MTN Group to invest $1 billion in Ghana after government dropped tax claim

MTN Group has pledged to invest $1 billion in Ghana over the next five years. The telecoms giants’ latest investment is intended to promote faster sectoral growth in the country using 5G technology.

This announcement comes after the Ghanaian government withdrew its tax claim, totalling approximately $773 million, against MTN. A few weeks ago, South Africa’s foreign minister, Naledi Pandor, implored MTN Group and the Ghana Revenue Authority to resolve their tax dispute. The latest developments are steps in the right direction.

MTN Chief Executive Officer Ralph Mupita stated the company remained dedicated to investing in Ghana despite the economic challenges.

To be sure, macroeconomic conditions are very challenging in the near term. That said we are focused on the medium and long term and we are seeing growth.

In a statement seen by Reuters.

MTN Group stated earlier this month that the Ghana Revenue Authority had issued a demand for back taxes to the company’s subsidiary MTN Ghana after auditing it for 2014 to 2018 and concluding that it had understated its revenue by around 30%.

This is not the first time a company in the MTN Group has been involved in tax issues. In October 2015, the Nigerian authorities fined the company $3.9 billion after failing to disconnect 5.1 million subscribers — amid concerns terrorists were using the lines.

In 2018, the Federal Inland Revenue Service of Nigeria (FIRS) levied $8 billion and $2 billion in tax evasion against MTN, which the company ultimately disputed.

Read Also: How MTN almost ruined Valentine’s day for Nigerians

MTN’s investment in Ghana

The MTN Group has played a significant role in helping Ghana develop in recent years. In March 2022, MTN Group planned to invest over $1 billion into the telecommunication sector in Ghana for the next five years, starting from 2021.

This fund was focused on fulfilling Ghana’s vision of a digital country as it planned to implement a national roaming plan and airtime distribution in partnership with other operators.

Extensia also reported that the Telco giants entered into an arrangement with the Ghana Investment Fund for Electronic Communications (GIFEC) to advance the government-led “rural telephone project to expand connectivity to most remote” communities.

Read Also: MTN to challenge Ghana’s $773 million tax bill

Ghana is in an economic crisis

Ghana’s economy has continued to weaken as the days go by. Other ways to help stabilize the economy could be through tax-generated income, but that alone cannot stimulate the economy and settle debts.

According to Reuter, the country’s consumer inflation slightly decreased in January from a more than two-decade high of 54.1% to 53.6% year-over-year.

It seems to be facing its worst crisis, with inflation reaching almost 40% in December. It is currently experiencing capital outflows, a crippling debt payment burden, and a swift currency devaluation inflicting damage on government and household finances.

The country’s total public debt is currently more than 460 billion cedis, about 76 per cent of the country’s Gross Domestic Product. During the end of Q4 2022, Ghana began talks with IMF for a debt restructuring.

Read Also: MTN, DStv top list of Africa’s most admired 100 brands of 2022