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NEITI: Federation Account Dips by 30%

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NEITI
  • NEITI: Federation Account Dips by 30%

A new report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has shown that disbursements from the Federation Account to the three tiers of government plunged by 30 per cent in the first half of this year when compared to the corresponding half of last year.

This sharp drop in revenues may negatively impact budget implementation across the three tiers of government this year, increase the size of budget deficits, and deepen the debt burden, NEITI warned.

This is contained in a report titled: FAAC Disbursements in First Half of 2016 and Possible Implications, released yesterday in Abuja. The report is the maiden issue of the NEITI Quarterly Review, a publication that will focus on issues around transparent and accountable management of revenues from the extractive sector.

Undertaken pursuant to Section 3(i) (j) of NEITI Act 2007, the report analysed disbursements by the Federation Accounts Allocation Committee (FAAC) in the first halves of last year and this year, and highlighted possible implications for public governance and management in the country.

According to the report, revenues shared to the three tiers of government were less by over N800billion from N2.89billion last year to N2.01billion this year. This 30 per cent decline reflected in lower allocations across the board.

The report stated: “Total disbursements to the Federal Government fell from N1.23 trillion in the first half of 2015 to N854 billion in the first half of 2016. This represents a 30.9 per cent decline. Total disbursements to states fell by 30.5 per cent from N1.009trillion in the first half of 2015 to N701billion in the first half of 2016. For local governments, allocations from FAAC (Federation Account Allocation Committee) dropped by 26 per cent from N580.63billion to N429.43billion.”

The reasons for the plunge in allocations, according to NEITI, include the drastic fall in oil prices, lower oil production due to the activities of Niger Delta militants, and lower non-oil revenues as a result of lower taxes arising from contraction in government spending, fall in consumption and investment expenditures and decline in economic activities.

Citing statistical data by the Central Bank of Nigeria (CBN) showing the gap between oil and non-oil revenues and analysis of oil prices and its correlation to FAAC disbursements, the report pointed out that “the dependence of governments at all tiers on the oil sector highlights the vulnerability of public revenue to global oil market developments.

“On average, statutory allocations constituted 86 per cent of total disbursements to the Federal Government in the first half of 2016. Statutory allocations make up 71 per cent of total disbursements to state governments and 67 per cent of disbursements to local governments. Thus, the Federal Government relies more on statutory allocations than the state or local governments”.

NEITI however explained that the reason for the greater exposure of the Federal Government on statutory allocations is because of the country’ s revenue sharing fomular: the Federal Government is allocated 52.68 per cent of statutory allocations while the states and local government areas receive 26.72 per cent and 20.60per cent respectively. This imbalance is however adjusted by the fact that the Federal Government receives only 15per cent of Value Added Tax (VAT), while states and local governamnet areas take 50 per cent and 35per cent respectively.

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

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Russia and North Korea Revive Military Pact, Heightening Tensions with US

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Russian President Vladimir Putin and North Korean leader Kim Jong Un have revived a Cold War-era military pact.

The agreement, signed on Wednesday during Putin’s first visit to North Korea in 24 years, commits the two nations to provide immediate military assistance to each other if either is attacked.

This development is likely to exacerbate tensions with the United States and its allies.

The Comprehensive Strategic Partnership Treaty, as the pact is officially named, represents the most powerful treaty signed between the two countries, according to Kim.

“This treaty elevates our ties to an alliance,” he declared during the signing ceremony. The deal stipulates that if either nation is invaded by an armed force, the other will provide military and other assistance “with all the means at its disposal,” in line with Article 51 of the United Nations Charter and the laws of both nations.

Putin’s visit to Pyongyang and the signing of the pact come on the heels of Kim’s trip to Russia in September, an event that has already resulted in a notable increase in arms transfers between the two countries, as confirmed by satellite imagery.

Despite the mounting evidence, both Moscow and Pyongyang have denied any such exchanges.

The renewed military alliance marks a significant escalation in the strategic partnership between Russia and North Korea, which had been relatively dormant since the end of the Cold War.

