The Nation Newspaper

Tag: revenue

  • Raging battle over revenue sharing formula

    Raging battle over revenue sharing formula

    To pundits, the revenue sharing formula remains a hotly debated issue as opinions are divided that many states of the federation are being shortchanged by the system in the disbursement of the national cake. Ibrahim Apekhade Yusuf with agency reports examine the thorny issue

    It is anybody’s guess why revenue sharing by states of the federation has remained a very hotly debated issue.

    Reason: it’s all about politics of money: who gets what, when and how.

    Crux of the matter

    The battle for equitable revenue sharing formula has remained a recurring decimal as state governments from resource rich-states, especially oil producing states, have continued to raise their voice above the din as to why they should get the huge chunk of the pie considering the fact that they are the major revenue earner for the country.

    Interestingly, some of the states in the Niger Delta region became favoured in the scheme of things as the Federal Government succumbed to the agitation for a better deal.

    But then, this led to more agitations by other regions, especially the north, with cries of marginalisation everywhere.

    The contentious revenue sharing formula

    The contentious revenue sharing formula and derivation principle remain one thorny issue that has remained unresolved.

    Expectedly, the same controversy reared its ugly head recently at the National Conference in Abuja, with splinter groups emerging at different camps.

    Observers say that the deadlock tends to reinforce the widespread notion that the country’s leaders are more interested in sharing the national cake than in baking the cake.

    The recommendation that pitched the country’s geopolitical zones against each other was the increase of derivation percentage, payable to mineral producing states and the stabilisation, rehabilitation and reconstruction fund, proposed for areas affected by terrorism and insurgency.

    To tackle the ensuing crisis situation, the Conference’s Chairman, Justice Idris Kutigi, summoned a meeting of the chairmen of the 20 standing committees and their deputies.

    Yet, the delegates failed to conclude voting on the recommendations of the Devolution of Power Committee, led by former Gov. Victor Attah of Akwa Ibom and former Inspector-General of Police, Ibrahim Coomasie; following sharp disagreements between delegates from the northern and southern parts of the country.

    To resolve the stalemate, a committee was set up and the committee recommended the increase of the derivation percentage from 13 per cent to 18 per cent.

    The committee also proposed that 50 per cent of the proceeds from the 18-per-cent derivation must go directly to communities where the mineral resources are extracted.

    The committee, headed by Prof. Ibrahim Gambari, also recommended the establishment of a National Intervention Fund, which shall be five per cent of the annual revenue of the Federal Government, for the stabilisation, rehabilitation and reconstruction of areas affected by terrorism and insurgency.

    The fund would be used for the North-East, in the first instance, and other parts of the country eventually.

    Three out of the 37 members of the elders’ committee did not endorse the report.

    Delegates from South-South, South-East and South-West geopolitical zones kicked against the intervention fund, insisting that “if there must be a fund of that nature; it must be set up for the entire country and not for a section of the country or the North alone.”

    Coomasie, a member of the Elders’ Committee, said that the committee failed to reach a consensus on the issue.

    “I am one of the delegates from the North involved in the discussion on derivation, and I want to say that we had discussions which ended in a stalemate,” he added.

    However, Chief Olu Falae, a member of the committee, said that the committee reached a consensus, while Chief Raymond Dokpesi, another member of the committee concurred, saying that the recommendations were agreed upon on principle.

    He said that the bone of contention was whether the committee should include the North-West and North-Central geopolitical zones in the areas affected by the insurgency.

    “All the Southern leaders, North-Central leaders made sacrifices, but there are some people who never wanted this conference to succeed and these people were the ones shouting today,” Dokpesi said.

    The impasse was not resolved on Monday, Feb. 14, when the delegates resumed plenary, compelling the conference to recommend that “government should set up a technical committee to determine appropriate percentages on the three issues and advise government accordingly.”

    There were, however, mixed reactions about the inability of the national conference to resolve the issue of revenue sharing via consensus.

    Senator Anietie Okon, a delegate from Akwa Ibom, said: “We are merely postponing what will come to pass. There is no question about the fact that we are in fiscal federalism and the basic principles of fiscal federalism are that there will be resource ownership and that attribution will be to those states which own the resources.

    “We have a reverse arrangement of federalism here; states own the resources but the Federal Government collects revenue on their behalf and begins to allocate funds.

    “We have a situation where a lot of states don’t contribute anything to the Federation Account. Now, what we are trying to do is to engineer a situation where revenue contribution to the national treasury will be widespread.”

    On his part, Chief Sola Ebiseni, a delegate from Ondo State, faulted the decision of the conference to refer decision on the matter to the government, saying that it shirked its responsibility.

    “As far as I am concerned, there was no decision taken today. What we did today was simply to abdicate our responsibility by throwing the issue back at Mr President, who sent us here to assist in proffering solutions to some of our national challenges.

    “What we fully failed to appreciate about what a national conference is that it is an extra-constitutional assembly of the people convened to critically examine all the issues that were pushed to us in a federation like ours, where we have to constantly review the terms of our national engagement as a country.

