MTN PROPOSES TO PAY FG N300BILLION AS NCC FINE
We may have finally reached a conclusion on the MTN N780 Billion saga, as the telco proposed a N300Billion ($1.5billion) settlement to the FG as payment in respect of the fine imposed by the NCC. The details of the proposal are as follows:
- The N50Billion already paid to the NCC in “Good Faith” on Feb 24, 2016.
- N100Billion via electronic transfer between Dec 31, 2016 – Dec 31, 2020 i.e. N20Billion every year for the next five years.
- N80Billion investment in Nigerian sovereign debt instruments in 2016-2017.
- N70Billion through the provision of broadband access to the FG (subject to excess capacity on MTN’s fibre network) for its e-initiatives till Dec 31, 2020.
Before we start debating the merits or demerits of MTN’s proposed payment, a cursory analysis of their annual report for 2015 would show the following for MTN Nigeria: Revenue – $3.413 Billion; Profit Before Tax (PBT) – $1.214Billion and NCC fine provision – $610.2Million (= N122.04 Billion)
This proposal if accepted amounts to 38.4% of the proposed N780Billion fine. Looking at the details of the proposal, the FG should receive N70Billion in cash this year … GOD Bless the TSA!
N80billion will also come as investment in the combo N984/N900billion debt that the FG intends to use to finance its budget deficit in 2016, which by the way is also tax-free (smart… very smart!) Look at it this way, if MTN invests N80Billion ($400m) in a 5-yr eurobond at 6.75% they’ll receive interest of $27m (N5.4billion) every year for 5 years! All of a sudden they’re only looking for N15billion (…it’ll definitely be a lot less than this…) to pay the FG N20bllion yearly.
They also added a sweetener, free broadband access, as we Nigerians like freebies… this is goooddd! This would help improve internet penetration in Nigeria, though with an internet penetration of 53% (95.8m) of the population, we are far above the African average of 28.6% (Nov 2015).
So there you have it ladies & gentlemen, all we are waiting for is the FG’s final acceptance of the terms, so we can move on. I believe MTN eventually realized it would be foolhardy to take on the FG in the Nigerian courts. Better late than never they say…
BVN UNCOVERS 11,000 ADDITIONAL GHOST WORKERS ON FG PAYROLL
Not long after the Bank Verification Number (BVN) led to the elimination of 23,306 ghost workers on its payroll, leading to monthly savings of N2.293Billion; an additional 11,000 ghost workers have been discovered bringing the total number of ghost workers discovered to 34,306 as the FG has introduced a continuous audit process to strengthen the internal audit process across all areas of government.
At an estimated cost of N97,000 monthly per ghost worker, this could result in further monthly cost savings of N1.058Billlion – bringing the total monthly cost savings to an estimated N3.35B monthly i.e. N40.2Billion annually! Now apply this to the 38months left in the current FG’s tenure and this comes to N127.3Billion – other things being equal! Equivalent to a quarter of your current FASHOLA (Power, Works & Housing) budget!
As much as I’m not one to extol the virtues of the previous administration, I must admit… BVN they got right! As at Jan 2016, there are a total of 30.13m accounts linked via BVN out of 58.6m active bank accounts representing a BVN/account linkage ratio of 51.4%. Though we still have a long way to go before majority of active bank accounts are linked… look at it this way… in March 2015, only 3.341m accounts were linked! Only 28.03m accounts more to go… to get to 100%.
NIGERIA NO LONGER $500BILLION ECONOMY AS Q4 2015 GDP FALLS TO 2.11%
Nigeria’s GDP dropped to 2.11% in Q4 2015 according to the NBS, meaning Nigeria’s economy only grew by 2.79% year-on-year (y-o-y) in 2015, in comparison to the 6.22% by which the economy grew in 2014. The 2.79% growth in 2015, means Nigeria’s economy grew at its slowest rate since 1999 (1.2% year-on-year) before the rebasing in 2014.
The size of Nigeria’s economy also dropped from a Nominal GDP value of $530.02Billion (N89.044tr – N168/$) in 2014 to $477.9Billion (N94.145tr – N197/$)) in 2015, meaning we are still Africa’s largest economy, (South Africa is 2nd with $317.3billion), but the 25th largest economy in the world (down from 21 in 2014).
The Oil sector of the economy recorded a 8.3% decline y-o-y in Q4 2015, this limited the impact of the 3.14% growth y-o-y in Q4 2015 in the Non-oil sector of the economy. The Non-oil sector of the economy contributed 91.94% to the GDP, while the oil sectors 8.06% contribution to the GDP is a historical low. Agriculture is still the largest sector contributing 20.9% of GDP, followed by trade at 19.2% of GDP; manufacturing contributes just 9.5% of GDP.
Now with inflation spiraling towards 10% ( …I had predicted this as far back as December), and the CBN reporting significant declines in 1.7% month-on-month in its February 2016 Purchasing Managers Index (PMI), based on a significant decline in manufacturing activity we could likely see GDP growth decline to as low as 2% in Q1 2016.
Let’s just keep our fingers crossed and hope crude oil continues to inch… slowly towards $60 per barrel! Did I hear someone say AMEN!!!