Black Ant: How the Big Foreign Companies are Taking Advantage of Nigeria FX Debacle
The FX malady has ravaged the nation for the last two years and unfortunately there are no sign of it abating. Instead, some naysayers are preparing for a N1000 USD. We all, sincerely, hope not to get there.
While at it, the CBN’s ban of 41 items last year, came as a great pain to the average man on the street. We were all told to see as a form of sacrifice for the nation. But we all know in Nigeria, sacrifice is expected of the common man and not the upper and connected class. Or how would you describe the huge amount of money made by the banks when cards are used abroad? What would you find as justification for the lorry load of cash minted for BDCs who get money cheap from CBN via the banks and sell sky high?
No wonder the foreign companies such as Microsoft, Oracle, IBM and others have joined the train of those raping Nigeria to death. And they are not doing it behind any dark alley, but in full view of everyone with CBN and other regulators cheering them on.
Let’s use Microsoft as an example of this perfidy.
Every large company in Nigeria pays for Microsoft software and the market has become so lucrative that the Nigerian office has been upgraded to a subsidiary and then moved to a lavish office at Civic Towers. You would think that would make them a corporate Nigerian citizen? Hell no! Microsoft charges companies in Nigeria in USD and fees are remitted to Ireland immediately. Even the smallest bank pays at least $1M per year in fees with likes of GTBank, First Bank, UBA, paying almost $2M per year.
Even using a conservative $1M per bank, it means an average bank bill has moved from N160M to N400M+ in under 2 years – even though the underlying services are same. Wait, isn’t Microsoft in Nigeria? Doesn’t the law say that bills should be Naira? Microsoft will tell you that the contract is with Microsoft Ireland and not Nigeria.
Meanwhile the poor Nigerians who work with Microsoft in Lagos are paid in Naira, anyway. If you ask why they are not paid in USD, they would cite local laws and say that the underlying employment contract is in USD. Now as the USD has gone bunkers, you expect salary to move in line with the new FX rate? Fat chance. Their salaries are stuck at the same Naira rate.
Invariably the story above is the same for every international company operating in the country. As Nigeria is going through a bad patch, they have ensured their revenue stays same. In fact, some, such as IBM, increase their fees by about 2% each year, factoring in some random rubbish. On the other hand, the cost of managing their operations in Nigeria has reduced by almost 50% since the Naira depreciated against the USD.
Meanwhile, hapless customers such as telcos, banks, even regulators such as CBN, run around to look for USD to transfer abroad with threats of service interruption chasing them around like Boko Haram.
In the midst of this madness, our regulators such as CBN, NOTAP, NCC, FIRS, etc. have kept a resounding silence and looked away up to a point that questions need to be asked if they are complicit with this.
What should be done is very simple – large Original Equipment Manufacturers (OEMs) operating in Nigeria such as Google, Microsoft, IBM, Visa, MasterCard, Oracle, etc. should only invoice in Naira. Contracts must be tied to alocal subsidiary, and cannot be indexed to USD.
The country must rise up to protect itself. Even the European Union, the bastion of free market, calls the likes of Apple, Google and Microsoft to order… routinely. We have the laws already; we just hope CBN and others have the political will to enforce them.
Photo Credit: Christopher Halloran | Dreamstime.com