Analysts suggest that this move is a clear message of defiance to Western powers, particularly the United States, which has been involved in ongoing disputes with both nations over various geopolitical issues.

“The Comprehensive Strategic Partnership Treaty is for defensive purposes,” Kim stated, but experts warn that the alliance increases the risks for the US and its partners in responding to provocations from Moscow and Pyongyang. The treaty not only includes mutual defense commitments but also outlines plans to enhance cooperation in trade and investment, further solidifying the bilateral relationship.

Russian officials emphasized that the pact is a natural progression of the countries’ shared interests.

“This treaty is a testament to the deepening strategic and military cooperation between Russia and North Korea,” said Sergey Lavrov, Russia’s Foreign Minister. “It is essential for maintaining regional stability and countering external threats.”

The US and its allies have expressed grave concerns over the implications of this agreement. “This treaty significantly alters the security landscape in East Asia,” stated a senior US State Department official. “It underscores the need for vigilance and reinforces the importance of our alliances in the region.”

Military analysts are closely watching the developments, noting that the alliance could embolden both nations to take more aggressive stances on the international stage.

“With this treaty, North Korea gains a powerful ally, while Russia secures a foothold in East Asia,” said Alexander Gabuev, a senior fellow at the Carnegie Moscow Center. “It is a strategic maneuver that complicates the geopolitical calculus for the US and its partners.”

The reactivation of the military pact also comes at a time when Russia is deeply involved in the conflict in Ukraine, where it faces significant opposition from Western nations.

North Korea’s unreserved support for Putin’s actions in Ukraine, as articulated by Kim, further aligns the two nations against common adversaries.

As the international community grapples with the potential ramifications of this treaty, it is clear that the renewed alliance between Russia and North Korea represents a formidable challenge to the current global order.

The coming months will likely see increased diplomatic activity as nations reassess their strategies in light of this development.

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Cyril Ramaphosa Begins New Term Under Coalition Government

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Cyril Ramaphosa

Cyril Ramaphosa was sworn in for another term as South Africa’s president on Wednesday, the beginning of a new era under a coalition government.

The ceremony held at the Nelson Mandela Amphitheater in the Union Buildings saw Ramaphosa take the oath of office before Chief Justice Raymond Zondo.

The event was attended by prominent dignitaries, including Nigerian President Bola Tinubu, Democratic Republic of Congo leader Felix Tshisekedi, and Zimbabwe’s Emmerson Mnangagwa, and was marked by a 21-gun salute and an air force flyover.

Ramaphosa’s reappointment comes three weeks after elections saw his party, the African National Congress (ANC), lose its parliamentary majority for the first time since the end of apartheid.

The ANC secured just over 40% of the vote on May 29, with millions of former supporters either backing a splinter party led by ex-leader Jacob Zuma or abstaining due to dissatisfaction over high levels of poverty, unemployment, and crime.

In his inauguration address, Ramaphosa emphasized the resilience of South African democracy and the need for unity.

“The resilience of our democracy has once more been tested, and the people have spoken loudly that they choose peace and democracy over conflict,” he said. “The voters of South Africa did not give any single political party the full mandate to govern our country alone. They have directed us to work together to address their plight and realize their aspirations.”

The ANC’s unprecedented electoral outcome necessitated a power-sharing agreement with long-time rivals. The main opposition Democratic Alliance (DA) and four other parties have agreed to join a government of national unity, supporting Ramaphosa’s leadership in exchange for cabinet and parliamentary positions.

This coalition is expected to prioritize economic growth, investment attraction, structural reforms, and sustainable management of state finances.

The rand strengthened to a level stronger than 18 per dollar for the first time in over ten months, and Johannesburg’s benchmark equity index reached a record high on Wednesday.

Market optimism is driven by the inclusion of business-friendly parties in the government, anticipated to bolster Ramaphosa’s reform agenda aimed at addressing power shortages, logistical challenges, and other economic impediments.