    “We now come to the tail end of considering a critical issue and then, we say we couldn’t take a decision and push it back to the President. That is a crafty way of maintaining the status quo and refusing to talk about it,” Ebiseni added.

    Analysts say that the derivation principle has always been a thorny issue in the country, describing the recent development at the National Conference as a mere replication of what happened at the 1995 Constitutional Conference.

    The current 13 per cent derivation for oil producing communities was agreed upon at the 1995 Constitution Conference, after a heated debate and threats from the mineral producing areas.

    All the same, concerned citizens advise state governments to exploit other sources of revenue, instead of depending solely on monthly allocations from the Federation Account for their survival.

    They insist that the current bickering at the National Conference would have been minimised if the states have been able to boost their internal revenue generation sources.

    Commenting on the impasse at the National Conference, Mr Issa Aremu, the Vice-President of the Nigeria Labour Congress (NLC), urged the delegates to refrain from taking hard-line positions on the country’s revenue sharing formula.

    Aremu, who is also a delegate, said that the impasse could have been avoided if the delegates allowed patriotism to replace parochial sentiments, while allowing national solidarity and cooperation for development to supersede unhealthy competition.

    “Delegates must look beyond the divisive revenue sharing formula to arrive at all-inclusive revenue growing/production formulae.

    “The truth of the matter is that we must grow this economy before revenue can be shared.

    “Oil and gas, which constitute the base of the derivation principle, is weak due to oil theft and relatively low exploration.

    “The challenge for delegates, including myself, therefore, lies in not just sharing what is not enough, but in growing what will be enough to build prosperity for our people.

    “We must complement distributive approach with production component to fiscal federalism,” he noted.

    Diversification as an option

    Apparently piqued by the rigmarole over the appropriate revenue sharing formula, Chief Elias Mbam, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), emphasised the need for all the states to reduce their dependence on monthly allocations from the Federation Account.

    Mbam, who spoke at a zonal workshop organised by RMAFC on “Economic Diversification and Enhanced Revenue Generation for the South-South Zone” in Asaba in 2012, also underscored the need for Nigeria to reduce its over-dependence on oil revenue.

    He stressed that the goals of development programmes such as the Vision 20-2020 and the Transformation Agenda of the Federal Government could only be attained via the adoption of effective economic diversification strategies which could provide steady, sustainable sources of revenue.

    He, nonetheless, urged the three tiers of government and the private sector to make pragmatic efforts to exploit the vast natural resources which abound in all parts of the country.

    He also noted that tangible emphasis should be placed on the development of the agriculture, manufacturing, solid minerals and tourism sectors, stressing that the sectors held the key to Nigeria’s economic prosperity.

    Besides, Mbam stressed that challenges facing the country such as poverty, unemployment and insecurity, could be effectively tackled via the diversification of the economy to expand access to extra resources for the development of basic infrastructure and provision of vital social services.

    Experts therefore urge the federal, state and local governments to adopt sound economic proposals, particularly those that would enable them to diversify their revenue sources and depend less on monthly allocations from the Federation Account.

    Recipe for a vibrant revenue portfolio

    At a public forum in Uyo, Akwa Ibom state capital, recently, Dr. Casimir Anyawu, a Commissioner at the Revenue Mobilisation and Allocation and Fiscal Commission (RMAFC) noted that “The nation’s hope to become an economic super power come 2020 will continue to be a pipe dream if infrastructural inadequacies are not urgently addressed.  A Marshall Plan must immediately be designed for power, water, roads, railway etc. The problem of the “Generator Cartel” must be squarely addressed.  A ban on further importation of gen sets must be explored, if in the national interest. Leakages and wastages in current tax revenue collections must be plugged.”

    The RMAFC, he stressed, “must pay closer attention to the operations of the FIRS and the Department of the Customs.  The law requires that this be done. Revisit the policy on the Ban on some Used Products and make the initiative work in the national interest towards increasing the revenue base. The policy on revenue generated by MDAs is woeful.  It needs total re-examination.  The current model is prone to sharp and corrupt practices.

    “RMAFC must come to the rescue of LGAs from the stranglehold of State Governments.  Rural Nigeria cannot develop to the extent that allocations meant for that purpose are high jacked by State Governments. We must return to basics.  There is urgent need for a Marshall Plan for Agriculture, Solid Minerals, Manufacturing and Tourism.

    “Nigeria must learn from the Asian Tigers.  The key to their success is massive investment in Education, Science and Technology.  We must get our priorities right. Inconsistency in policy formulation and lack of continuity of programmes have resulted in undue waste of our national wealth.  Policy summersaults should be kept to a minimum.”

  • Nigeria’s top 10 federal revenue receiving states

    Nigeria’s top 10 federal revenue receiving states

    Finance Minister, Dr Ngozi Okonjo-Iweala, has listed Nigeria’s 10 highest revenue receiving states based on the federal allocations in 2013.

    The states, according to her, earn more than the annual budgets of some neighboring countries.

