WORRIED: Mohammed Nalla, Nedbank Capital head of strategic research, is concerned about treatment of companies in Nigeria Picture: FINANCIAL MAIL on BDLive
By Alistair Anderson, Business Day Live
HOTEL and casino group Sun International will remain a committed investor in Nigeria despite run-ins with that country’s authorities.
Nigeria has the largest pipeline of hotel developments among its continental peers and this includes 9,000 rooms to be built across more than 50 planned new hotels in the medium term.
Four Sun International employees — three South Africans and one Nigerian — were detained and released without charge last week by the country’s Economic and Financial Crimes Commission, which has instituted a probe into the hotel and casino group’s investment in the Tourist Company of Nigeria.
Sun International spokesman Michael Farr said: "Based on the strength of the Nigerian economy, we are committed to the country.
"We have offered to be audited and to show our deal meets all of the country’s company law requirements. That offer was declined, but we are still willing to be audited."
Sun International is the latest South African company that has had a run-in with Nigerian authorities. The Standard Bank Group’s Nigerian subsidiary, Stanbic IBTC, obtained injunctions this week to stop the country’s Financial Reporting Council from interfering in its operations and imposing a $5m fine for alleged accounting breaches.
MTN’s Nigerian arm was slapped with a $5.2bn fine, later dropped to $3.9bn, by the country’s Communications Commission for failing to deactivate 5.1-million unregistered SIM cards on its network.
Tiger Brands bailed out on its loss-making Nigerian unit for $1, made write-downs of R1.9bn and wrote off shareholder loans of about R700m last year.
But Mr Farr said: "We will continue to invest in Nigeria and … (other countries on) the continent and will work with authorities (there) and the South African High Commission … to prove our investment is above board."
The JSE-listed hospitality player’s investment in the Tourist Company of Nigeria has been troublesome since the company made it 10 years ago because of disputes in the Ibru family, a prominent business dynasty and a large shareholder in the hotel group’s venture.
The Tourist Company of Nigeria is a private investment company focused on hospitality.
The group bought 49.3% of the Tourist Company of Nigeria in 2006, making the group the largest single shareholder and giving it exposure to The Federal Palace Hotel, which describes itself as a five-star luxury establishment, in Lagos.
Sun International’s investment is worth $50m.
Although Nigeria is ripe for the picking because of its fast-growing economy and has a large young population underserved by hotels, the disputes in the Ibru family, which has a 49% stake in the Tourism Company of Nigeria, have delayed further development of the hotel, said Mr Farr.
Ibru family members could not be reached for comment.
Mohammed Nalla, head of strategic research at Nedbank Capital, said he was concerned about Nigerian authorities’s treatment of South African companies.