Telecommunications operators in Nigeria have kicked over the Corporate Governance provision by the Nigerian Communications Commission (NCC) on the repatriation of funds.
Recall that section 14 (16) of the Corporate Governance Guidelines published by the NCC, stated that the board shall ensure a licensee seeking to repatriate funds over 30 per cent of its annual net profit shall obtain the prior written approval of the commission.
The operators, which includes IHS Nigeria, ATC Nigeria, and Airtel Nigeria, during a public inquiry on the draft guidelines, expressed their displeasure on the provision that licensees must obtain written approval from the telecom regulator before they can repatriate funds.
In its written submission during the inquiry, a tower company, ATC Nigeria Wireless Infrastructure Limited, said: “Repatriation of funds ensures that foreign investors successfully reap the dividend of their investment (particularly when the licensee has mainly foreign investors). Waiting for the approval of the NCC before funds are repatriated will lead to investor dissatisfaction and affect the smooth operation of the company.
“We respectfully suggest that the approval of the NCC be obtained where the repatriation involves a significant amount that might jeopardise the company’s operations. The repatriation threshold that would require the approval of NCC be fixed at 80 per cent.”
In the same vein, Airtel Nigeria said, the Section 14(16) Guidelines are in contravention of Section 15(4) of the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act Chapter F34, 1995 18 which guarantees unrestrictive transferability of returns from Foreign Direct Investment.
“It is also at variance with the federal government’s policy guaranteeing 100 per cent repatriation of profit from investments in the country. This pre-approval requirement from the Regulator to repatriate more than 30% of net profit could discourage Foreign Direct Investment (FDI) in the industry.
“The Commission is currently reviewing capital and other ratios for its licensees, which will be taken into account in further review of this provision,” the company said.
IHS Nigeria is also concerned about the far-reaching implications of the provision, even as it stated that it would only create bottlenecks and discourage investments, both local and foreign.
“Given that foreign shareholders and bondholders are entitled to receive dividends and interest respectively depending on the capital structure of the entities, the inability to timely meet interest repayments portends a negative connotation for the country especially as lenders would be reluctant to extend further credit to local borrowers and this eventually adversely impacts sovereign credit rating.
“Requiring prior written approval of the Commission to repatriate funds is unduly restrictive and at variance with the policy position of the current government administration which has expressed the desire to attract foreign investments.
“The commission’s position seems to contravene the NIPC Act S.24. on investment guarantees, transfer of capital, profits, and dividends, which empowers investors to repatriate funds. We strongly object to this provision and request that the provision be expunged from the code,” it averred.
Meanwhile, the commission, in its response to the operators’ concern, said it is currently reviewing capital and other ratios for its licensees, and this will be taken into account in the further review of this provision.