“The brazenness of Nigerian authorities to levy such a penalty is attracting attention,” Gareth Brickman, an Africa analyst at ETM Analytics NA LLC in Stamford, Connecticut, said in an e-mailed note to clients on Wednesday.
“Investor perceptions of Nigeria have been strained to say the least by policy makers’ management of the naira and the new administrations’ lack of progress on economic reform.”
Nigeria’s telecommunications regulator this week fined Johannesburg-based MTN, Africa’s biggest mobile-phone operator, $5.2 billion for failing to disconnect customers with unregistered SIM cards and having incomplete data, causing the shares to post their biggest three-day plunge in Johannesburg since 2008.
Nigeria is MTN’s biggest market, where it had 62 million customers by September.
Investors are losing faith in President Muhammadu Buhari, who has yet to name his cabinet five months after taking office. He has backed foreign-currency controls imposed by the central bank that’s led to an overvalued naira, restricted imports and curbed economic growth in Africa’s biggest oil producer.
The economy grew at 2.4% in the second quarter from a year ago, its slowest pace this decade.
“Are investors not supposed to respect the laws of the land where they are operating?” Tony Ojobo, spokesman for the Nigerian Communications Commission, said by phone from Abuja. “It is in accordance with our regulations and guidelines that if service providers don’t comply they’ll face a penalty.”
Security concerns
The fine has reinforced investors’ cautious mood, Brickman said. “These kinds of incidents will only add to the checklist of reasons for investors to stay away for the foreseeable future,” he said.
MTN said on Oct. 26 that the penalty relates to the timing of the disconnection of 5.1 million MTN Nigeria subscribers in August and September and is based on a fine of 200,000 naira ($1,005) for each unregistered subscriber.
Yinka David-West, a senior fellow in Information Systems at Lagos Business School, said the stricter rules on registration were aimed at improving security in a country where kidnapping for ransom is rife and the government is struggling to end an insurgency by Boko Haram militants in the northeast.
“This registration exercise started because of a security issue,” she said by phone on Wednesday. “It’s not just about having a database of names and numbers. It’s a tool that is supposed to help fight terrorism, kidnapping, money laundering and all sorts of issues.”
-Bloomberg
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