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FG Slashes 2017 Independent Revenue by N298bn

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  • FG Slashes 2017 Independent Revenue by N298bn

The harsh economic climate, which has resulted in the slowdown of business activities, may have forced the Federal Government to reduce its projected independent revenue from N1.5tn in 2016 to N1.2tn.

Independent revenues of government are funds generated by agencies as captured by the Fiscal Responsibility Act of 2007, which stipulates that any government agency that generates revenue must remit 80 per cent of their operating surplus to the Consolidated Revenue Fund account.

Some of these agencies are the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation, Securities and Exchange Commission, Nigerian Shippers Council, Nigerian Export Promotion Council, National Health Insurance Scheme, Nigerian Civil Aviation Authority, and Nigerian Communication Commission.

The reduction is part of the proposals contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper, which has been submitted by the executive to the National Assembly.

The MTEF, which is currently before the National Assembly and awaiting legislative approval, provides the basis for annual budget planning and consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.

The document, prepared by the Ministry of Budget and National Planning, also sets out the underlying assumptions for these projections; provide an evaluation and analysis of the previous budget; and present an overview of consolidated debt and potential fiscal risks.

In the document, a copy of which was obtained by our correspondent in Abuja, the Federal Government said the current economic realities had necessitated a downward review of the independent government revenue.

It listed some of the factors that might affect revenue projections in the 2017 fiscal period as slowdown of economic activities, which would affect tax revenue; insurgency in the North-East; lags in fiscal spending; the issue of climate change, which would affect revenue based on agricultural productivity.

The document read in part, “Government recognises the potential implications of a strong non-oil revenue drive and is, therefore, working to ensure proper coordination of its policies in a manner that will not be counterproductive or distort medium-term fiscal projection.

“Slowdown in economic activities as well as insurgency in parts of the North-East remains potential risks to non-oil revenue. While insurgency contributes to the moderation of taxable activities around the region, lags in fiscal spending in critical economic sectors resulting from shortfalls may drag activities in the real sector with implications for government tax revenues as well as social welfare.

“There are also concerns about climate change effects on rainfall, and consequently, on agricultural productivity with spillover effects on food imports, forex demand and current account balances.

“Proactive flood and drought risk assessment, prevention and control measures as well as other potential damage-mitigation measures are being deployed in order to effectively curb the risks of drastic weather changes in the medium term.”

To guard against an unrealistic budget framework, the report explained that revenue projections had been carefully determined, factoring the developments in the international oil market, actual non-oil revenue performances, domestic oil sector developments and reforms.

The Minister of Finance, Mrs. Kemi Adeosun, had stated that the Federal Government would reduce the level of revenue leakages by making the revenue generating agencies more efficient.

She said a circular had been issued on the approved template for the computation of operating surpluses of revenue generating agencies.

She said henceforth, the ministry would not allow any revenue generating agency to incur what she described as “non-allowable expenses in the computation of operating surpluses.”

These non-allowable expenses, according to her, are salary and staff loans in excess of approved scale by National Salaries, Incomes and Wages Commission; monetisation of medical and other allowances; expenditure in excess of approved limit; and donations to individuals, political and charitable organisations.

The minister said the agencies had also been mandated to disclose additional information in their financial statements such as expenses incurred on behalf of supervisory or regulatory agencies.

Others are salaries and allowances paid to board of directors, governing council and commissions outside the approved amount; donations, sponsorships and gifts given or transferred to staff or board members.

She put the total independent revenues generated between January and October 2016 at N272.03bn out of the projected N1.5tn, adding that the government planned to increase this to N811.03bn.

She said as part of the measures to check revenue leakage, a new financing model would also be instituted for universities and hospitals.

This, she noted, would take into consideration their funding model and requirement for better control and improved service delivery.

Adeosun added that a circular on the inclusion of 92 additional corporations, agencies and government owned-companies to the schedule of the Fiscal Responsibility Act had been issued.

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

Economy

Once Again The National Grid Collapsed

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Nigeria’s electricity transmission system, also known as the National grid, has suffered another system collapse, plunging Lagos, the country’s commercial capital, Kano and other major cities into a blackout.

The collapse, which occurred about 11.00 am on Tuesday, was confirmed by two of the country’s electricity distribution companies in separate messages to their customers.

“We regret to inform you that the power outage being experienced across our franchise – Kaduna, Sokoto, Kebbi and Zamfara states – is as a result of the collapse of the national grid,” Kaduna Electric said on Twitter.