    The allocations are as follows:

    Akwa Ibom N260 billion,
    Rivers N230 billion,
    Delta State N209 billion,
    Bayelsa N173 billion,
    Lagos N168 billion,
    Kano N140 billion,
    Katsina N103 billion,
    Oyo N100 billion,
    Kaduna N 97 billion
    Borno N94 billion.

    Okonjo-Iweala gave the breakdown of the allocations on Sunday at Babcock University’s 12th Convocation at which she delivered a lecture with the theme: ‘Transforming Nigeria economy: Opportunities and Challenges’

    “These were the allocations that all these states got last year, so the question is what did they do with it? Analysis shows that many Nigerian states receive revenue allocation which are larger than budgetary allocation of neighbouring countries such as Liberia which is $ 433 million, Gambia $210 million.

    ” So you see that our top 10 states receive more money than these countries and therefore you should be asking what is this money being used for?”
    Okonjo-Iweala said.

    She noted that some states use their allocation better than others adding that “that is why we can actually see what they are doing with their infrastructure, education, while others do not”.

    ” We should also ask ourselves what is the role of our state government and local government in supporting our transformation? We know from the constitution that provision of public services such as health, education, agricultural services and so on are all on a concurrent list and therefore are joint responsibilities of the federal state and local governments.

    “However it is not often that you hear people asking what has your state done? Most of their attention is turned to the federal government so we also need to ask what do our state and local government do with the resources they get?” Okonjo-Iweala stated.

  • Mobile money revenue to hit $3b soon

    Mobile money revenue to hit $3b soon

    The revenue of mobile money operators will rise to $3 billion next year, a study by Pyramid Research has shown.

    Although Safaricom’s M-Pesa in Kenya has long been the lone success story in the mobile money universe, successes are being recorded in, Uganda and Tanzania with similar mobile money offerings.

    MTN Uganda’s mobile money service accounts for three per cent of all airtime sold on its networ­k, and Vodacom’s M-Pesa service in Tanzania has six million subscribers with exponential growth of 600 per cent experienced in the past year alone. Currently, mobile money offerings remain limited and are concentrated in just 22 of the more than 50 African countries.

    Analysts said the African mobile money market has the potential to grow to a money-making market, but operators, banks and regulators need to work toward developing an enabling environment for business models that meet service providers’ revenue demands.

     

  • FIRS gets N4.21trn revenue target for 2014

    The Federal Government has given the Federal Inland Revenue Service (FIRS) a N4.21 trillion revenue target for 2014, the Acting Executive Chairman of the Service, Alhaji Kabir Mashi, has said.

    Mashi stated this on Monday in Abuja at the 2014 Corporate Plan Retreat and Enlarged Management Meeting of the Service.

    He said that the Service was expected to collect N1.79 trillion from Petroleum Profit Tax (PPT), N1.03 trillion from Companies Income Tax (CIT) and N96 billion from gas component of CIT.

    Other sources, he said, include N861 billion from Value Added Tax (VAT), N10.21 billion from Capital Gains Tax, and N8.46 billion from Stamp Duties.

    Mashi said the Service was also expected to collect N156 billion, N59 billion and N10.6 billion from Education Tax, Personal Income Tax and Technology Levy, respectively during the period.

    He said that FIRS surpassed its 2013 revenue target by N337 billion or 7.56 per cent, adding that it collected N4.805 trillion as against the targeted N4.468 trillion.

    He, however, stated that the actual collection from non-oil revenue in 2013 fell short of government’s target of N2.188 trillion by three per cent, but assured that it would be improved on in 2014.

    “One proactive step that has been taken in respect of growing non-oil revenue tax is the take-off of the Capacity Enhancement Programme (CEP) towards delivering additional non-oil revenue in the current year.

    “We have every intention of sustaining and hopefully improving upon the standards that the service has come to be known with in terms of delivering results in recent time,’’ he said.

    Mashi said that the retreat was aimed at further addressing FIRS management’s desire to grow tax revenue for development, particularly non-oil revenue which held significant potential.

    Earlier in her welcome address, Mrs Queen Seghosime, FIRS’ Coordinating Director, Direct Report Group, said that the meeting was an annual forum where important strategic decisions of the Service were taken.

    Seghosime added that the retreat would provide the management team the opportunity to brainstorm on the organisation’s corporate plan to meet its revenue forecast and corporate aspirations.

  • AAAN expects higher revenue from politics, telecoms, banking

    Politics, telecoms and banking will propell growth of advertising spend in the year, the Association of Advertising Agencies of Nigeria (AAAN) has said.

    The association believes that with political campaign kicking off in preparation for 2015 election, the industry will experience boom in ad spend while telecoms and banking sectors are expected to also further skyrocket growth over last year’s figure.

    AAANPresident, Mrs. Bunmi Oke, said though a projected N20 billion to be spent on political campaign might not pass through the organised private sector, the projected increase in the banking sector would be due to the new banking regime and rebranding exercise.

    In the breakdown of last year’s advert spend, it was revealed that N66, 250 billion was spent on TV; N22, 500 billion on radio; 23,750 billion on outdoor and 23,500 billion on press. The total was put at N125 billion, which is about 37.3 per cent increase compared with advert spend in 2012, which was about N91.8 billion.

