BY JAMES SIMONS
Nigeria has imposed a record $5.2 bn fine on a South African mobile phone company for failing to register users, it has emerged today. The unprecedented fine has raised concerns that regulations are being tightened to make up for a budget shortfall.
The hefty fine has already caused a 16% drop in the share price of Africa’s largest mobile company,-MTN, Africa’s and may jeopardize the firm’s future there. The actions of the regulators may even put off foreign investors from Nigeria, according to some experts.
MTN stand accused of failing to deactivate unregistered sim cards in a timely manner. The regulators have defended their position by claiming the fine to be aimed at ensuring that the wilful non-compliance ceases”.
Unregistered sim cards pose a major security threat to the Nigerian government who fear that the wide presence of such cards would facilitate terrorism and crime.
Many consider the fine not to be disproportionate to the offense. Only last year, Shell was fined a whopping S3.96 bn for its major oil spill at its offshore because of the consequential damage that resulted from the spill. Cynics believe Nigeria may be using the fine as a guise for their true reason; namely to regenerate income for an economy that only recently suffered a sharp plummeting in oil prices.
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Nigeria is the company’s largest and most profitable market, which is why the company is currently reeling in disbelief. Significantly, the company’s Nigerian operating license is up for renewal next year and there are fears that run-ins with the regulator could threaten this renewal. The company share price on the Johannesburg market is also reported to have collapsed following the huge fine. A knock on effect of the fine has also been the company’s failure to alert shareholder’s of the fine after 7 hours of the public knowledge of the man. MTN have expressed their wishes for a settlement, but have not said much more.
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Strangely, another South African company, Stanbic ITC, also tasted the wrath of the Nigerian regulators, who instructed the withdrawal and restatement of their financial statement for the 2014 and the 2013 , citing suspicion of “accounting irregularities and poor disclosures”. Four directors, the chairman and the CEO have been suspended, pending further inquiries. The fine is not good for relations between the two countries who are perceived to be stark economic rivals. Nigeria is one of the richest oil nations in the continent of Africa and has recently displaced South Africa as the biggest economy. But its past governments have been notorious for corruption and mismanagement of government money despite its wealth of natural resources and high education in the country. A dramatic court case may enter the equation at some point in the absence of a peaceful resolution.
