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On regulatory body language – Nigerian Government and Corporate Entities

On regulatory body language – Nigerian Government and Corporate Entities

Written by: Mark Amaza

Communications strategist and public commentator

One of the unique perks of the governance practices entrenched in most democracies is the relative ease with which most observers are able to watch the body language of public institutions. The effect of monitoring regulatory body language only on key political, social and economic actors is crucial in understanding the often unseen but important drivers of economic growth and social change.

Take the situation with the Central Bank of Nigeria and the country’s biggest telecom provider, MTN. The CBN had alleged in August 2016 that MTN and four banks – Standard Chartered Plc, Citigroup Inc, Stanbic IBTC Plc, and Diamond Bank illegally repatriated $8.1 billion from the country and asked that the company should return it. The regulator also imposed a $16 million fine on the four banks, which it has already debited.

Cue in the predictable backlash from foreign investors, much of the political elite, even some foreign government representatives and most informed economic observers. The bank, evidently realising the unintended consequences of their actions, have sought to institute some form of damage control. CBN Governor Godwin Emefiele admitted as much when he told reporters in London last month that “this is not a matter that should have blown so openly,’’ a comment that lies at the core of the main issue of this whole drama and needs to be examined in some detail.

There are aspects of the MTN regulatory morass that appear choreographed in ways that do not suggest an independent regulator appraising the situation with detachment and dispatch. The bank’s posturing has had a tinge of retribution. At its core, the allegations about improper Certificates of Capital Importation (CCIs), if true, might be an indicator at a wider, systemic procedural compromise but the regulator has been silent about the integrity of its processes, just as it was silent in 2009 when the issue was first flagged with it.

In addition, the needless public dragging of one of the largest private sector employers in the country, particularly how the story broke was the stuff of high-level political mudslinging. Over the course of this event, the CBN has appeared to behave in ways that increasingly appears to be the product of a script written by interested political elements with designs on getting a piece of the action of one of the country’s big companies. For this top 1% of the elite, the side effects of this regulatory inquisition, whether the whittling of investor confidence or the possible economic sabotage it may wreck are immaterial – the only thing that matters is their interest.

It, therefore, did not come as a surprise when Ex-British Secretary of State, Priti Patel, in a recent op-ed for City A.M, urged foreign investors to stay away from Nigeria. In her words, “The Nigerian government has continued to flout international law and convention, and it refuses to respect the various court decisions. Investors must consider this long-running scandal and weigh this obstinacy against Nigeria’s mishandled economic potential,”.

There is another crucial question that MTN’s travails raise about Nigeria’s regulatory climate, away from the obvious political undertone – the apparent divide between regulators and oversight bodies.

In November 2017, Nigeria’s upper legislative house approved a report exonerating the company from accusations that it illegally repatriated $14 billion out of the country. The Senate, instead, indicted the CBN for granting extensions and exemptions to financial regulations, opening the door to potential “sharp practices by commercial banks.” What did the CBN do in the wake of the report? Nothing, it would appear.

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Now, media reports cite some unnamed senators as alleging that the Muhammadu Buhari administration and the CBN have perfected arrangements to go easy on MTN “through the back door.” According to these senators, the executive is acting unilaterally without recourse to the Senate, which had earlier investigated and cleared MTN on this matter. This argument, while clearly another front in the political back and forth between the executive and legislature, does have some merit.

During the Senate investigation, it was the CBN’s testimony before the Senate Committee on Banking, Insurance and Other Financial Institutions that MTN did not breach any law with how it issued its CCIs, a fact the company has incorporated in its legal defense. It was in fact, the bank’s testimony that persuaded the senators to exonerate the bank.

It is not far-fetched, thus, to imagine the surprise and chagrin of the Senate that the CBN, not only ignored the conclusion of their investigation but then proceeded in August 2018 to fine MTN’s bankers, try to punish the company and confuse foreign investors and most Nigerians in the process. Only to attempt to retrace its steps.

In a narrow sense, these new developments can be seen as the Senate’s attempt at imposing its supervisory constitutional powers over a federal regulatory agency that seem at times, like a pantomime playing to the orchestra; at other times, too independent for its own good. With the bank set to liberalise the regulatory environment to allow telcos to offer mobile banking services to Nigeria’s huge unbanked market, the time has never been more appropriate to ensure that the supervisors are themselves properly supervised.

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