    Oke said: ”Licensing of new DISCO Companies will increase advertising spend in the energy sector while the business outlook for the 2014 portends some potentials for practitioners and agencies. It is believed that advertisers will also increase spent and operate within the framework of law, ethics and best business practices.”

    She, however, further explained that the industry contributions to the economy goes beyond offering marketing communication services to the private sector but extends to fully engendering proper understanding of government policies and revealing to the public ways by which they can participate benefit and contribute to the growth of the economy.

    Oke, however, suggested that efforts must be aimed at building the profession to the level of what everybody understands to better engagement. This, to her, is why the local industry must be supported and shielded from undue foreign patronage. She condemned the recent engagement of a foreign agency by one of the major political parties to help it positively project its image.

    According to her, marketing communications agencies are more than qualified and capable to handle such task besides having a better understanding of the dynamics of the country and its people.

    On the National Conference, where the association would be sending a representative, she said because it is a collaborative effort the body is discussing with all stakeholders to collate opinions in order to have a well-informed position that would drive the industry forward and to greater height.

    Events being proposed by the association for the year include the 41th AGM/Congress; agencies funfair; Women in Advertising Seminar and an International seminar on the persuasive power of advertising to win elections.

  • Bayelsa eyes agric, tourism to boost revenue

    Bayelsa eyes agric, tourism to boost revenue

    Its revenue has been going down in a scary manner in the last few months. Bayelsa State’s share of revenue from the Federation Account has dropped by between N4 billion and N5 billion monthly in recent time, prompting the urgent need to look inwards for alternative revenue sources. Cyril Akika, Special Adviser to the Governor on Investment, confirmed that much when he said that fluctuations in oil price as well as dwindling allocation from the Federation Account has put tremendous pressure on the state’s fiscal system hence, the resolve to drive the development of its economy by growing the SME sector in collaboration with members of the private sector.

    Bayelsa State Governor Seriake Dickson believes the way out of the quagmire is to diversify the economy. In the last two years, he said he has devoted attention to various policies and projects aimed at diversifying the economy of the state away from oil and gas. Consequently, the state government has made deliberate interventions in the Small and Medium Enterprises (SMEs) sector where it is grooming a new crop of entrepreneurs to drive post-oil Bayelsa State, including other revolutionary investments in agriculture, culture/tourism, entertainment, and infrastructure development such as building roads, airport, seaport, and industrial parks.

    For instance, to underscore the shift towards the SME sector as one of the growth drivers and alternatives to oil & gas revenue, the state government, in collaboration with members of the organised private sector (OPS) is raising a N10 billion SMEs Development Trust Fund to encourage small and medium scale entrepreneurs. While the state government, according to the governor, would source for 40 per cent of the fund, members of the OPS would provide the remaining 60 per cent and also manage the fund. The Nation learnt that while the governor has supported the Trust Fund with an initial sum of N250 million, the Bayelsa State Development and Investment Corporation (BDIC) did same with the sum of N100 million. That was last year. Beneficiaries, especially land and property owners in the state with relevant Certificate of Occupancy (C of O), after presentation of their title documents, would have the opportunity to access the fund after thorough screening.

    The BDIC is a privately run state enterprise set up in August 2012 with the mandate to, among others, promote the state’s public private partnership (PPP) initiative, which seeks to create the enabling environment for the private sector to thrive; act as holding company for all the state’s assets, manage them and bring in income and dividends to the state, as well as act as catalyst for social and economic development. Apart from the critical focus on tourism and agriculture, the BDIC is also focusing on areas of comparative advantage in oil and gas, marine and logistics. The BDIC is also donating the sum of N50 million to support the 20th International Conference on SMEs scheduled to hold in Yenagoa, the state capital, between March 28 and May 1.

    To enlist the support of members of the OPS, Dickson, on March 9, led his commissioners to a pre-event luncheon with business stakeholders ahead of the 20th International Conference on SMEs. At the event, the governor called for the active participation of local and foreign investors in the economic development of the state, urging investors to take advantage of the numerous business and investment opportunities that abound in the State. He identified some of the areas of the state’s economy begging for private sector partnership with the state government to include agriculture, aqua-culture, tourism, waste management, housing and the construction of a new airport and deep seaport. The administration, as part of its sensitisation programmes, would organise a special road show within and outside the country on the deep seaport project located in Agge in Ekeremor Local Government Area of the State.

    Also, preliminary engineering works have been concluded for the construction of an airport. “We have started and we hope that in the next two years we should be able to deliver on the airport project. The area has been acquired, preliminary engineering works concluded. Bulldozers have been brought in,” the governor informed. When completed, the Bayelsa airport would create a direct link to Yenogoa, thus bringing to an end the about two kilometer drive by road from Port Harcourt Airport. “We are also working on setting up an industrial park within the vicinity of the airport,” he said, adding that the state government is also investing massively in infrastructure such as roads and bridges. “Before I came into office, it was taking us one hour from Yenogoa to Amazoma, the university community, which is almost where you are not just talking of a congenial, right investment climate, you are also talking about the presence of supporting infrastructure,” the governor said, with glee.

