MTN cancels dividend payment after difficulty in repatriating funds from Nigeria to South Africa

MTN cancels dividend payment after difficulty in repatriating funds from Nigeria to South Africa

- MTN shareholders won't receive the final dividend for 2020 because of three factors

- MTN is struggling to repatriate its cash in Nigeria's economy, with the network upstreaming a lesser amount

- The difficulties faced by MTN to repatriate its funds is caused by CBN's tight financial control

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MTN rules out paying its shareholders final dividend for 2020 following difficulties to repatriate its funds out of Nigeria. The network provider said it has N108 billion stuck in Nigeria, as the Central Bank of Nigeria (CBN)'s tight financial control continues.

MTN's earnings performance last year showed that the company is liquid enough to pay its shareholders dividend, but that distribution of cash will be held until 2022, almost two years.

It was learnt that dividend won't be paid due to some factors such as proceed timing of asset realisation programme (ARP), the coronavirus pandemic, and difficulty in repatriating the company's funds from Nigeria.

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Already, the y'ello network has repatriated over N7 billion back to South Africa, the location of MTN Nigeria's parent headquarters. MTN Group President, Ralph Mupita, said cash upstreaming, which is capital repatriation, is difficult in Nigeria.

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MTN cancels dividend payment after difficulty in repatriating funds to South Africa
MTN cancels dividend payment after difficulty in repatriating funds from Nigeria to South Africa. Photo: @MTNNG/Twitter, Getty Images
Source: UGC

In a The Cable report, Mupita said due to the factors aforementioned, any talk about divided payment will wait till 2021:

"Cash upstreaming from Nigeria remained challenged in terms of securing foreign currency in the market. During 2020, we upstreamed the equivalent of approximately R286 million from Nigeria, with approximately R4.2 billion yet to be repatriated as of 31 December 2020.

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“In light of these material uncertainties, the board has also suspended the dividend policy and anticipates communicating a revised medium-term dividend policy when we announce our 2021 results in March 2022.
“On assessment of the progress of cash upstreaming from Nigeria, ARP delivery and COVID-19 impacts, the board will consider returning further cash to shareholders in the form of special dividends or share repurchases after the release of 2021 results." Mupita said.

Why did MTN find it difficult to repatriate its money?

The repatriation of funds had been made difficult by the CBN to prevent a massive outflow of capital from the Nigerian economy during the COVID-19 pandemic which caused panic among foreign investors.

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The outbreak of the virus was new and many don't know the extent COVID-19 impact will have on the Nigerian economy which was slowly growing. In order to prevent panic responses from foreign investors, CBN tightened the exit point.

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Nigeria is short on forex, and the repatriation of capital will further affect the country's foreign reserves.

In order to prevent such occurrence from happening, repatriation of funds has been sluggish, a reason why MTN has moved less capital than its fund still locked up in Nigeria.

With the global economy getting back in shape and rising crude oil failing to prevent Nigeria's foreign reserves from dwindling, foreign investors with a significant economic presence in Nigeria will have to wait longer before they can take their money away from Nigeria's economy.

Meanwhile, had earlier reported that armed robbers attacked one of Wema Bank's branches in Osun State, destroying the company's properties.

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The robbery attack occurred two weeks after the company announced its revenue dwindling, with profit after tax also declining.

Fakoyejo Olalekan is a Business and Financial Journalist with over three years of experience in covering finance and business activities within Nigeria and offshore. Prior to joining, he worked at Nairametrics where he wrote financial and investment analysis articles. Olalekan is a resourceful and result-driven journalist with a track record for conducting extensive research and interviews to produce articles that provide different perspectives to market activities.


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