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Buhari to Present 2017 Budget Dec 1




All things being equal, President Muhammadu Buhari will on December 1 present the 2017 budget before a joint session of the National Assembly, the Senate disclosed wednesday. This disclosure was made by the Minority Leader, Godswill Akpabio, at the conclusion of the debate on 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) wednesday.

Taking into cognisance the vehement criticism of the document by senators as well as submissions by senators that the document should again be returned to the executive, Akpabio said doing so would be counter productive in view of the planned presentation of 2017 budget on December 1.

Akpabio therefore urged his colleagues to rather send the document to relevant committees with its flaws and leave such committees with the task of addressing the flaws.

“We can see that we don’t have a perfect document in our hands but of course we are looking at assumptions and assumptions may not necessarily be correct. I want to suggest that we send it to the committee. Of course, the committee will invite the relevant agencies and ministries of government. And they will come up with a more realistic MTEF/FSP because I believe also that looking at the date that this was submitted to the Senate – it was submitted to the Senate on the 4th of October – and we are debating it today on the 22nd (of November). So, a lot of indices must have changed.

“Yesterday, you (Saraki) made reference to the fact that the president may be coming to the chambers to submit and read the 2017 budget on December 1. If that is the case and we send this back now and wait for it to come and debate it, it means that we will not be able to meet that deadline. But if we send it to the committee level, they may come up with something within the next three days that will be more realistic.

“So, my appeal will be that the committee members should take into cognisance all the submissions and observations made today so that we can come up with a more realistic MTEF and FSP,” Akpabio said.

However, during the debate on MTEF and FSP yesterday, there was a consensus among senators that the document was flawed as they vehemently condemned the document, describing it as a compedium of fraud, dishonesty, lies, deceit and one which lacked the basis to project the 2017 fiscal year.

Leading debate on the document yesterday, Deputy Senate Leader, Bala Ibn Na’Allah, described it a statutory document which articulated government revenue and spending plan as well as its fiscal policy objective over a stated period.

Na’Allah said presentation of the document which was in accordance with Section 11 of Fiscal Responsibility Act (FRA) 2007, consisted of proposed $42.5 oil benchmark, projected 3.02 per cent gross domestic product (GDP) growth in 2017 and moderated inflation rate of 12.92 per cent.

He said the GDP growth would be driven by strong performance in agriculture, wholesale and retail, construction and real estate sectors among others.

The lawmaker added: “Similarly, the GDP growth for the medium term is based on assumptions of average oil production of 2.2 million barrel per day (mbpd), 2.3 mbpd and 2.4 mbpd for 2017, 2018 and 2019 respectively with average benchmark oil price of $42.5 bpd, $45bpd‚ and 50bpd for 2017,2018 and 2019 respectively as well as an average exchange rate of N290 per dollar. It is also based on an average growth rate of 9.69 per cent during the period.”

Na’Allah also said the 2017 budget would be guided by six principles which he listed as realism, credibility, allocative strategy, prioritisation, transparency and accountability and social safety nets.

In his contribution, Senator Dino Melaye (Kogi West), recalled how Central Bank of Nigeria (CBN) last Monday admitted that the nation was plunged into recession by Nigeria’s huge debt.

Melaye who demanded the performance of 2016 to 2018 MTEF/FSP also criticised the proposed N290 to $1 exchange rate in the MTEF, describing it as a factual lie moreso that the official exchange rate is N305 to $1 and over N400 to $1 in the parallel market.

Melaye said: “If we speak the truth, we will die, if we lie, we will die. So, I have chosen to speak the truth and die. Mr. President, just this morning,The Punch Newspaper carried on its front page boldly an assertion from the CBN that huge debt is responsible for recession and there is no other factual factor responsible for recession than our huge debts. I want to say this document that I have before me, this MTEF proposal and projections of the 2017 to 2019, is a lie. This document is not truthful. It is not honest. It is not transparent and It is not factual.”

Also speaking, Senator Usman Nafada (Gombe North), while speaking on imminent consequences of the flawed document, noted that the trouble with the current 2016 budget might have been laid by the 2016-2018 MTEF.

He echoed Melaye that N290 to $1 exchange rate contained in the document was a farce, explaining further that pegging the exchange rate at N290 to $1 would run the 2017 budget into defict.

Nafada added that a situation where the nation was producing only 1.5 million bpd as against the projected 2.2 million bpd would continue to create forex crisis adding that a situation where only oil is the product being exported in Nigeria is unhelpful.

Nafada took on Senator Ahmad Sani (Zamfara Central) who had claimed that nothing was wrong with the document and that within three months, the economy could recover. Nafada challenged him to “tell us the magic you want to do in three months.” Sani had claimed that he had a masters degree in Economics.

In the same vein, Senator Mohammed Hassan (Yobe South) said the 2017 projection was not realistic as he argued that there was no basis for the projections in MTEF.

Hassan also lamented lack of co-ordination between the fiscal and monetary policies of the government, pointing out that a situation where the government keeps borrowing while banking is unattractive is not healthy for the economy.

In his submission, Senator Sam Anyanwu (Imo East) lamented a situation where oil pipelines are being destroyed in Niger Delta without a decisive attempt to stop the trend.

On the MTEF, Anyanwu did not mince words to deride it, saying “there is no document before us.”

On his part, Senator Joshua Lidani (Gombe South) said the document lacked credibility, noting that production volume had been on a progressive decline without any political will from the government to address it.

He recalled how the late President Umaru Yar’Adua confronted a similar situation in the past and nipped it in the bud by coming up with amnesty for militants as he lamented that despite the claim of diversification, nothing has been done by the government to add value to the agricultural sector.

On his part, Senator Adeola Olamilekan (Lagos West), attacked the federal government’s economic team, saying it is in disarray.

Others who also spoke on the document were Senators John Enoh (Cross River Central); Ahmad Lawan (Yobe North), Emmanuel Paulker (Bayelsa Central) and Kabiru Gaya (Kano South).

In his remark, Senate President Bukola Saraki, echoed his colleagues that the projections were not realistic but tasked the Committees on Approprition and Finance to dust the MTEF and return it a refined document.

“There is no doubt about the fact that these projections are not realistic. There is no doubt that the exchange rate is not realistic.

The Central Bank of Nigeria has said it is using N305 to a dollar exchange rate).There is no doubt as well that throughout this year, we did not achieve 2.2 million barrels per day (production volume). Even in time of peace in the oil rich Niger Delta, we have not achieved 2.5mbpd. How realistic is 2.2mbpd next year? The oil price as well looks conservative.

“Like some of our distinguished colleagues said, our responsibility is to work on it and use our capacity to do the right thing. We have our Committees on Appropriation and Finance that should not just take anything from the executive, sign it and return it (verbatim). If it means that we have to rehearsh it, look at it again, turn it around and do what is right, then, that is our responsibility.

“I think that is just the way to go rather than to just take a document from the executive and return the same to it. It is clear from what was submitted today that it will not work like that this time around,” Saraki said.

However, the decision to debate the MTEF was taken at the executive session held by the senators before yesterday’s plenary.

It was learnt that the Senate resolved to debate the document in view of perceived indifference of the government towards the return of the document to it in the last two weeks.

The Senate had returned the document to the executive earlier in the month, alleging that it was empty, shallow and asked the government to make the document more valuable. But rather than address the issues raised by the Senate, the presidency looks the other way.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

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World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco




The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead



Value added tax - Investors King

In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Nigeria’s Economy to Close 2021 at 2.5% Growth Rate



Trade - Investors King

The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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