    He further disclosed that the state is building a tourism development school, probably one of its kind in the country, “because we want to train tourism practitioners who would service that robust economy. He said the state is leveraging the tourism sector to diversify the base of the state’s economy beyond oil and gas, which is why month after month it sponsors major local and international events in collaboration with the private sector. “If you are interested in investing in the tourism sub-sector, Bayelsa is the place to be,” he declared, assuring that investors would get a C of O within 60 days for any piece of land acquired for any tourism related investment. “The reason is that we don’t have enough hotels in Bayelsa so, we are looking for people who would take advantage of that. About a month ago, I launched the automated title certification system; it is not just for people who may be interested in the tourism and hospitality industry, but also for any other kind of investment that you can think of,” he explained.

    Another major plank of the state’s inward-looking strategy is agriculture. As the governor explained, Bayelsa State has a comparative advantage in agricultural long before the discovery of oil in commercial quantity. He recalled that the whole of the territory known as Bayelsa and its environs was originally known as the oil rivers protectorate, but because of crude oil but oil palm. He therefore, disclosed that the state government is poised to resuscitate palm oil production and several other derivatives along the entire value chain. “We shouldn’t just be focusing on producing primary products, we should be thinking of doing it down the entire value chain, which again presents several opportunities to investors,” he said, pointed out for instance, that the swampy nature of the state, “we have no business importing rice into this country when you have a place like Bayelsa. I want to see big time investors, people who would come and take over the massive farmlands that have been earmarked already for rice production.”

    The need to boost human capital development is not lost on the state government, which is why there has been emphasis on manpower training. At present, the state government is sponsoring about 150 doctor of philosophy (Ph.d) and 400 Masters Degree students in various top-notch universities across the world, according to governor Dickson. Also, about 25 model secondary boarding schools have also been built across the state. “There is no state in this country that has made the type of investment we have made in education. We are making this kind of revolutionary investments because unless you have an educated population and workforce your society and the economy have no capacity to develop; we are absolutely going to have a combustible society, the type that can blow up anytime,” he explained.

    Apparently buoyed by the structures so far put in place to unlock the enormous investment potentials in various sectors for the purpose of preparing Bayelsa for the post oil regime, the state government has set for itself the lofty ambition to become the ‘Dubai of Africa’ in terms of physical infrastructure and business opportunities. “We are already on the journey of becoming the new Dubai,” governor Dickson declared, noting that “this is why you see major international events holding in Bayelsa. In the past two years, Bayelsa has become the home of hospitality and tourism and entertainment capital of Nigeria and the entire continent.”

  • Customs generate N73.2bn at PTML Command in 2013

    Customs generate N73.2bn at PTML Command in 2013

    The revenue generated by the Nigeria Customs Service (NCS), Ports and Terminal Multi-Services Ltd. (PTML) Command rose to N73.2 billion in 2013 up from N71.2 billion collected in 2012.

    The Public Relations Officer of the command, Mr Steve Okonmah, disclosed this over the weekend in an interview with the News Agency of Nigeria (NAN) in Lagos.

    According to him, the revenue result achieved in 2013 reflects a 2.7 per cent increase compared to that of 2012.

    He said: “In 2013, PTML Customs Command, a model port, realised the sum of N73, 210, 954, 981 as against a total revenue of N71, 267, 589, 007.

    This shows that in 2013, there was an increase of N1, 943, 365, 974 or 2.7 per cent increase as against 2012.

    “The truth of the issue is that we were able to achieve this because the CAC in his Wisdom 30 Loop Holes and the officers were adequately sensitised.

    “You know that the CGC has already been motivating the officers. He has been training and re-training the officers.

    “So expertise, alertness and honesty on the part of officers and constant dialogue and sensitisation of agents led to this increase, notwithstanding the withdrawal of Maersk Line on April 4,“ Okonmah said.

    Okonmah said that a total of six containers were seized in 2013 which included five 40ft containers and one 20ft container.

    Okonmah also said that six vehicles such as Lexus Jeep, Mitsubishi Space Star, Toyota Camry, Nissan Murano, Nissan Quest and Toyota 4Ruuner were also seized in the period under review.

    Okonmah said that the Duty Paid Value (DPV) of the seized items was N97.3 million.

  • Furore over budget, revenue shortfall

    Furore over budget, revenue shortfall

    The House of Representatives is probing the the federal revenue shortfall. Correspondents VICTOR OLUWASEGUN and DELE ANOFI write on the altercation between the House Committee on Finance and Finance Minister Dr. Ngozi Okonjo-Iweala on the vexed issue and its implications for the executive/legislative relationship.

    The face-off between the Federal Government and the House of Representatives over dwindling economic fortunes may continue this year.

    The House has begun an investigation into the revenue shortfall, which generated anxiety among the 36 governors last year. During the investigation by the House Committee on Finance, the legislators and the Finance Minister and Controlling Minister of Economy, Dr. Ngozi Okonjo-Iweala, traded words. There were hot exchanges. However, the disagreement was not personal.