Eko Electricity Distribution Company Plc, in a text message to its customers, said: “Dear customer, there is a partial system collapse on the national grid. Our TCN partners are working to restore supply immediately. Please bear with us.”

The grid, which is being managed by the government-owned Transmission Company of Nigeria, has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences.

Spinning reserve is the generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.

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Economy

FG Consider Diversification To Generate Revenue

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As revenue from oil nosedives following incessant global price fluctuations, the Federal Government is now channeling efforts to the development of minerals in the mines and steel industry to shore up foreign exchange earnings.

Officials of the Federal Ministry of Mines and Steel Development said on Wednesday that while there had been concerted efforts to develop various minerals in the sector, much emphasis had been placed recently on the development of bitumen, barite and gold.

They told our correspondent in Abuja that the government through the mines and steel ministry was striving to diversify the Nigerian economy away from oil as the major foreign exchange earner for Nigeria.

They also confirmed that large quantities of gold had been discovered in various locations in Zamfara and Osun states.

Asked if the government had initiated programmes to explore the minerals and boost revenues now that the country’s income had plunged, the Special Assistant on Media to the Minister of Mines and Steel Development, Ayodeji Adeyemi, replied in the affirmative.

He said, “Indeed, the ministry has the mandate to generate revenue and diversify the economy through the mines sector.

“And bitumen is one of the key resources which the nation is abundantly endowed with, that has been identified for strategic development.”

To buttress his position, Adeyemi shared some recent presentations of the Minister of Mines and Steel Development, Olamilekan Adegbite, where the minister said his ministry was gathering data on some bitumen fields across the country to attract investors.

“A lot of people are interested in bitumen, which is coming from both local and foreign investors. However, we are still acquiring data in some of the fields,” the minister stated.

On barite, the minister said the mines and steel ministry was working on raising the quality of barite produced in Nigeria to an internationally acceptable standard, as certified by the American Petroleum Institute.

Adegbite said his ministry had contracted a consultant to help raise the standard in the local production of barite to ensure that oil industry players make use of barite produced in Nigeria as against importing the commodity from other countries.

He said, “Barite is a critical weighting material in drilling fluids used in the oil industry. We have a lot of barites but the issue is that it is not produced to API standards. However, we are putting a system in place which would be ready to launch in about July.

“We have got the millers who can produce barite to API standard. Hence we will be able to compete with foreigners and it would save Nigeria a lot of foreign exchange in import substitution.”

On the development of gold, officials at the ministry further stated that the commodity had been aggregated for the production of bullion bars and that this was the first time that such aggregation was happening in Nigeria.

They stated that the gold was sourced from artisanal miners, while the final refining to bullion was done in Turkey.

The sources stated that the ministry had registered two refineries that would now refine to LBMA standard when they come on stream. LBMA is the de facto standard, trusted around the world.

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Economy

Nigeria Sovereign Investment Authority Generates N160.06 Billion in 2020

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The Nigeria Sovereign Investment Authority (NSIA) generated revenue of N160.06 billion in 2020, according to the latest audited financial reports announced by the Managing Director of NSIA Mr. Uche Orji.

The NSIA income came from devaluation gain of N51 billion, and core income of N109 billion compared to N33.07 billion in 2019.

But Orji lamented: “Covid-19 adversely affected logistics around infrastructure projects, especially the toll road projects and the presidential fertiliser initiative.

Despite the pandemic, the Authority achieved 33 percent growth in Net Assets to N772.75 billion compared to the previous year’s performance of N579.54 billion.

Orji said the NSIA “received additional contribution of $250 million; and provided first stabilisation support to the Federal Government of $150 million withdrawn from Stabilisation Fund last year.”

The same year, the NSIA received $311 million from funds recovered from the late General Abacha from the United States Department of Justice and Island of Jersey for deployment towards the Presidential Infrastructure Development Fund (PIDF) projects of Abuja-Kaduna-Kano Highway, Lagos Ibadan Expressway and Second Niger Bridge.

In response to COVID-19, Orji said: “NSIA partnered the global Citizen, a not-for profit group, to form the Nigeria Solidarity Support Fund. Separately NSIA acquired and distributed oxygen concentrators to the 21-teaching hospital as part of corporate social responsibility; in addition to staffing support to the Presidential taskforce on COVID-19.”

In 2020, the NSIA “invested additional capital into NG Clearing, the first derivative clearing house in Nigeria to maintain NSIA’s shareholding at 16.5 per cent following the company’s rights issue of 2020″ Orji said.

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