Nigeria’s finance minister, Ngozi Okonjo-Iweala who has increasingly harped on the need to grow government’s non-oil revenues since oil prices crashed, may need to first create a business friendly environment so more firms like MTN Nigeria might take root, flourish and likewise pay taxes.
MTN Nigeria, the country’s largest mobile operator with 59.89 million subscribers in December 2014 accounted for 11 percent of Nigeria’s non oil tax revenue and five percent of total taxes paid in 2014, according to data from the firm’s FY 2014 results presentation.
The huge taxes paid to government at all levels, come despite Nigeria’s harsh operating environment, which saw the company spending N30.45 billion last year alone on diesel to power its operations, which is enough to build over 5,000 additional base stations.
The regulatory and operational challenges meant that MTN Nigeria grew its revenue by only four percent (five percent in 2013), lower than the inflation and GDP growth rates of eight percent and six percent respectively.
“In Nigeria, some level of uncertainty remains, with regards to the implications of the oil price and currency fluctuations, which may lead to slower economic growth,” MTN said in a statement.
Oil revenues make up 75 percent of the Federal Governments budget but account for a much higher proportion in most of Nigeria’s 36 states.
Some economists have called for an increase in taxes, to help cushion the poor fiscal position of the Nigerian Government and most sub national entities.
“Nigeria needs to raise tax revenues, Nigeria has the lowest tax rate in the world with five percent Value Added Tax (VAT) – and 10 percent being the standard globally,” Ayo Teriba, CEO of Economic Associates said at a recent conference.
Government revenues are equivalent to only 12 percent of Nigeria’s $465 billion economy.
The Finance Ministry has proposed austerity measures for 2015 and plans to impose taxes on luxury goods, to help plug the budget gap from crude oil prices that are down some 40 percent since June 2014.
MTN Nigeria says the 22 percent increase in total costs of operations is mainly attributable to some unused accrual reversals in 2013, and significant forex revaluation losses.
“There was also a 29 percent growth in site rental expense due to astronomical rent increases by landlords,’’ MTN Nigeria said in the presentation.
“Diesel costs remain the biggest singular expense in MTNN’s cost profile.”
The total payment made by MTN Nigeria to government from inception in August 2001 is N1.3 trillion.
MTN Nigeria says beyond paying taxes, it has also used its platform to stimulate growth in other sectors of Nigeria’s economy, such as the banking, insurance, e-commerce, oil and gas and creative/entertainment industry.
“The ICT industry with MTN as leader is a critical enabler of socio-economic growth in Nigeria,” MTN Nigeria said.
In 2014, MTN generated over N5billion for the Nigerian music industry through the monetisation of Caller Ring Back Tunes utilising local musical content.
Recent rebasing shows the contributions of the entertainment and music sector at $7billion to the total value of $510billion.
This represents 1.37 percent of the total GDP value in 2013.
The Federal Government received non-oil revenue of N645.5 billion for 2014 half year, compared to a half year projection of N935.9 billion, according to data from the budget office.
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