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Corporate Governance – MTNN’s ExperienceMTN Nigeria By: Ahmad Farroukh Presented By: Uto UkpanahMay 2010
Corporate Governance
‘I am becoming less and less comfortable with the phrase “corporate governance” – not because of its content but because it has been so widely used that it may become meaningless. There is a danger that it will be recited as a mantra, without regard to it’s real import. If that happens, the tendency will be for those who have to pay regard to it to develop a tick box mentality. The attitude might be ‘ ‘Yes, we have a state – of the art corporate governance model; yes it is committed to writing; and yes, the Company Secretary has checked that each item is in place and has included a statement to that effect in the annual report. Therefore there could be no problem in the corporation’.
Royal Commissioner, Justice OwenRoyal Commission on HIH Insurance Collapse 2001
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Corporate Governance- Definitions
• The practices, principles and values that guide a company and its business every day, at all levels of the organisation;
• Corporate governance comprises the long-term management and oversight of the company in accordance with the principles of responsibility and transparency.
Corporate GovernanceWhy?
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•Improves access to capital
•Leads to a better system of internal control, thus leading to greater accountability and better profit margins
•Paves the way for possible future growth, diversification, or a sale, including the ability to attract equity investors – nationally and from abroad – as well as reduce the cost of loans/credit for the company
Corporate Governance Why ?
• Provides the proper incentives for the Board and Management to pursue objectives that are in the interest of the company, shareholders and other stakeholders, as well as facilitate effective monitoring.
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MTN – Corporate Milestones
• Incorporated 8th November 2000• Digital Mobile Licence (DML) 9th February
2001• Commenced operations 8th August 2001• Universal Access Licence 1st September 2006• 3G Licence 1st May 2007• Submarine Cable Licence 1st January 2010 • Part of the MTN Group
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MTN: Corporate Governance Framework
• Institutional and policy framework for ethical practice
• At MTN we have clearly defined and communicated code of ethics
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MTN: Corporate GovernancePolicies
MTN Corporate Business Principles• Whistle Blowing Policy• Document Retention Policy• Guidelines in the Conduct of Governmental
Affairs• Code of Ethics
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MTN: Corporate GovernanceAffiliations
• Convention on Business Integrity• United Nations Global Compact
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MTN: United Nations Global Compact (UNGC)
• We have participated in the following UNGC initiatives:– Communication on Progress (COP) : an online
publication for company participants which showcases good practices in line with the Global Compact’s ten principles.
– RESIST Project: Participated in UNGC project named ‘Resisting Extortion & Solicitation in International Sales and Transaction’ (RESIST). MTNN suggested practical ways of dealing with real-life situations of corruption and bribery.
– UNGC Publication: Provided key content for UNGC publication titled The Business Case Against Corruption.
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MTN: Adding Value
• GSM has brought empowerment, and has unleashed previously underrated potential in Nigerians:
• Millions of Nigerians are today connected to each other and the rest of the world
• Millions of businesses have been created and enhanced since the introduction of GSM
• Thousands of jobs have been created directly and indirectly
• Nigerian professionals have all skilled up to accommodate the new standards required
• Sponsorship of sports, music and various laudable causes have reached new heights
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MTN: Adding Value
• Championing of best Practise QoS KPIs reporting
• Ensuring the prompt payment of interconnect
receivables, AOL, Spectrum fees, Numbering fees
etc etc
• Promotion of self regulation in collocation &
infrastructure sharing
• Championing reduction of multiple taxation and
regulation
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MTN: Adding Value
• Active input in industry initiatives, proposed
regulations and guidelines e.g. SIM Registration,
Corporate Social Responsibility, SMS interconnect
rate, interconnect rate review
• Spearheading Industry public campaign on
perceived EMF health concerns from mobile
telephony installations
• Championing Best Practise Regulatory Environment
