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FG, States, LGs to Share N5.7tn This Year

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Nigerian president Muhammadu Buhari

A total sum of N5.7tn is being planned to be distributed among the three tiers of government as allocations for the 2016 fiscal year, figures obtained from the Medium Term Expenditure Framework have revealed.

The framework covers the period 2016 to 2018 and was sent to the National Assembly by President Muhammadu Buhari late last year for approval.

A breakdown of the N5.7tn shows that the sum of N4.3tn is being planned to be shared under statutory sources from the Federation Account, while the balance of N1.4tn is to be shared from the Value Added Tax pool account.

From the N4.3tn, the fiscal strategy paper revealed that the Federal Government would get the sum of N2.2tn, representing 52.68 per cent; the 36 states of the federation, N1.14tn or 26.72 per cent of the total; while the 774 local government councils are to get N886.5bn or 20.6 per cent.

For the VAT revenue of N1.4tn, the document states that the Federal Government is expected to get the sum of N212.4bn or 15 per cent; the states, N708bn or 50 per cent; while the local governments are to get the balance of N495.6bn or 35 per cent.

The document also states that out of the N2.2tn allocated to the Federal Government from the Federation Account, the sum of N43bn, representing one per cent, will go to the Federal Capital Territory; ecological and derivation, N43bn; statutory stabilisation, N21.5bn or 0.5 per cent; and development of natural resources, N72.3bn or 1.68 per cent.

The persistent drop in the price of crude oil in the international market has impacted negatively on the nation’s revenue as the country recorded a shortfall of N1.27tn in gross federally collectible revenue in the first nine months of 2015.

Figures obtained from the Federal Ministry of Finance showed that the country earned a total sum of N3.35tn between January and September last year from oil and non-oil sources.

Based on the revenue framework, which was approved in the budget for the 2015 fiscal period, the Federal Government had projected to earn a monthly revenue of N513.69bn from oil and non-oil sources.

When the N513.69bn is multiplied over a nine-month period, the Federal Government had expected to earn a total sum of N4.62tn as revenue.

However, owing to production shut-in occasioned by crude oil theft and pipeline vandalism, the country was only able to realise N3.35tn out of the projected figure, thus leaving a shortfall of N1.27tn for the nine-month period.

While the Federal Government had projected a monthly revenue of N513.69bn, findings showed that the revenue generating agencies were unable to meet up with target in the first nine months of 2015.

The highest amount generated as revenue in the period was in June when the sum of N485.95bn was earned from both mineral and non-mineral sources.

The N485.95bn recorded in June represents a shortfall of N27.74bn when compared with the budgeted revenue of N513.69bn.

Further analysis showed that the actual receipt from mineral and non-mineral sources was N416.04bn in January last year.

This represents a shortfall of N97.65bn when compared with the targeted amount of N513.69bn

For the month of February, the sum of N401.46bn was generated, indicating a decline of N112.23bn compared to the budgeted amount of N513.69bn

In the months of March, April and May 2015, the sums of N315.04, N282.06bn and N324.96bn were received as gross federally collected revenue, indicating shortfall of N198.65bn, N231.63bn and N188.73bn, respectively.

For July, August, and September, the amounts earned were N433.58bn, N369.14bn and N321.99bn from both oil and non-oil sources, indicating a shortfall of N80.11bn, N144.55bn and N191.7bn, respectively.

Some financial experts, who spoke to our correspondent on the issue of declining revenue, said there was a need for the government to urgently begin a readjustment of its fiscal position in a way that would enable it to generate more revenue from taxes.

The Director-General, Institute of Fiscal Studies of Nigeria, Mr. Godwin Ighedosa, said, “We have so much relied on oil revenue in the last 45 years and with the decline in oil revenue, the time has come now for us to review our fiscal position.

“We need a short-term fiscal adjustment, particularly in our budgeting system, by switching from a zero-based budgeting system to a performance-based budgeting system.

“There is a need for reform of the country’s tax administration system to enable the Federal Government to raise more revenue from Capital Gains Tax. Our tax to Gross Domestic Product ratio is one of the lowest in the world and we need to address that.”

Also, the Chief Executive Officer, Safmur Investments Limited, Mr. Rislanudeen Muhammad, said the fall in revenue was making the economy to become more fragile.

He said while the economy was growing weaker by the day owing to vulnerabilities in the oil market, its external partners were beginning to have doubts about the potential in the economy.

Muhammad, a former Managing Director of Unity Bank Plc said, “We have done things wrong in the past because we should have saved a lot of money through the Excess Crude Account.

“That arrangement in the constitution that stipulates that any money generated must be shared is a major problem for Nigeria. We are not earning as much as we were earning. What the economy needs now is single digit interest rate and a little devaluation to allow for stability, support the GDP growth rate, employment and avoid recession.”

Punch

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Government

FG Resumes Conditional Cash Transfer Programme Across Six Local Govt. In Kebbi

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NAIRA - Investors King

The Federal Government has resumed the Conditional Cash Transfer (CCT) programme in Kebbi State, commencing with a payment of N9.24bn to 76,107 CCT beneficiaries.

The National Coordinator of the programme, Hajiya Halima Shehu, made the announcement during a state visit to Governor Atiku Bagudu in Birnin Kebbi.

“As at now, payment to CCT beneficiaries is ongoing in the state. A total number of 76,107 beneficiaries across six local government areas of Bagudu, Danko, Wasagu, Dandi, Jega, and Shanga, will be receiving the payment. The beneficiaries will be receiving 26 months of payment circles, starting from January to February 2020.