    In the opinion of the House, the economy has suffered from hemorrhage. The legislators complained that Ministries, Departments and Agencies (MDAs) were responsible for the drop in the Internally Generated Revenues (IGR). For instance, the committee alleged that the Nigerian National Petroleum Corporation (NNPC) was owning the Federal Government N142.7b and it showed no intention of paying the money. The corporation supposed to remit the amount from its N6 trillion IGR between 2009 and July 2012 to the Consolidated Revenue Fund (CRF) as demanded by the Fiscal Responsibility Act, 2007.

    On the other hand, the Central Bank of Nigeria (CBN) was also alleged to be owing the Federal Government N95b unmerited independent revenue from its IGR, but it remitted N80b. in March. The Committee also turned the heat on the banks for short changing the Federal Government of its revenues as tax collection agents. There were mind boggling revelations. on behalf of the government.

    However, the meeting of the committee with the Finance Minister ended on a sour note. The Committee Chairman, Hon. Abdulmumin Jibrin, and Dr. Okonja-Iweala clashed. Before the meeting, the Speaker, Hon. Aminu Tambuwal, had accused the Ministry of Finance and the Budget Office of inflicting pain on the country. He said the ministries were responsible for the benchmark controversy, which led to another frosty relationship between the legislature and the executive.

    Jibrin alleged that while the minister had painted a picture of a growing economy, what is on ground is at variance with her position. He handed to the minister 50 questions, which he said will shed light on the true picture. The committee gave the minister two weeks to give her response.

    Okonjo-Iweala informed the committee that, owing to her indisposion, the Accountant General of the Federation (AGF) and the Director General of the Budget Office, Bright Okogwu, would provide necessary answers to the queries.

    The first question is: what are the major economic achievements of the administration in the 2013 fiscal year? The committee chairman queried: “If the economy is one of the fast growing economies, what is exactly growing the economy? What role does government play in the said economic growth, especially given that as high as 80 percent of the total annual budget spending still goes into recurrent expenditure?

    “Since your arrival as minister of finance in 2011, you have publicly announced the need to reduce the recurrent expenditure so that more money would be made available to capital spending which is critical to growing and diversifying the country’s economy. How far has government succeeded in making these necessary cuts; and where exactly have these cuts been made in this effort to reduce recurrent expenditure? In other words, based on real amount spent on capital expenditure, how much reduction was made in 2011 against 2010, in 2012 against 2011 and in 2013 against 2012?

    “You are known to be celebrating a single-digit GDP growth. But speaking recently at a breakfast dialogue with some members of the organised private sector in Lagos, organized by the Nigerian Economic Summit Group (NESG), you were quoted as saying: “We are growing, but not creating enough jobs. That is a very big challenge. We need to grow faster. I think it needs to grow at least 9 to 10 percent to drive job growth the way we want.” Don’t you agree that a good finance minister managing an economy like ours should be celebrating a GDP growth as high as 20 percent annually? Why is it that our economy cannot grow beyond a single digit? How many jobs are being created as a result of these said growths? In which sectors of the economy are these jobs created? If in private sector, what contributions is government making to further assist these private sector firms?

    “In the presence of Nigeria’s huge infrastructure deficit, why is it that the country’s debt-to-GDP at about 19 percent in 2012 remains one of the lowest in the world when compared to nations already with world-class infrastructure and industrial economies such as America’s 105 percent, Brazil’s 65.49 percent, India’s 67.60 percent, and South Africa’s 40.9 percent? Since facts don’t lie, have you any disagreements with the September 4, 2013 Global Competitiveness Report of the World Economic Forum for 2013-2014, which ranked Nigeria 120th out of 148 countries ranked in the Global Competitiveness Index, including being ranked far behind some African countries such as Mauritius 45th, South Africa 53rd, and Kenya 96th?

    ‘’For the first time in Nigeria’s 53rd year history, we have successfully privatized the electric power industry,’’ so said the President at a recent meeting in London with some foreign investors. As minister of finance should you agree that the recent privatization of the country’s power infrastructure is worth celebrating as a major economic achievement in 2013, when in reality there is little or nothing to show as an improvement in the country power supply? Also why our rush to wholesale privatization of the power sector when countries like South Africa, generating as high as 42,000MW still have their power sector mostly in public hands?”.

    The Committee expressed worry over the debt profile, which was responsible for the $4 added to the government’s projected benchmark for 2013 budget, put at $75. The House raised it to $79 so that the balance could be used to service the debt and boost domestic economic activities. “From Debt Management Office (DMO) 2012 Annual Report, the total public debt outstanding between 2008 and 2012 for external stock rose from $3.72bn to $6.53bn, while domestic stock rose from $17.68bn to $41.97bn. The total debt service in the same period showed a reduction from 11.46 per cent to 5.96 per cent while the percentage of domestic debt servicing grew from 88.54 per cent in 2008 to 94.04 per cent in 2012, drastically increasing the cost of the total debt service, since the cost of domestic borrowing is atrociously higher than the cost of external borrowing. “How could your debt sustainability analysis rationalize this without seeing some narrow interests being the overriding reason? Could this be the explanation why commercial banks in the country are declaring unheard-of three digit profits and the high Foreign Portfolio Investment and low Foreign Direct Investment?”, Jibrin asked.

