Finance

FG, States Budget N5.6tr For Salaries, Overheads

Published

7 years ago

January 12, 2017

FG, States Budget N5.6tr For Salaries, Overheads

The federal and 36 state governments will spend half of their N13.5 trillion total budgets for the year on salaries and overheads.

Analysis of the 2017 budget documents shows that the central and 33 state governments would spend N5.9 trillion (41 percent) of their total budgets on salaries.The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).

The central government’s budget for the year is N7.29 trillion; of which the recurrent expenditure will gulp N2.98 trillion. Other components of the federal government budget are statutory transfers (N414 billion) and debt servicing (N1.66 trillion).The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.

The 33 states have a combined budget of N6.22 trillion and they are spending N2.60 trillion (42 percent) on workers emoluments. There are no budget figures from Adamawa, Ondo and Kebbi states.The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.

The swollen recurrent expenditures keep coming despite the economic recession triggered by the dwindling oil revenues and low votes for development projects.At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.

At Nigeria’s official exchange rate of 304 to a US dollar, the federal and state governments will spend $42.9 billion this year. The 33 states are spending $19.7 billion while the federal government is spending $23 billion.Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.

Capital spending by the central and the state governments this year is N5.77 trillion (43 percent) – N2.24 trillion for the federal and N3.53 trillion for the states.Further analysis of the budget estimates of the two tiers of government

Further analysis of the budget estimates of the two tiers of government show an increase of N1.3 trillion from last year’s N12.2 trillion.The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.

The total recurrent expenditures of the federal and state governments also rose by over N200 billion, from N5.3 trillion last year to N5.5 trillion this year.Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

Also, capital projects by the two tiers soared by over half a trillion naira. It rose from N5.04 trillion in 2016 to N5.77 trillion this year.

The 17 northern states have a total budget of N2.38 trillion, witnessing a reduction of over N100 billion from last year’s N2.5 trillion. Of this, N1.37 trillion was for capital and N928 billion for recurrent, compared to last year’s N1.4 trillion and N1.1 trillion respectively.The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

The total budget of the 16 southern states is N3.83 trillion against previous year’s N3.5 trillion. Of this, N2.15 trillion is capital and N1.67 trillion recurrent against N1.9 trillion and N1.5 trillion in 2016.

Small spenders
The seven states with the lowest approved budgets are Nasarawa (N67 billion), Yobe (N69 billion), Gombe (N86 billion), Ekiti (N94 billion), Abia (N103 billion), Enugu (N105 billion), Niger (N108 billion), and Taraba (N110 billion).

Big spenders
Lagos, with N813 billion, is leading the league of states with huge budgetary allocations. Other big spenders are Rivers (N470 billion), Akwa Ibom (N365 billion), Cross River (N301billion), Delta (N271 billion), Bayelsa and Ogun (N221 billion each), Kaduna (N215 billion), Kano (N210 billion) and Oyo (N207 billion).

Geopolitical analysis
On geopolitical basis, the seven states of the northwest zone (minus Kebbi) have a total budget of N1.01 trillion slightly lower than previous year’s N1.12 trillion. The budget has capital and recurrent components of N635.2 billion and N376.5 billion when compared with last year’s N698 billion and N479 billion irrespectively.The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.

The total budget for the northeast zone is N593.1 billion, about N80 billion lower than 2016’s N676 billion, with capital expenditure consuming N298 billion against last year’s N347 billion; leaving N209.8 billion for recurrent, which is lower than N326 billion for the previous year.The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.

The north central zone’s approved budget for the year is N781.5 billion, a rise of about N100 billion from last year’s N684 billion. N439 billion is for capital and N342.4 billion for recurrent spending, unlike N385 billion and N343 billion in the previous year.The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for

The southwest zone’s budget for the year is N1.47 trillion, slightly higher than last year’s N1.36 trillion, with capital spending consuming N805.7 billion, leaving N668 for recurrent component. The zone has a recurrent vote of N695 billion and N671 billion capital, last year.The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The south-south region has a total budget of N1.77 trillion against N1.6 trillion last year, comprising N1.03 trillion capital and N750.6 billion recurrent expenditure. The oil-rich region spent N949 billion on capital projects and N579 billion on recurrent in 2016.

