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Senate Probes Alleged N4tn Revenue Leakage in Customs

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  • Senate Probes Alleged N4tn Revenue Leakage in Customs

The Senate has launched a fresh investigation into the Nigeria Customs Service over the alleged revenue leakage under the border security agency between 2006 and 2016 to the tune of about N4tn.

The Chairman, Senate Committee on Customs, Excise and Tariff, Hope Uzodinma, made this known in an interview with journalists in Abuja on Friday.

Uzodinma stated that the committee would stop at nothing to recover the money, which, he said, was lost due to various infractions by the men of the service.

The lawmaker said a preliminary investigation by the lawmakers had shown that the over N4tn revenue leakage discovered was due to the non-implementation of the Form ‘M’ (Foreign Exchange forms) by the customs from 2006 to 2016.

Hameed Ali was appointed as Comptroller-General of NCS in August 2015.

Uzodinma said a public hearing would be held as part of the investigation.

The lawmaker also attributed the loss of revenue to wrong classification of cargoes under the Harmonised System Codes, non-screening of cargoes coming into Nigeria and lack of adequate Information and Communication Technology infrastructure for revenue collection.

Uzodinma added that the cancellation of pre-arrival assessment reports and abandonment of goods declaration had also contributed to the revenue loss.

He said, “The Senate Committee on Customs has condemned the inability of the Technical Committee on the Implementation of Comprehensive Import Supervision Scheme to ensure that provisions of the Import Control Management Act are followed to the letter.

“The committee frowns on the quantum of revenue losses and it will stop at nothing in ensuring that those involved in this ugly act return all recoverable monies with them.

“The committee also frowns on the level of collusion and corruption within the Customs Service.

“At the end of our current investigation, all these will become a thing of the past and customs revenue will be enhanced while non-oil revenue will be improved upon.

“What we are investigating is not money spent. It is the leakages. For instance, I am supposed to pay XYZ amount of duty, I will abandon the documentation, go and get fake documents, collude with customs (officers), pay maybe a fraction of it (duty) and carry my goods. With that, the true import circle is not closed.

“Another instance is that assessment is abandoned or I (may) fill the Form ‘M’, for example, with a pro forma invoice, apply for foreign exchange in Central Bank of Nigeria, XYZ amount of money is allocated to me, money moves in (is released) but no goods shipped. I will then go get fake documents, collude with customs (officers) and then retire the allocation.”

Uzodinma decried that the alleged round tripping and false declarations had over years led to increase in the exchange rate. He stressed that in most cases, the amount of money spent was not commensurate with the number of goods being imported.

According to the lawmaker, the committee had started questioning the companies and banks indicted in the case.

“We will not mention the companies involved because we are also very careful of the integrity and public perception of some of these companies, being that some of them are in the stock market. We will be diplomatic in carrying out this investigation.

“This is to the extent that little or no damage will be done to the integrity and image of such companies, provided that government revenues in their hands will be recovered,’’ Uzodinma said.

When asked if the probe would not eventually be abandoned like in some previous cases in the Senate, Uzodinma explained that the lawmakers were, sometimes, faced with constitutional limitations.

He, however, stated that the current investigation would be concluded “because it has to do with the economy and revenue loss”.

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

Japan Donates US$6.5 Million to WFP to Stem Food Insecurity in South Sudan

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The United Nations World Food Programme (WFP) welcomes a contribution of US$6.5 million from the Government of Japan. This contribution is timely at the start of the lean season when more than 7.2 million people in South Sudan are expected to face acute food shortages.

This latest contribution consists of US$4.5 million for life-saving food assistance to people who are severely food insecure and US$ 2 million to restore livelihoods and enhance resilience.

WFP will use this contribution to support 115,000 people in Jonglei, Warrap, Northern Bahr el Ghazal and Lakes States, where food insecurity has reached catastrophic levels due to continuing violence, two years of excessive flooding, displacement and the loss of livelihoods, livestock, infrastructure and homes that have left millions of people highly vulnerable and unable to provide for themselves.

“It is our sincere wish that Japan’s grant helps save the people from food insecurity accelerated by natural disaster, communal violence and displacement and bring those suffering people back to a normal living environment which is the precondition to pave the way to nation building and economic development in South Sudan,” said H.E. Tsutsumi Naohiro, Ambassador of Japan to the Republic of South Sudan.

The contribution will also support WFP’s livelihoods and resilience-building programmes, which include creation of community assets such as access roads and multi-purpose water points. These communal assets are geared towards improving families’ access to local markets to sell their produce and purchase food and other essentials, as well as their access to clean water.