    Also, the committee beamed a searchlight on the Excess Crude Account and the Sovereign Wealth Fund and their effects on the internal economic growth. The committee raised some posers” “How much exactly has been the amount of money lost in government revenue as a result of import duty waivers in 2011, 2012 and 2013?Provide the names and beneficiaries and justification for same. In your opinion as the minister of finance who oversees the economy, what are the implications to the country’s economy? What efforts have you have made to stop this waiver policy, which is distorting the economy?

    “Our non-oil income has dropped in 2013. A case where increased tariffs on various items effectively reduced importation to zero in some sectors. However, those items now find their way into Nigeria through our borders. Does it make any sense to increase these tariffs when we have such porous borders? As an example, officially, Togo imported more rice this year than Nigeria.

    “Do you really believe that Nigeria needs a ‘Sovereign Wealth Fund’ at this critical juncture of budgetary deficits, and having to be borrowing extensively in an effort to address government revenue gaps?

    “ Shouldn’t the presence of Nigerian Sovereign Investment Authority (NSIA) simply mean spreading government’s scarce resources thinly? Why will you insist that no matter what we still need to operate a sovereign wealth fund? Sincerely speaking, how sustainable are the objectives of Nigeria’s Sovereign Wealth Fund, particularly in the long-term?

    “Who determines the investment objective and who establishes the risk parameter for the NSIA’s portfolio? In providing answer to this question, it is also important to understand and explain why NSIA recently hired a Swiss national as its chief portfolio investor? Answering this question is important since it should help us to know who determines the maximum draw-down that the government would be comfortable with in extremely negative market environments.

    “Do you agree that the Excess Crude Account as being operated by government is illegal and unconstitutional, especially given how it has been managed? Can you explain with clarity how the ECA is being operated? Also provide a statement of account of the ECA from 2011 to 2013? Also how much have we made in excess of the benchmark price from January 2013 till date.

    “ If there is nothing like Excess Crude Account, would you have been demanding lower oil price benchmark for the budget, especially when the executive arm of government around world is known for demanding more money from lawmakers in order to be able to meet government spending obligations, particularly capital spending. Why is the reverse the case in Nigeria only, notably since 2011?

    “ With respect to the Excess crude account and our Sovereign wealth fund again, there have been allegations and counter allegations on its legality. Assuming, for the sake of the committee’s enlightenment, the FGN alone saved its own excess in its ECA/SWF (which is about 52% of the Federation account) and the states and LGs get their funds in full compliance with the constitution, what would be the effect on the economy?”

    “Why should we expect private sector firms to be investing in the economy? You are quoted as saying, ‘’ Very soon, the US would become a net exporter of oil. So, it would be disingenuous for anyone to say that just because the price of oil has hovered at around $100 per barrel, it cannot crash”. Lest we forget, as recently as 2008, oil prices crashed from a peak of $147 per barrel to $35 per barrel in a space of months triggered by the global financial crisis.

    “Given the IEA global oil price trajectory, can’t we agree that “there are many constraints on supply keeping pace with demand’’, which means that within this decade, oil prices should always hover around $125 per barrel? Answering this question will help us understand why you insist on benchmarking the oil price for the 2014 appropriation at below $79 per barrel.

    “ In answering this question, would you also agree that, as the global economy shifts from the West to Asia, will the appetite for global oil consumption shift from the West to Asia?

    “As crude oil continues to sell at $100-$110, how low will production have to fall for us to record a net loss or at what production level can we break even at a 2013 benchmark of $79?

    The House also wanted to know whether Okonjo-Iweala is familiar with business arrangements of the NNPC. It queried: “Why were these business arrangements excluded from the MTEF, which used to be the practice? “Why do you always prefer a lower benchmark, which leaves government with wider deficits and your attitude of no qualms with domestic borrowings at excessively high interest rates to balance deficit, as against our position of increasing benchmark to reduce deficit, which consequently reduces domestic borrowing, that frees up funds for the real sector of the economy, thereby bringing down the interest rate, increased private sector investments and creating jobs?

    “What is the total amount expended by certain statutory agencies of government without appropriation for 2011, 2012, and 2013?

    “ As the Coordinating Minister of the Economy, do you feel comfortable with allegations that almost equal amount of our yearly aggregate expenditure is being spent without appropriation, yet we are crying that the country is running short of revenue?

    The 50 questions have generated interest in the government circle and the public. For now, the House awaits the minister’s response. Her explanations may either restore mutual confidence between the two arms or accentuate the frosty relationship.

  • Oil revenue drops to N457b, says CBN

    Oil revenue drops to N457b, says CBN

    FEDERAL Government’s earnings from oil dropped by 29.2 per cent to N457.23 billion in August, the Central Bank of Nigeria (CBN) has said.

    In a statement obtained from its website, the CBN said the oil receipts constituted 60.1 per cent of the total revenue.

