Nigeria's decision to slap a R71.1bn on MTN is posing a real dilemma for Pretoria, writes Peter Fabricius.
The Nigerian government’s decision to slap a mind-boggling fine of $5.2 billion (about R71.1bn and probably rising) on MTN for failing to cancel the cellphone services of unregistered users, is posing a real dilemma for Pretoria.
The South African government is coming under considerable pressure to intervene with Abuja on behalf of MTN to reduce the fine at least.
Deputy President Cyril Ramaphosa told Parliament last week that the huge fine would “impact on South Africa” as it would reduce tax revenues from MTN significantly. In other words, this is an issue of national importance and national interest.
Yet, Ramaphosa also seemed to suggest that his government would not intervene and would leave it up to MTN to handle the matter itself. He said South Africa would like its companies to comply with the laws and regulations of the countries where they operate.
A Nigeria-based analyst has been quoted as saying MTN is trying to negotiate the fine down by 60 percent to 80 percent. Maybe governments should not intervene every time their companies get into trouble abroad, but this is a case where it should, for several reasons.
The main one is that the fine seems completely excessive, and that raises some issues about the Nigerian government’s motives. Relations between the two countries are not great after a recent history of clashes.
These include a major one over the deaths of 84 South Africans when a building belonging to the charlatan preacher TB Joshua collapsed on them in Lagos last year. Nigeria’s mishandling of the bodies seriously strained relations.
Then there was South Africa’s seizure of millions of dollars in cash from dodgy Nigerian dealers trying to enter this country to buy arms. The Nigerian government claimed that they were conducting a legitimate government arms purchase.
And earlier this year Abuja recalled both its high commissioner and his deputy after the spate of xenophobic attacks in South Africa, even though Nigerians had barely been affected.
That prompted Pretoria to issue a very strong statement in which South Africa’s suppressed anger over the church deaths boiled over. The SA government slammed Abuja “for the deaths and more than nine months delay in the repatriation of the bodies of our fallen compatriots” and “the fact that when these bodies eventually returned, they were in a state that they could not be touched or viewed as required by our burial practice”. Wham. That was an unusually undiplomatic statement which revealed South Africa’s true feelings about Nigeria.
Against this background, it is not implausible that there could be a political motivation to Nigeria’s huge fine on MTN - even though, it must be said, relations between Pretoria and Abuja seemed to have improved since Muhammadu Buhari succeeded Goodluck Jonathan in this year’s presidential elections.
Even so, Pretoria should not stand back nobly on the principle of separating government matters from corporate matters. In an ideal world that stance might be defensible. But Nigeria is far from being an ideal world.
South Africa investors in Nigeria - and elsewhere in Africa - need protection because the rule of law is often not respected.
Ironically, this issue has risen after the SA government unilaterally terminated bilateral investment treaties with several Europeancountries, replacing them with a single investment protection bill which is still before Parliament.
But it is unlikely to assuage the concerns of foreign investors much because it would not allow them to seek international arbitration of their disputes with the SA government, unless the government agreed to that recourse.
Yet such international arbitration would seem, on the face of it, to be the best way of settling the MTN-Nigeria dispute if MTN’s own efforts fail.
Is South Africa, in a sense, being hoist on its own petard?
Should it not apply a universal standard of investment protection which covers others in South Africa just as it covers South Africans where they need it abroad?
The Star
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