A penalty of $5.2bn is not punishing non-compliance, it is destruction of much-needed alliances, says Victor Kgomoeswana.
Johannesburg - Where in the world is Kofi Annan? We need his wisdom and elegance to prevail on Nigeria before it makes the biggest mistake of the President Muhammadu Buhari era by imposing a $5.2 billion (R73.7bn) fine on the company that did more for its foreign direct investment inflows and economic growth than most, MTN.
Here is a country with an annual budget of $22.6bn, seeking to collect 23 percent of that from one company – its platinum investor. I am a big fan of Nigeria, but this time it needs to do a rethink.
For further context, last year Nigeria fined Shell $3.96bn for spilling about 40 000 barrels at its offshore Bonga oil field in 2011. In 2011, a pharmaceutical giant was fined $75m for a meningitis drug trial which claimed the lives of about 12 000.
Is a failure to disconnect SIM cards a more grievous transgression, or is there more at play here? Are South African companies worth higher fines? Standard Bank also narrowly escaped a $5m penalty in the same week as MTN got stung.
Does MTN deserve such severe censuring for its lapse on unregistered SIM cards?
Am I happy that the kidnappers of former finance minister Olu Falae happened to use MTN phones to negotiate a ransom?
No to both. Short of accusing MTN of being in cahoots with Boko Haram, I have no idea what the Nigerian Communications Commission (NCC) is suggesting with its planned debilitating penalty.
Not only is the $5.2bn disproportionately high for what fellow Africans could and should have prevented, it risks souring relations between Nigeria – Africa’s largest economy – and its critical ally, South Africa.
Nigeria has done well over the past 10 years to transform itself. Its reform of the financial sector has produced all-star bankers like Jim Ovia and Tony Elumelu.
This yielded manifold benefits to the economy, particularly higher confidence in its banking system. Nigerian banks such as Access, Zenith and UBA are some of the global players to emerge from this deliberate action of the Nigerians.
Corrupt bankers were jailed, smaller ineffectual banks closed down and the Asset Management Corporation (Amcon) continues to mop up the debris from the consolidation.
Well done! Nigeria has also diversified its economy, raising the contribution of agriculture to the GDP by attracting investment and talent into the sector.
The country is now a net exporter of cassava chips, thanks to the actions of the government. Multinationals such as General Electric are among the foreign investors beefing up the power sector.
Will they be watching this R73.7bn fine, worrying they may be next? Nigeria is a worthy leader of the African continent, but it must get a grip and act with the bigger picture in mind.
It owes a lot of its better image as an investment destination to companies such as MTN, who bet on it when many others would not.
In making Nigeria a prime contributor of 37 percent to its revenue, MTN opened the proverbial floodgates for other investors to follow.
It assisted Nigeria to build an industry with plenty of spin-offs. Mobile money, telemedicine and music downloads are some of them.
In dealing with MTN and South African companies, Nigeria must lose its crass voracity.
Even if it were to successfully collect the $5.2bn from MTN – although it cannot and should not be allowed to – what good would that do? Its oil revenue will continue to dwindle unless there is a miraculous recovery in the global price of crude.
Buhari has done well so far in stabilising the economy in the face of a plunging oil price, Boko Haram, piracy and an incredulous electorate. He has brought some certainty to the petroleum industry, appointing a no-nonsense head of the Nigerian National Petroleum Corporation (NNPC).
Dr Emmanuel Ibe Kachikwu shook things up at the NNPC in under six months: the corporation now publishes its financials, monthly sales figures, has opened the bidding process to public scrutiny and reduced the number of directorates from eight to five.
Buhari’s fight against Boko Haram has been bold. MTN should therefore understand that its actions in failing to comply risked undermining this key priority for the entire continent, considering the link between cellular telephony and terrorism.
This should be a lesson for other South African firms, too. Still, the Buhari administration cannot afford to be overzealous in punishing noncompliance.
A penalty of $5.2bn is not punishing non-compliance, it is vengeful destruction of much-needed alliances.
MTN, by investing in Nigeria, eroded the anti-Nigeria stereotype among South Africans, and those who use South Africa as a gateway to the continent. In return for this, Nigeria must act in a manner that suits its stature, and use diplomacy to resolve this.
* Victor Kgomoeswana is author of Africa is Open for Business and an anchor for Power Hour, which broadcasts Monday to Thursday on Power FM. He is also a weekly columnist for the African Independent. Tweet him: @VictorAfrica
The Sunday Independent
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