MTN battle seen as risk for SA’s financial system

MTN’s fights with Nigerian authorities over $10bn in repatriated funds and back taxes could increase risk in SA’s financial system depending on the outcome, the Reserve Bank has said, according to a Fin24 report. MTN, Africa’s biggest wireless carrier by subscribers, is facing mounting pressure to return $8.1bn to Nigeria after its central bank argued that the SA company had repatriated funds illegally. Separately, the West African nation’s Attorney-General’s Office alleges the company owes $2bn in back taxes. ‘The immediate, or at least near-term, repatriation of the funds to the Nigerian authorities could affect MTN’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,’ the Reserve Bank said in its Financial Stability Review released yesterday. The claims amount to almost all of MTN’s market value of about $12bn, it said. A ‘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 said.

Full Fin24 report