Two global banking corporations – HSBC and UBS – have closed their offices in Nigeria in yet another blow to foreign direct investment in the country.
The Central Bank of Nigeria (CBN) said on Friday that foreign direct investment dropped from 532.63-billion naira ($1.7-billion) in 2017 to 379.84-billion naira ($1.2-billion) in the first half of 2018.
The CBN also revealed that three of its commercial banks did not meet their minimum liquidity ratio of 30%. A liquidity ratio indicates whether a company’s current assets will be able to meet the company’s liabilities.
In its statement, the central bank did not say why HSBC and UBS have closed their offices but investor confidence in the country has been on shaky ground following the 2016 recession, the MTN repatriation saga and President Muhammadu Buhari’s declaration that he will be running for a second term in next year’s elections, further raising concern over the state of the country’s economy.
According to Business Day, HSBC noted in a report in July that Buhari wanting to run for a second term “raises the risk of limited economic progress and further fiscal deterioration, prolonging the stagnation of his first term, particularly if there is no move towards completing reform of the exchange rate system or fiscal adjustments that diversify government revenues away from oil”.
The MTN saga
In August, the CBN ordered South-African based mobile operator MTN to repay $8.13-billion on the grounds that the telecommunications company had not obtained the necessary permission to repatriate the funds between 2007 and 2015.
The four banks – Standard Chartered Bank, Citibank Nigeria Limited, Stanbic IBTC Bank Limited and Diamond Bank Plc – involved in transferring the funds from MTN’s bank accounts in Nigeria to those in South Africa were fined a combined $16.2-million.
The Nigerian government also ordered MTN to pay back taxes to the tune of $2-billion which sent MTN’s shares tumbling as much as 7.5%.
The court battle between MTN and the central bank is set to continue on December 4.
This is not the first time that MTN Nigeria has faced such costly challenges. In 2015, the multinational corporation was fined $5.2-billion by the country’s telecoms regulator for failing to disconnect unregistered SIM cards on its network. MTN managed to negotiate this amount down to $1.7-billion.