyago.
He said that “another task is to get more out of our public spending -- ridding institutions of corruption and improving health and education outcomes.”