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CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE AND FINANCIAL PERFORMANCE: MTN NIGERIA (2020-2025)

Abstract

This work examines the relationship between corporate social responsibility (CSR) expenditure and financial performance within the context of MTN Nigeria from 2020 to 2025. The study draws upon annual financial and sustainability reports for the period 2020-2024, supplemented by interim 2025 reports, to analyze six years of time-series data. Methodologically, it employs descriptive statistics, correlation analysis, and regression modeling to evaluate how CSR spending primarily channeled through the MTN Foundation and capped at 1% of profit after tax influences key financial indicators including revenue, EBITDA, and profit after tax (PAT).

The findings reveal a nuanced dynamic: cumulative CSR investments exceeding ₦32 billion by 2025 bolstered brand reputation and subscriber growth despite economic headwinds, correlating with revenue expansion (evidenced by a 36% year-on-year increase to ₦3.36 trillion in 2024). However, substantial foreign exchange losses during 2023-2024 precipitated PAT declines irrespective of CSR initiatives, though partial recovery emerged in the first half of 2025 (PAT ₦414.9 billion). Regression analysis indicates a positive longitudinal association between CSR and revenue growth, juxtaposed with neutral or short-term negative profitability impacts attributable to macroeconomic volatility.

The study recommends maintaining CSR allocations at 1% of PAT to preserve reputation capital, incorporating CSR considerations into broader risk management strategies to mitigate currency fluctuations, and focusing CSR investments on digital transformation and youth empowerment programs that align with national development objectives. The conclusion underscores that while CSR contributes meaningfully to stakeholder trust and organizational resilience in Nigeria’s volatile emerging market, exogenous economic factors mediate its direct financial returns, necessitating strategic CSR deployment to support sustainable performance outcomes.

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study

Corporate Social Responsibility (CSR) has transitioned from a marginal philanthropic endeavor to a core strategic priority for firms operating in emerging markets, where business operations increasingly intersect with societal expectations and regulatory pressures. CSR represents voluntary corporate actions addressing environmental, social, and governance concerns that extend beyond legal obligations, often with the objective of generating shared value for stakeholders. Within the telecommunications sector, CSR initiatives predominantly concentrate on digital inclusion, education, healthcare access, and youth development, aligning with the industry’s pivotal role in reducing connectivity disparities.

MTN Nigeria, as the country’s largest mobile network operator and a subsidiary of MTN Group, serves as a notable case study in CSR implementation. By 2024, the company reported over 80 million subscribers, with its MTN Foundation, established in 2004, functioning as the primary vehicle for CSR investments. The Foundation allocates up to 1% of MTN Nigeria’s post-tax profits annually toward CSR projects, accumulating expenditures surpassing ₦32.23 billion by 2025. These investments have directly benefited more than 3,389 communities through interventions in education, healthcare provision, economic empowerment, and national priority initiatives.

Noteworthy programs include scholarship schemes, healthcare infrastructure donations, vocational training via the MTN Skills Academy, and community development projects under the “What Can We Do Together” campaign. The period between 2020 and 2025 presented considerable macroeconomic obstacles, including the COVID-19 pandemic, currency devaluation resulting in foreign exchange losses amounting to ₦925 billion in 2024 inflationary pressures, and evolving regulatory frameworks. Despite these adversities, MTN Nigeria sustained robust revenue expansion, growing from ₦1.3 trillion in 2020 to ₦3.36 trillion in 2024, reflecting a 35.9% increase in service revenue.

However, profitability exhibited volatility during this period, with net losses recorded in 2023 (₦137 billion) and 2024 (₦400 billion) due to currency depreciation impacts, followed by a significant recovery in the first half of 2025 (profit after tax of ₦414.9 billion). Academic literature examining the relationship between CSR and financial performance remains inconclusive but increasingly suggests a positive correlation within emerging market contexts. Research focusing on Nigerian corporations, particularly in telecommunications, indicates that CSR contributes to enhanced corporate reputation, customer retention, and sustained profitability, despite potential short-term financial costs.

Earlier studies specific to MTN Nigeria, conducted prior to 2020, identified affirmative associations between CSR expenditure and profitability. The economic turbulence witnessed from 2020 to 2025 presents a valuable opportunity to reassess these dynamics under conditions of heightened volatility.