The southeast’s total budget this year is N581.2 billion, about N90 billion increase from previous year’s N490 billion. It is made up of N324 billion capital and N257.3 billion recurrent votes; which is slightly higher than last year’s N242 billion and N248 billion respectively.

Huge recurrent expenses
The seven states with swollen recurrent expenses are Plateau, where Governor Samuel Lalong budgeted N68.5 billion for recurrent, leaving N64.3 billion for capital.

Osun State Governor Abdulrauf Aregbesola budgeted N138.2, allocating N75.8 billion for recurrent and N62.4 billion for capital votes.

Another state in this league is Nasarawa, where Governor Tanko Al-Makura, budgeted N67 billion, out of which N37 billion is for recurrent and N30 billion for capital expenditure.

In Yobe, Governor Ibrahim Gaidam budgeted N69 billion for the year, setting aside N42 billion for recurrent spending and N27 billion for capital projects. Governor Ayodele Fayose’s Ekiti State also has a higher recurrent vote, standing at N55.6 billion out of N94 billion, leaving N38.4 billion for capital expenditure.

Abia State votes N103 billion, setting aside N57.4 billion for recurrent and N45.1 billion for capital spending.

Among the oil-rich states, only Bayelsa and Delta’s recurrent budgets exceeded their capital votes. Of the N271 billion Delta expenditure, N152 billion is for recurrent and N119 billion for capital expenses.

Bayelsa State Governor Henry Seriake Dickson budgeted N221 billion for the year. Recurrent vote will consume N137 billion, leaving N84.3 billion for capital spending.

Up Next

Central Bank: We Won’t Devalue Naira

Don't Miss

NSE to List Med-view Airline Shares

Samed Olukoya

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.

Comments

Finance

Presidential Committee to Exempt 95% of Informal Sector from Taxes

Published

5 days ago

May 14, 2024

Samed Olukoya

The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) has unveiled plans to exempt a significant portion of the informal sector from taxation.

Chaired by Taiwo Oyedele, the committee aims to alleviate the burden of multiple taxation on small businesses and low-income individuals while fostering economic growth.

The announcement came following the close-out retreat of the PFPTRC in Abuja, where Oyedele addressed reporters over the weekend.

He said the committee is committed to easing the tax burden, particularly for those operating within the informal sector that constitutes a substantial portion of Nigeria’s economy.

Under the proposed reforms, approximately 95% of the informal sector would be granted tax exemptions, sparing them from obligations such as income tax and value-added tax (VAT).

Oyedele stressed the importance of supporting individuals in the informal sector and recognizing their efforts to earn a legitimate living and their contribution to economic development.

The decision was informed by extensive deliberations and data analysis with the committee advocating for a fairer and more equitable tax system.

Oyedele highlighted that individuals earning up to N25 million annually would be exempted from various taxes, aligning with the committee’s commitment to relieving financial pressure on small businesses and low-income earners.

Moreover, the committee emphasized the need for tax reforms to address the prevailing issue of multiple taxation, which disproportionately affects small businesses and the vulnerable population.

By exempting the majority of the informal sector from taxation, the committee aims to stimulate economic growth and promote entrepreneurship.

The proposal for tax reforms is expected to be submitted to the National Assembly by the third quarter of this year, following consultations with the private sector and internal approvals.

The reforms encompass a broad range of measures, including executive orders, regulations, and constitutional amendments, aimed at creating a more conducive environment for business and investment.

In addition to tax exemptions, the committee plans to introduce executive orders and regulations to streamline tax processes and enhance compliance. This includes a new withholding tax regulation exempting small businesses from certain tax obligations, pending ministerial approval.

Banking Sector

CBN Governor Vows to Tackle High Inflation, Signals Prolonged High Interest Rates

Published

5 days ago

May 14, 2024

Samed Olukoya

Central Bank of Nigeria - Investors King

The Governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso, has pledged to employ decisive measures, including maintaining high interest rates for as long as necessary.

This announcement comes amidst growing concerns over the country’s soaring inflation rates, which have posed significant economic challenges in recent times.

Speaking in an interview with the Financial Times, Cardoso emphasized the unwavering commitment of the Monetary Policy Committee (MPC) to take whatever steps are essential to rein in inflation.

