Dr. Jimoh Ibrahim, GMD, Energy Group |
There is no
doubting the fact that either side of the argument is good for consideration
and will remain a lesson to both regulators and operators. Now, what lessons
can be learnt from this to prevent future occurrence?
Regrettably,
business decisions and foreign direct investment will not wait for the
resolution of the crisis. Some investors may have already made up their minds
not to touch investments that have to do with Nigeria or continue to invest in
Nigeria.
Some
investors may have decided to withdraw recognition and respect for institutions
that should protect their investments in Nigeria, especially local laws. They
may have resolved to protect themselves henceforth by subjecting disputes
arising from their investments to international arbitration. Unfortunately,
investment is not a judicial matter!
The argument
has always been made that international organisations should respect the laws
and institutions in any country where they operate if they want to be
profitable and sustainable. And no nation operates without laws.
The Nigerian
government has spent a lot of resources in time past to make the business
environment friendly and attractive to foreign companies. Such government
efforts include amendment of local laws to give investors the opportunity to be
on equal footing with local investors, or in some cases, allow foreign
companies to have more competitive advantage than the local companies. Consider
the Foreign Investment Protection Act.
The CEO of a
foreign company is more likely to see the president of Nigeria more easily and
faster than the CEO of a local Nigerian company. In his days, President
Jonathan would have readily seen the CEO of MTN before seeing a Minister or
indeed the CEO of, for instance, Globacom. To some people in government, only
foreign companies “know how to do business,” as they are the only ones who come
bearing the almighty dollar. It’s nice to see that the dollar can also come
with problems that can actually consume the naira, especially if security is at
issue.
The matter
at hand is very simple. MTN violated the laws and regulations put in place by
the Nigerian institution that is, by law, mandated to regulate the
communication industry by not deleting the telephone numbers of subscribers
that are not registered in their system.
The
regulating agency directed that unregistered subscribers should not have access
to the telephone network so as to be able to monitor and enhance the integrity
of calls and callers, as well as ensure that there is no security breach. This
type of regulation is normal in a developing country such as Nigeria, where
security is an issue. And non-compliance may be interpreted to mean that the
company does not want to comply with a regulation that is likely to cause
depletion in its profitability. Regrettably, no nation will compromise her
security for any company’s profitability.
It was
President Obama who first argued that Africa must encourage institutions and
build them, rather than individuals! He was heartily applauded when he said
these famous words in Ghana. But what was Obama thinking? Did he conveniently
forget that individuals build institutions? In the United States today, many
successful institutions are now in the hands of the fourth or fifth generations
of their founders. If individuals are not built, how will institutions be
built?
Obama could never
have argued in this manner when he was our teacher at the law faculty in
Harvard. Did Obama consider the fact that institutions, by the level of their
resources, can destroy a developing country such as Nigeria? How many women
were killed in India when the government of that country was promoting foreign
investor, GE Health Care’s Ultrasound machine?
The
Government of India was very excited to promote the ultrasound compact machine
at the expense of indigenous health solutions when GE said they had developed a
machine that will give relief to millions who suffer from painful or
potentially life threatening diseases, such as breast cancer, uterine fibroids,
cardiac diseases and gynecological disorders. But pregnant women in India used
the machine to detect the sex of their fetuses. And once it was discovered that
the foetus was female, the pregnancy was promptly aborted.
There is an
inordinate preference for male children in India because of the huge dowry
parents have to pay to the families of prospective grooms to get their female
children married. The ordinarily well-intentioned ultrasound machine therefore
became a means of avoiding the ‘misfortune’ of having a baby girl in India.
In 1998, the
government of India responded to the allegation that GE’s ultrasound machines
were being misused to facilitate female feticide in India by enacting the
Pre-Natal Diagnostic Techniques (PNTD) Act, a law that prohibits any person or
body from using equipments or techniques for the purpose of detecting the sex of
an unborn child. What then happened to GE’s investment in India?
The Western
argument of creating and assuring strong institutions for business development
in developing countries is made to favour the imperative of such institutions
to regulate business. If the institutions that protect their investments are
strong, it will communicate strong signals to foreign investors that they can
do business in Nigeria. This requirement is necessary in ensuring the
independence of such institutions as regulators, the judiciary and the
parliament. Unfortunately, the West did not tell us when a country will be
deemed mature enough to create and protect strong institutions.
The fallacy
of the argument of strong regulations in developing countries is better
explained by a recent development in China. China is set to recruit more judges
in addition to her 200,000 judges, with the Supreme Court alone having 340
judges! No one will say that because judges are corrupt, we should sack all of
them and start all over again. It takes time to build institutions and Nigeria
cannot be holier than her capacity for holiness.
The
government of China largely owns the enterprise and it is a case of regulating
themselves ! China today boasts a very strong economy. Indeed, the Asian giant
is about to take over the world, with an impressive reserve of over four
trillion dollars in cash as at yesterday!
We gain
nothing by regulating successful companies that we don’t have the capacity to
develop out of business. The dilemma of the five billion dollar fine imposed on
MTN can be resolved, depending on the strategy of MTN. A lesson to learn for
companies similar to MTN is to take Corporate Social Responsibility seriously.
This is probably why it appears that Nigerians are not supporting MTN against
the fine. Nigerians ought to have enjoyed more Corporate Social Responsibility
from MTN. That would probably have created an emotional and moral burden for
the regulator in deciding what fine to impose and how to mitigate those fines.
The need to invest in the eco system is urgent!
In 2006,
American company, Google, entered
into the Chinese market. After investing several billions of dollars in China,
Google exited China in 2010 simply because the Chinese Government shut her
gateway against Google! In India, GE Healthcare claimed they had found a new
market to solve some challenging health problems. But after investing billions
of dollars, the civil society of India raised the alarm that Indians were using
the ultrasound machines to reduce their female population. GE embarked on
serious Corporate Social Responsibility to prevent what would have become a
serious integrity issue for the global company.
The options
for MTN are quite straightforward. The communication giant can either go the
Google way in China or take the GE Health Care option in India. Wishing MTN the
best of luck!
No comments:
Post a Comment