1.2 Statement of the Problem

While CSR initiatives are widely advocated as contributors to sustainable corporate performance, empirical research demonstrates mixed outcomes in economically unstable contexts such as Nigeria. The financial strain imposed by CSR expenditures during periods of crisis is exemplified by MTN Nigeria’s foreign exchange-related losses, which occurred despite sustained investments through its Foundation. Currency devaluation, inflationary pressures, and regulatory conflicts exacerbated these financial difficulties, prompting scrutiny over whether CSR generates measurable economic returns or primarily serves reputational purposes.

Following significant CSR allocations, including ₦2.6 billion in 2023, MTN Nigeria reported negative profit after tax (PAT) in 2023-2024, attributable to exogenous economic disruptions. Paradoxically, simultaneous increases in subscriber acquisition and revenue imply potential indirect advantages linked to strengthened brand credibility. This contradiction underscores the central research dilemma: to what extent does CSR spending directly impact financial indicators such as revenue, EBITDA, and PAT for MTN Nigeria, or are these metrics predominantly determined by macroeconomic variables?

1.3 Objectives of the Study

The primary objective is to examine the relationship between corporate social responsibility expenditure and financial performance in MTN Nigeria from 2020 to 2025.

Specific objectives are:

1. To evaluate the trends in CSR expenditure through the MTN Foundation and its alignment with national priorities during 2020-2025.
2. To assess the impact of CSR initiatives on key financial performance indicators such as revenue growth, EBITDA margin, and profit after tax.
3. To identify moderating factors (e.g., forex losses, economic volatility) influencing the CSR-financial performance nexus and propose strategies for optimization.

1.4 Research Questions

1. What are the patterns and scale of CSR expenditure by MTN Nigeria via the Foundation from 2020 to 2025?
2. How has CSR expenditure influenced financial performance metrics in MTN Nigeria over the study period?
3. What external factors moderate the relationship between CSR and financial performance, and how can CSR be leveraged for better outcomes?

1.5 Research Hypotheses

H01: There is no significant positive relationship between CSR expenditure and revenue growth in MTN Nigeria (2020-2025).

H02: CSR expenditure does not significantly affect profitability (PAT and EBITDA) after controlling for macroeconomic variables.

H03: CSR initiatives have no measurable impact on subscriber base and market share as proxies for long-term performance.

1.6 Significance of the Study

This study advances the discourse on corporate social responsibility within Africa’s telecommunications sector by presenting longitudinal data from a prominent operator operating under significant economic volatility. The findings yield substantive implications for MTN Nigeria and comparable firms regarding the strategic alignment of CSR initiatives with financial sustainability objectives. Additionally, the research elucidates the developmental impact of CSR within national policy frameworks and enhances investor comprehension of ESG implementation dynamics in emerging market contexts.

1.7 Scope of the Study

The study focuses on MTN Nigeria’s CSR via the Foundation and financial data from annual/sustainability reports (2020-2024 full years) and interim 2025 results. It examines direct expenditure and indirect impacts on performance metrics.

1.8 Limitations of the Study

Limitations include reliance on secondary data (annual reports), potential underreporting of CSR impacts, and confounding macroeconomic effects (e.g., devaluation). Generalizability is limited to large telecom firms in Nigeria.

1.9 Definition of Terms

• Corporate Social Responsibility (CSR): Voluntary investments in social, environmental, and economic initiatives beyond legal obligations.
• Financial Performance: Measured by revenue, EBITDA, PAT, and subscriber metrics.
• MTN Foundation: CSR arm of MTN Nigeria, funded by up to 1% PAT.

References

Babalola, Y. A. (2012). The impact of corporate social responsibility on firms’ profitability in Nigeria. European Journal of Economics, Finance and Administrative Sciences, 45, 39-50.

Madugba, J. U., & Okafor, M. C. (2016). Impact of corporate social responsibility on financial performance: Evidence from listed banks in Nigeria. Expert Journal of Finance, 4, 1-9.

Nsikan, J. E., Umoh, V. A., & Bariate, M. (2015). Corporate social responsibility and mobile telecommunication competitiveness in Nigeria: The case of MTN Nigeria. American Journal of Industrial and Business Management, 5(8), 527-537.

Ohiokha, F. I., Odion, O. A., & Akhalumeh, P. B. (2016). Corporate social responsibility and corporate financial performance: The Nigerian experience. International Journal of Accounting Research, 2(10), 34-43.

Tsoutsoura, M. (2004). Corporate social responsibility and financial performance. Center for Responsible Business Working Paper Series, University of California, Berkeley.

Yaparto, M., Frensidy, S., & Lucia, L. (2013). The impact of corporate social responsibility on firm performance: Evidence from Indonesia. Journal of Indonesian Economy and Business, 28(3), 345-360.