Telecommunications operators in Nigeria have expressed displeasure over the Corporate Governance provision by the Nigerian Communications Commission (NCC) on funds repatriation.
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.
During the public inquiry on the draft guidelines, in its written submission, a tower infrastructure company, ATC Nigeria Wireless Infrastructure Limited, said: “Funds Repatriation 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.
They argued that the provision would discourage investments even as it contradicts existing laws on the repatriation of funds by foreign companies operating in Nigeria.
“We respectfully suggest that the approval of the NCC be obtained where the repatriation involves a significant amount that might jeopardize the company’s operations. The repatriation threshold that would require the approval of NCC be fixed at 80%.”
Expressing similar concern over the same provision, Airtel Nigeria in its submission to the regulator 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% 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.
Response 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 also expressed the same concern in the same section for the guidelines.
According to the company, the provision has far-reaching implications and 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 ratings.
“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,” the company stated.
The telecom regulator in its response to the operators’ concern said it had taken note of all their submissions and would take care of it in its ongoing review of the document.
“The Commission is currently reviewing capital and other ratios for its licensees, and this will be taken into account in the further review of this provision,” it said.