    It said the revenue fall was largely as a result of the shortfall in receipts from exports and other oil revenue during the period.

    At N303.06 billion, gross non-oil receipts constituted 39.9 per cent of the total, and was 0.9 per cent above the monthly budget estimate. This was however lower than the level in the preceding month by 25.1 per cent. The increase in non-oil revenue relative to the receipts in the preceding month, reflected largely the rise in receipts from corporate and education taxes.

    It said the rise in receipts relative to the monthly budget estimate, reflected largely the increased receipts from Corporate and Education Taxes, adding that Federal Government estimated retained revenue was N261.88 billion, while total estimated expenditure was N362.16 billion. Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N100.28 billion, compared with the provisional monthly budget deficit of N73.92 billion.

    The report said Nigeria’s crude oil production, including condensates and natural gas liquids, was estimated at an average of 1.88 million barrels per day (mbd) or 58.28 million barrels for the month. This was 0.03 mbd, or 1.6 per cent higher than the 1.85 mbd (57.35 million barrels) produced in the preceding month. It attributed the development to the successful arrests and constant clampdown of crude oil vandals, even though crude oil theft in the Niger Delta region continued to impact negatively on output.

    The CBN said crude oil export was estimated at 1.43 mbd, or 44.33 million barrels per month, stating that this represented an increase of 2.1 per cent, compared with 1.40 mbd, or 43.4 million barrels recorded in the preceding month. Deliveries to the refineries for domestic consumption stood at 0.45 mbd, or 13.95 million barrels during the review month.

    The regulator said the average price of the Organisation of Petroleum Exporting Countries’ (OPECs) basket of 11 crude streams increased by 2.9 per cent to $107.52 per barrel, compared with the level in the preceding month.

    A breakdown of receipts showed that proceeds of industrial, manufactured, minerals, agricultural, and food sub-sectors stood at $88.05 million, $44.33 million, $27.12 million, $42.13 million, and $7.08 million, respectively.

     

    It said world crude oil output in August was estimated at an average of 90.04 million barrels per day (mbd), while demand was estimated at 90.18 million barrels per day (mbd), compared with 89.95 and 89.64 (mbd) supplied and demanded, respectively, in the preceding month. The rise in demand was attributed to increased transportation and industrial fuel usage by the low income economies.

     

     

  • Fair revenue sharing formula will end nation’s woes, says ARG

    Fair revenue sharing formula will end nation’s woes, says ARG

    •Recommends 35 per cent for Fed Govt

    The pan-Yoruba group, Afenifere Renewal Group (ARG), has said a justified revenue allocation formula will solve some of the nation’s problems.

    ARG’s National Chairman Mr. Olawale Oshun spoke in Ibadan, the Oyo State capital, at the public hearing on the proposed review of the revenue sharing formula organised by the Revenue mobilisation, Allocation and Fiscal Commission (RMAFC) for the Southwest.

    Oshun said a fair revenue sharing formula would have contained the many complaints of the people.

    He noted that RMAFC had a crucial role in rescuing the nation from the precipice by presenting a formula reflecting true federalism.

    Oshun said people’s needs could only be addressed by local administrations, saying the Federal Government should not be allowed to hold on to 52 per cent of the revenue in the Federation Account.

    “There are about 193,000-kilometre roads in Nigeria, of which only 34,000 are federal. The larger burden of road maintenance falls on states. There are about 1,000 secondary schools in Lagos State and only about 10 belong to the Federal Government. Again, the need is at the state level. The same can be said for health facilities.

    “So, the Federal Government’s allocation must be reduced and some of its responsibilities devolved to states, whose percentage allocation must be increased to allow for purposeful governance.”

    The group proposed a sharing ratio of 35:65 between the Federal Government and states, arguing that there was no need to allocate anything to local governments which are “entirely under state”.

    On how to decentralise the Federal Government’s responsibilities, “ARG, citing agriculture said states are in a better position to implement agricultural policies than the Federal Government. It recommends that the portolios of the Federal Ministry of Agriculture” should be altered to retain only their research and policy functions. Then, their allocations can be turned into a Conditional Grant Scheme for states willing to buy into the Federal Government’s policies.

    “The same approach can be applied to decentralise the delivery of major public services, such as education, health and social services. This approach stands to benefit from the efficiencies associated with local administrations while serving important national objectives.”

    The group said special funds had made impact and should be cancelled. If need for such arises, it said the Federal Government and the affected appropriate state could decide on a counterpart funding arrangement.

    ARG recommended that derivation be increased from 13 percent to 25, arguing that the derivation principle should also be applied to the sharing of taxes such as VAT, etc.

    To bridge the developmental gap among states, it suggested an equalisation fund into which states would pay an agreed percentage of their Internally Generated Revenue (IGR).

    ARG said the fund would be “accessible by poor states only as a conditional grant for developmental projects”.

    Decrying the lack of accountability in governance, the group advocated independence of the RMAFC. It urged the commission to ensure that all revenues go into the Federating Account and condemned a situation where some agencies refuse to remit the money.