The Explosive MTN Nigeria Fine And How It Affects You

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I like looking at numbers, they excite me, because numbers don’t lie. But back to the topic at hand…

MTN was fined approximately $5.2 billion for failing to disconnect customers with unregistered SIM cards, you can read about that here.

The Nigerian Communications Commission basically fined MTN about $1,000 per unregistered user which covers about 5 million unregistered SIM cards. But here is where the number starts getting interesting…

Nigeria’s 2015 budget proposal submitted to the Senate in December of 2014 has an aggregate revenue of N3.602 trillion. Which is made up of oil revenue of N1.918 trillion and non-oil revenues of N1.684 trillion according to PWC.

In US dollars, that will be an estimated oil revenue in 2015 of $9.5 billion, while the non-oil revenue estimates (Primarily made up of taxes) will be approximately $8.5 billion.

Now, the MTN fine of $5.2 billion (if it stands) is already 60% of our expected non-oil revenue for the year! And is approximately 30% of the expected entire 2015 Nigerian revenue.

And according to the MTN fine “would exceed the revenue the Nigerian government made from oil in the second-quarter [of 2015], and be more than double the state’s non-crude proceeds.”

MTN fine

So what does all this mean?

The Nigerian government is looking for ways to increase it non-oil revenue amount and MTN is its first victim.

But this is not the end … the government looks to be poised to audit more aggressively Nigerian business accounts to find tax evaders and other violators and bring them to book. And if the MTN example is anything to go buy, they will not be lenient with their fines.

So what is the impact?

If the government is overtly aggressive in its tax evaders hunt, it might have the effect of scaring foreign investors away from Nigeria. The MTN fine is a prime example! Their fine per is already 50% of their total estimated 2015 revenue of $10.7 billion dollars. If they pay the fine, they will struggle to pay staff or would need to take a loan to stay afloat, and their stock price would drop (South African stock exchange suspends trading in MTN shares). Either way it is a bad bad situation for MTN

And other foreign companies might be wary about investing in Nigeria (remember we have already been kicked off the JP Morgan emerging markets bond indexes).

However, if the government shows some flexibility in the fine and lowers it considerably, it could send a message that the Nigerian government means business without scaring investors away. Either way it is a balancing act better left to financial experts.

And the sooner we get our finance minister and his or her team in place, the better.



And for Nigerians like myself with small businesses, you need to start auditing your accounts now … because we are next.

The government desperately needs money and taxes as I talked about in this article written in July is how they are going to get it.

FYI: Did you know that once you register a business you have to remit VAT to the FIRS monthly and even though you have no VAT to record you still have to document that to the government. Failure to do so will cost you N5,000 for every month from the date of your incorporation. So if you registered your business in January of 2000 but have not paid VAT till date, you owe the government N895,000!

So yes foreign investors might be the buzz right now … but we Nigerians are next … especially small Nigerian businesses.

twitterWritten and Researched by Okechukwu Ofili of
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Author: Ofili

Words by Okechukwu Ofili of
Follow him on Twitter
Stalk him on Instagram
Read his crazy titled books on konga or okadabooks
Feed his children at…no wait he has no kids…. 




16 comments on “The Explosive MTN Nigeria Fine And How It Affects You

  1. The next option is to start working without a registered business structure. Declare bankruptcy and deregister your business.

  2. an eye opener. I hope NCC comes down on the price though so Nigerians can also stay at work because a lot of these companies including Nigeria owned are cutting down on Jobs. These awhole Economical imbalance is killing the nation, the earlier these portfolios are assigned the better…..

  3. I heard the fine conditions was set by NCC and agreed to (in writing) by all operators, including MTN. This goes to show many companies operating in Nigeria (both local ad foreign own) do not feel any obligation to obey Nigerian laws and conditions of their existence in our country.

    My take would be… let MTN pay the full fine, they and the other operators agreed to the terms! But let negotiations be on payment terms… They can pay over the next 10 years so that it is not too much of a blow to their operations. At the end of the day, all businesses operating or intending to operate in Nigeria must know the implications of disregarding regulations.

    • Ofili

      Fair enough. The key message in the article is that the fine should punish MTN Nigeria but not kill MTN Nigeria. As long as we achieve the former I am happy.

      • Omooba on said:

        Punish but not kill it is then. That is the spirit! Law enforcement is big business in other climes and should be here too – serves as deterrent and of course make some much needed revenue for the government.

  4. The crucial question is, is tax evasion a good thing in the first place? No. If any business chooses to thrive in any locality, it must have to operate within the confines of the law in place. Foreign investors who may be scared of this may not find it interesting, true. But they would agree that perhaps in their countries, similar measures are in play. I’m sure no business which operates within the law will have an unfair share of the burden.
    I’m just concerned about the possible laying off of staff this may result in. We already know how organisations react to such situations- “right-sizing.” MTN should better find the least stressful way of paying the fine.

  5. George Ben. on said:

    All you’ve said are so true Ofili, I must agree wif yhu. To me I feel NCC’s fine on Mtn as an Organization dat has bettered d lives of many Nigerians in a way or two, is rather too outrageous nd uncalled for..atleast not a huge sum as dat…And like my frnd earlier said, it would scare Foreign investors away, nd dats so true…

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