He underscored the urgency of the situation, stating that there is “every indication” that the MPC is prepared to implement stringent measures to curb the upward trajectory of inflation.

“They will continue to do what has to be done to ensure that inflation comes down,” Cardoso affirmed, highlighting the determination of the CBN to confront the inflationary pressures gripping the economy.

The CBN’s proactive stance on inflation was evident from the outset of the year, with the MPC taking bold steps to tighten monetary policy.

The committee notably raised the benchmark lending rate by 400 basis points during its February meeting, further increasing it to 24.75% in March.

Looking ahead, the next MPC meeting, scheduled for May 20-21, will likely serve as a platform for further deliberations on monetary policy adjustments in response to evolving economic conditions.

Financial analysts have projected continued tightening measures by the MPC in light of stubbornly high inflation rates. Meristem Securities, for instance, anticipates a further uptick in headline inflation for April, underscoring the persistent inflationary pressures facing the economy.

Despite the necessity of maintaining high interest rates to address inflationary concerns, Cardoso acknowledged the potential drawbacks of such measures.

He expressed hope that the prolonged high rates would not dampen investment and production activities in the economy, recognizing the need for a delicate balance in monetary policy decisions.

“Hiking interest rates obviously has had a dampening effect on the foreign exchange market, so that has begun to moderate,” Cardoso remarked, highlighting the multifaceted impacts of monetary policy adjustments.

Addressing recent fluctuations in the value of the naira, Cardoso reassured investors of the central bank’s commitment to market stability.

He emphasized the importance of returning to orthodox monetary policies, signaling a departure from previous unconventional approaches to monetary management.

As the CBN governor charts a course towards stabilizing the economy and combating inflation, his steadfast resolve underscores the gravity of the challenges facing Nigeria’s monetary authorities.

In the face of daunting inflationary pressures, the commitment to decisive action offers a glimmer of hope for achieving stability and sustainable economic growth in the country.

Banking Sector

NDIC Managing Director Reveals: Only 25% of Customers’ Deposits Insured

Published

5 days ago

May 14, 2024

Samed Olukoya

The Managing Director and Chief Executive Officer of the Nigeria Deposit Insurance Corporation (NDIC), Bello Hassan, has revealed that a mere 25% of customers’ deposits are insured by the corporation.

This revelation has sparked concerns about the vulnerability of depositors’ funds and raised questions about the adequacy of regulatory safeguards in Nigeria’s banking sector.

Speaking on the sidelines of the 2024 Sensitisation Seminar for justices of the court of appeal in Lagos, themed ‘Building Strong Depositors Confidence in Banks and Other Financial Institutions through Adjudication,’ Hassan shed light on the limited coverage of deposit insurance for bank customers.

Hassan addressed recent concerns surrounding the hike in deposit insurance coverage and emphasized the need for periodic reviews to ensure adequacy and credibility.

He explained that the decision to increase deposit insurance limits was based on various factors, including the average deposit size, inflation impact, GDP per capita, and exchange rate fluctuations.

Despite the coverage extending to approximately 98% of depositors, Hassan underscored the critical gap between the number of depositors covered and the value of deposits insured.

He stressed that while nearly all depositors are accounted for, only a quarter of the total value of deposits is protected, leaving a significant portion of funds vulnerable to risk.

“The coverage is just 25% of the total value of the deposits,” Hassan affirmed, highlighting the disparity between the number of depositors covered and the actual value of deposits within the banking system.

Moreover, Hassan addressed concerns about moral hazard, emphasizing that the presence of uninsured deposits would incentivize banks to exercise market discipline and mitigate risks associated with reckless behavior.

“The quantum of deposits not covered will enable banks to exercise market discipline and eliminate the issue of moral hazards,” Hassan stated, suggesting that the lack of full coverage serves as a safeguard against irresponsible banking practices.

However, Hassan’s revelations have prompted calls for greater regulatory oversight and transparency within Nigeria’s financial institutions. Critics argue that the current level of deposit insurance falls short of providing adequate protection for depositors, especially in the event of bank failures or financial crises.

The disclosure comes amid ongoing efforts by regulatory authorities to bolster depositor confidence and strengthen the resilience of the banking sector. With concerns mounting over the stability of Nigeria’s financial system, stakeholders are urging for proactive measures to address vulnerabilities and enhance consumer protection.