“The payment will be in two batches of those 60,000 beneficiaries for four payment cycles, using the virtual account. The second batch has 70,107 beneficiaries for nine payment cycles through the debit cards. The total amount for the two batches in the state, according to Shehu, was over N9.24 billion.

“The Federal Government of Nigeria, in partnership with the World Bank in 2016, designed and developed a safety net programme for Nigeria under the platform of National Social Safety Net Programme (NASSP).

“One of the components of NASSP is the national conditional cash transfer office responsible for implementing the household uplifting- conditional cash transfer to the poor and the vulnerable households across the country,” she said.

Shehu commended the governor for providing her an audience and the chance to update him on the commencement of payments and the state’s successful implementation of the program.

Responding, Gov. Bagudu, represented by his Deputy, Alhaji Samaila Yombe-Dabai, thanked the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development, headed by Hajiya Sadiya Umar-Farouq, for actualising the programme in the state.

“I assure you that the state government will do all it takes to support the success of the programme in the state.

“We are looking forward to getting more local governments to be involved in the cash transfer programme,” Bagudu said.

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Government

Ukraine/Russian War: Twitter Heightens Fight Against Misinformation 

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Twitter - Investor sking

In the wake of the Russia-Ukarine crisis, Twitter has stepped up its effort to put an end to misleading tweets from official accounts about the war.

Investors King gathered that Twitter has already limited content from more than 300 Russian government accounts, including President Putin. The new change will be effected under the company’s new “crisis” policies.

Twitter will also prioritise labelling false posts from accounts with wide reach, like state media or official government accounts, while preserving them for “accountability” reasons.

Twitter users will now be required to click through the warning notice to view the post and Twitter will disable the ability to like, retweet or share the content. The company said it would also change its search and explore features to avoid amplifying false tweets.

Twitter’s head of security and safety, Yoel Roth, wrote in a blog post announcing the changes saying “Today, we’re introducing our crisis misinformation policy – a global policy that will guide our efforts to elevate credible, authoritative information, and will help to ensure viral misinformation isn’t amplified or recommended by us during crises. In times of crisis, misleading information can undermine public trust and cause further harm to already vulnerable communities. 

“Alongside our existing work to make reliable information more accessible during crisis events, this new approach will help to slow the spread by us of the most visible, misleading content, particularly that which could lead to severe harms. 

“While this first iteration is focused on international armed conflict, starting with the war in Ukraine, we plan to update and expand the policy to include additional forms of crisis,” Twitter said examples of problematic posts included false or misleading allegations of war crimes, false information regarding the international response and false allegations regarding use of force.

The company said it would rely on multiple sources to determine when claims are misleading. Strong commentary and first person accounts are among the types of tweets that would not be challenged by the policy, it said.

Twitter has approved a $44bn takeover by billionaire Elon Musk, who has criticised its content moderation policies

The new policies come just weeks after Twitter’s board agreed to a $44bn (£34.5bn) takeover offer from billionaire businessman Elon Musk, who has called for less moderated speech on the platform.

Musk had said in the past week that he would revoke Twitter’s suspension of former United States president, Donald Trump. 

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Government

Modest Increase in the FAAC Payout – Coronation Economic Note

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FAAC

The gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N725.6bn in April (from March revenue). This shows an increase of 4.4% or N30.6bn from the previous payout.

Based on data in the local media, it was observed that companies’ income tax (CIT), petroleum profit tax (PPT), value-added tax (VAT), oil and gas royalties, import and excise duties recorded increases over the previous month. The FGN received a total of N277.1bn and state governments received N227.2bn, including N53.4bn representing the 13% derivation for the few oil producing states.

The headline figure consists of N337.4bn in gross statutory distribution, N165.6bn from the VAT Pool, and excess bank charges of N7.5bn was recovered. The total deductions for cost of collection was N44.4bn and the total deductions for statutory transfers, refunds and savings was N382.8bn.

The committee disclosed that the balance in the Excess Crude Account (ECA) is USD35.4m.

The average monthly FAAC distribution (N665.1bn in Q1 ‘22) declined from an average of N682.5bn in Q4 ’21 but is slightly above the average of N647.0bn recorded in Q1 ’21.

Based on local newswires, the Nigerian National Petroleum Commission (NNPC) has not made any remittance to the federation account this year due to the high fuel subsidy costs. The NNPC spent N210.4bn (USD500.1m), N219.8bn (USD522.9m) and N245.8bn (USD584.8m) as subsidies on petrol in January, February, and March respectively. This is a total of N675.9bn (USD1.6bn) in Q1 ’22.

The NNPC is expected to deduct N671.9bn from its remittance to FAAC for April which is due for sharing at the May ‘22 FAAC meeting. The estimated total shortfall of N671.9bn comprises of shortfalls recorded in February (N152bn) and March (N519bn).

Money markets saw an inflow of N391bn in early-May ‘22, representing the net distribution to state and local governments. The FGN’s share is directly to the treasury single account.

Analysts at Coronation expect continuous strain with regards to FAAC payouts. According to them, it is imperative for states that depend solely on the inadequate monthly FAAC distribution to seek ways to boost their internally generated revenue. The FGN’s primary objective should be to create a conducive business environment as IGR sustainability is a by-product of an enabling environment.

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