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Finance: South African reserve bank says MTN Group's dispute with Nigeria poses systemic risk

The South African Reserve Bank (SARB) says MTN Group’s dispute with Nigerian authorities over $10.1 billion in repatriated funds and tax bills could increase risk in the country's financial system depending on the outcome.

SARB, in its Financial Stability Review released on Wednesday, November 7, 2018, in Pretoria, said if MTN eventually repatriates the disputed amount to Nigerian authorities, the telecom’s ability to meet its debt obligations, especially in South Africa might be affected.

The Reserve bank said, “the immediate, or at least near-term, repatriation of the funds to the Nigerian authorities could affect MTN Group’s ability to continue meeting its debt obligations, including those in the South African banking sector, which, given the interconnected nature of the financial system, could increase systemic risk.”

ALSO READ: All you need to know as Nigeria’s central bank and MTN go head-to-head in new forex saga

The potential worst-case scenario would be for MTN to pull out of Nigeria, which would increase the company’s exposure level to reputational risk, the Reserve Bank added.

About 78% of MTN Nigeria Communications Limited’s shares are owned by MTN Group Limited, a company with a primary listing on the Johannesburg Stock Exchange.

The claims amount to almost all of MTN’s market value of about $12 billion.

MTN, Nigeria in forex repatriation dispute

In August 2018, CBN ordered Africa's telecoms giant, MTN and four other banks to “refund a total of $8.134billion moved out of the country" for breaching the country's forex regulations.

It also slammed a huge N5.8 billion fine on the banks for allegedly aiding MTN in the illegal capital repatriation.

The case is presently in a Nigerian court as the mobile phone firm had approached the court to protect its properties.

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