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Adding Value
GOVERNMENT TAX & OTHER LEVIES AS AT SEPTEMBER 2009 Aug. 01 – Sept 09Duties on Equipment 46,317,957,298.26Duties on stock 5,693,175,035.90
VAT on Revenue 88,911,774,761.22 VAT on Operating Expenses 12,050,586,220.37 WHT 40,065,175,691.84 Employee Taxes 9,387,399,982.25 NCC Levy 42,705,760,330.78 CAC 152,798,600.00 Stamp Duties 541,704,090.00 Building Permit 141,179,731.82 Local Govt Permit 870,390,278.01 Motor Vehicle/Hackney Permit 248,130,571.00 Licence 53,038,136,986.30 Admin Charges on Licence Fee 4,480,000.00 Rates & Taxes 854,428,385.44
Company Income Tax 78,403,507,729.18 Education Tax 18,378,408,268.31 NIDT Fees 2,857,965,215.13 TOTAL 400,622,959,175.82
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Adding Value
• GSM has brought empowerment, and has unleashed previously underrated potential in Nigerians:
• Millions of Nigerians are today connected to each other and the rest of the world
• Millions of businesses have been created and enhanced since the introduction of GSM
• Thousands of jobs have been created directly and indirectly
• Nigerian professionals have all skilled up to accommodate the new standards required
• Sponsorship of sports, music and various laudable causes have reached new heights
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Adding Value: MTN Payments as Govt. Taxes & Other levies - 2001
to May 2008Nature of Federal charge / levy (NGN)
LICENCE FEES DML,UASL,0806 Numbering Fess 51,603,930,000.00
NCC - annual operating levy, miscellaneous fees & dues 30,216,953,616.42
Duties on Stock 4,426,573,597.75
Duties on Equipment 38,064,303,135.85
VAT on Revenue 59,647,561,507.74
VAT on Operating Expenses 8,860,302,554.30
Withholding Tax 26,225,239,589.79
Employee Taxes 6,828,495,139.48
Corporate Affairs Commission 152,798,600.00
Stamp Duties 541,704,090.00
LOCAL GOVT PERMITS 326,399,819.15
MOTOR VEHICLE AND HACKNEY PERMITS 162,497,730.68
RATES AND TAXES 750,956,430.74
BUILDING PERMITS 141,179,731.82
COMPANY INCOME TAX 2,305,896,140.90
EDUCATION TAX 3,055,389,716.00
NITDEF 1,104,538,191.13
TOTAL 234,414,719,591.75
MTN: Corporate Social Responsibility
‘Companies in developing nations face some of the most difficult investment climates in the world. For them CSR is not a luxury good. It is common sense’
- Peter Woicke, IFC Vice President
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Corporate Social Investment THE MTN FOUNDATION
• CS I – Key to MTN’s business strategy;
• Align CSI with MTN’s brand essence.
CSR – Why?
• CSR is an all round responsible way of doing business
• CSR goes beyond the statutory obligation to comply with legislation
• In the last decade, directional signals point to increased corporate investment and an apparent transition from giving as an obligation but to giving as a strategy
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CSR – Why?
Hence, MTN adopted a corporate culture to do good because:
• Not only is it important to give back to communities in which we operate, it is also smart business
• Healthy communities are important to the wellbeing of society and the overall economy
At MTN, CSR is an integral part of our business strategy, thus the MTN Foundation was established as the vehicle for MTN’s aggressive CSI agenda.
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In 2003, The Board of MTN Nigeria approved the establishment of a Foundation to manage the organisation's Corporate Social Responsibility initiatives. The MTN Foundation was formally incorporated in July 2004.
“To improve the quality of life in communities all over Nigeria”
Mission
Health
EconomicEmpowerment
Education
Key Focus Areas and Objectives
Alleviating the health challenges of Nigeria
Bridging the digitaldivide
Restoring human dignity through self sustenance
About the MTN FOUNDATION
CSR - Challenges
• Sustainability of project initiatives
• Overwhelming request from communities
• Multiple areas of need in Nigeria and govt’s inadequacy to meet basic needs, thus putting pressure on corporate organisations
• Managing stakeholders’ expectations
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A case for good corporate governance
“If a country does not have a reputation for strong corporate governance practices, capital will flow elsewhere. If investors are not confident with the level of disclosure, capital will flow elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere. All enterprises in that country suffer the consequences.”
Arthur Levitt, former Chairman of the
US Securities & Exchange Commission
Future Outlook
•Continue to build on our corporate governance structures
• Constructive engagement with shareholders and other stakeholders
• High quality of financial and non-financial disclosure
• Continue to invest in our communities•Lead by example
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