“We are grateful to Japan for this timely contribution at a time when food needs are the greatest but funding for humanitarian assistance is dwindling because of the economic impact of COVID-19. This noble gesture demonstrates the government of Japan’s commitment towards alleviating suffering and contributing to peace in South Sudan,” said Matthew Hollingworth, WFP’s Country Director in South Sudan. “It is a great boost towards our saving lives and changing lives efforts.”

The Government of Japan has funded food assistance to developing countries since 1968. Japan has supported WFP’s work in South Sudan since 2013, contributing more than US$35 million.

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Oil Firms Borrowed N130B From Banks in February – CBN

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Operators in the downstream, natural gas and crude oil refining sectors of the Nigerian oil and gas industry borrowed N130b from Nigerian banks in February amid the significant rise in global crude oil prices.

The debt owed by the oil and gas companies rose to N4.05tn in February from N3.92bn in January, according to the latest data obtained from the Central Bank of Nigeria on Monday.

Operators in the upstream and services subsectors owed banks N1.26tn in February, down from N1.27tn a month earlier.

The combined debt of N5.31tn owed by oil and gas operators as of February 2021 represents 25.29 percent of the N21tn loans advanced to the private sector by the banks, according to the sectoral analysis by the CBN of deposit money banks’ credit.

Oil and gas firms received the biggest share of the credit from the deposit money banks to the private sector.

The slump in oil prices in 2020 as a result of the coronavirus pandemic hit many oil and gas companies hard, forcing them to slash their capital budgets and suspend some projects.

A global credit rating agency, Moody’s Investors Service, said last month that the outlook for Nigeria’s banking system remains negative, reflecting expectations of rising asset risk and weakening government support capacity over the next 12 to 18 months.

“Nigerian banks’ loan quality will weaken in 2021 as coronavirus support measures implemented by the government and central bank last year, including the loan repayment holiday, are unwound,” said Peter Mushangwe, an analyst at Moody’s.

The rating agency estimated that between 40 percent and 45 percent of banking loans were restructured in 2020, easing pressure on borrowers following the outbreak of the pandemic.

Another global credit rating agency, Fitch Ratings, had noted in a December 8 report that Nigerian bank asset quality had historically fallen with oil prices, with the oil sector representing 28 percent of loans at the end of the first half of 2020.

It said the upstream and midstream segments (nearly seven percent of gross loans) had been particularly affected by low oil prices and production cuts.

“However, the sector has performed better than expected since the start of the crisis, limiting the rise in credit losses this year due to a combination of debt relief afforded to customers, a stabilisation in oil prices, the hedging of financial exposures and the widespread restructuring of loans to the sector following the 2015 crisis,” it said.

The rating agency predicted that Nigerian bank asset quality would weaken over the next 12 to 18 months.

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Fall in Economic Activities in Nigeria Created N485.51 Billion Fiscal Deficit in January -CBN

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The drop in economic activities in Africa’s largest economy Nigeria led to a N485.51 billion fiscal deficit in January, according to the latest data from the Central Bank of Nigeria (CBN).

In the monthly economic report released on Friday by the apex bank, the weak revenue performance in January 2021 was due to the decline in non-oil receipts following the lingering negative effects of COVID-19 pandemic on business activities and the resultant shortfall in tax revenues.

In part, the report read, “Federally collected revenue in January 2021 was N807.54bn.

“This was 4.6 per cent below the provisional budget benchmark and 12.8 per cent lower than the collection in the corresponding period of 2020.

“Oil and non-oil revenue constituted 45.4 per cent and 54.6 per cent of the total collection respectively. The modest rebound in crude oil prices in the preceding three months enhanced the contribution of oil revenue to total revenue, relative to the budget benchmark.

“Non-oil revenue sources underperformed, owing to the shortfalls in collections from VAT, corporate tax, and FGN independent revenue sources.

“Retained revenue of the Federal Government of Nigeria was lower-than-trend due to the lingering effects of the COVID-19 pandemic.”

“At N285.26bn, FGN’s retained revenue fell short of its programmed benchmark and collections in January 2020, by 41.3 per cent and 7.5 per cent respectively.

“In contrast, the provisional aggregate expenditure of the FGN rose from N717.6bn in December 2020 to N770.77bn in the reporting period, but remained 14.4 per cent below the monthly target of N900.88bn.

“Fiscal operations of the FGN in January 2021 resulted in a tentative overall deficit of N485.51bn.”

The report noted that Nigeria’s total public debt stood at N28.03 trillion as of the end-September 2020, with domestic and external debts accounting for 56.5 percent and 43.5 percent, respectively.

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