Despite criticism in his previous term for his consultative approach, which opponents labeled as indecisive, Ramaphosa reaffirmed his commitment to inclusive governance.

“Those who would like a president that is dictatorial, who is adventurous, who is reckless, will not find that in me,” he stated last month. “In me they will find a president who wants to consult. All these processes have often been seen as, ‘he is weak, he is not decisive.’ I am decisive, but I want to take people along with.”

The new coalition government faces significant challenges, including negotiating policy differences and accommodating politically powerful figures within the ANC and its partners.

The DA has already expressed concerns over the ANC’s uncosted national health insurance plan and its foreign policy stance.

Susan Booysen, director of research at the Mapungubwe Institute for Strategic Reflection, noted the complexities ahead. “South Africa is really moving into this with minimal on-the-ground preparation and justification,” she said. “The devil is going to be in the exact detail. Once cabinet is announced, some basic agreement will have to be reached on policy positions and on what the red-line issues will be.”

As Ramaphosa begins his new term, the nation watches closely, hopeful that this coalition government can navigate the intricate landscape of South African politics and bring about the much-needed reforms and stability.

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Fubara Appoints and Swears in Caretaker Chairmen for All 23 Rivers State LGAs

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Siminalayi Fubara

Governor Siminalayi Fubara of Rivers State has appointed and sworn in new caretaker chairmen for all 23 local government areas.

This significant action followed swiftly after the House of Assembly, led by factional Speaker Victor Jumbo, screened and confirmed the nominees earlier in the day.

The process began on Tuesday when Governor Fubara submitted the list of nominees to the state House of Assembly.

According to a statement by the Clerk of the House, G.M. Gillis-West, the nominees were summoned for an early morning screening at 8 a.m. on Wednesday.

The rapid succession of events underscores the urgency of the appointments amid ongoing political unrest in the state.

The political crisis intensified as former council chairmen, whose terms had expired, refused to vacate their offices.

This defiance prompted the need for a swift and firm resolution to ensure continuity and stability in local governance.

The swearing-in ceremony took place under tight security at the Executive Council Chambers of the Government House in Port Harcourt, the state capital.

Governor Fubara administered the oath of office to the first batch of eleven caretaker chairmen, with subsequent batches following promptly.

The newly appointed caretaker chairmen are:

  • Abua/Odua LGA: Madigai Dickson
  • Ahoada East LGA: Happy Benneth
  • Ahoada West LGA: Mr. Daddy John Green
  • Akuku Toru LGA: Otonye Briggs
  • Andoni LGA: Reginald Ekaan
  • Asari Toru LGA: Orolosoma Amachree
  • Bonny LGA: Alabota Anengi Barasua
  • Degema LGA: Anthony Soberekon
  • Eleme LGA: Brain Gokpa
  • Emouha LGA: David Omereji
  • Etche LGA: John Otamiri
  • Gokana LGA: Kenneth Kpeden
  • Ikwerre LGA: Darlington Orji
  • Khana LGA: Marvin Yobana
  • Obio/Akpor LGA: Emmanuel Dogwo
  • Ogba/Egbema/Ndoni LGA: Vincent Anyanwu
  • Ogu/Bolo LGA: Margaret Ezenwa
  • Okrika LGA: Chizoba Onyebuchi
  • Omuma LGA: Cynthia Amadi
  • Opobo/Nkoro LGA: Solomon Dokubo
  • Oyigbo LGA: Chima Nwafor
  • Port Harcourt LGA: Isaac Udochukwu
  • Tai LGA: Ruth Michael

Governor Fubara expressed confidence in the capabilities of the newly appointed chairmen and emphasized the importance of their roles in maintaining stability and driving development at the grassroots level.

He urged them to prioritize the needs of their communities and work diligently towards improving the quality of life for all residents of Rivers State.

The appointment of the caretaker chairmen is expected to quell the political tensions that have recently plagued the state, ensuring that local governance continues smoothly and efficiently.

As Rivers State navigates this transitional period, the administration remains committed to fostering a stable and prosperous environment for its citizens.

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