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Lagos Generates More IGR than 30 States Combined

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  • Lagos Generates More IGR than 30 States Combined

Fourteen states are insolvent as their Internally Generated Revenues (IGR) in 2016 were far below 10 per cent of their Federation Account Allocations (FAA) in the same year.

The index, which was released on Monday by Economic Confidential, an Economic Intelligence Magazine, showed that without the monthly disbursement from the Federation Account Allocation Committee (FAAC), many states are unviable, and cannot survive without the federally collected revenue.

The IGR are generated by states through Pay-As-You-Earn Tax (PAYE), Direct Assessment, Road Taxes and revenues from Ministries, Departments and Agencies (MDA)s.

The report as contained in the Annual States Viability Index (ASVI), further indicated that the IGR of Lagos State of N302billion is higher than that of 30 states put together excluding Lagos, Ogun, Rivers, Edo, Kwara and Delta States whose IGRs are very impressive at more than 30 per cent each.

The 30 other states merely generated a total of N258billion in 2016.

The latest report on IGR revealed that only Lagos and Ogun States generated more revenue than their allocations from the Federation Account by 169 per cent and 127 per cent respectively and no any other state has up to 100 per cent of IGR to the federal largesse.

The IGR of the 36 states of the federation totalled N801.95 billion in 2016 as compared to N682.67 billion in 2015, an increase of N119.28 billion.

While the report provides shocking discoveries to the effect that 14 states which have less than 10 per cent IGR may not stay afloat outside the Federation Account Allocation due to socio-political crises including insurgency, militancy and herdsmen attacks, others lack foresight in revenue generation drive coupled with arm-chair governance.

The states that may not survive without the Federation Account due to poor internal revenue generation include Borno which realised a meagre N2.6billion compared to a total of N73.8 billion it received from the Federation Account Allocation (FAA) in 2016 representing about four per cent

Others are: Ebonyi with IGR of N2.3 billion compared to FAA of N46.6bn representing five per cent Kebbi N3.1 billion compared to FAA of N60.88 billion representing 5.14 per cent; Jigawa with N3.5 billion compared to N68.52 billion of FAA representing 5.15 per cent and Yobe with IGR of N3.24nn compared to N53.93 billion of FAA representing 6.0 per cent within the period under review.

Other poor internal revenue earners are Gombe which generated N2.94 billion compared to FAA of N46 billion representing 6.26 per cent; Ekiti N2.99 billion compared to FAA of N47.56bn representing 6.28 per cent; Katsina N5.54 billion compared to FAA of N83bn representing 6.65 per cent and Sokoto N4.54 billion compared to FAA of N65.97 billion representing 6.88 per cent.

Meanwhile Lagos State remained steadfast in its number one position in IGR with a total revenue generation of N302bn compared to FAA of N178 billion which translate to 169 per cent in the twelve months of 2016.

It is followed by Ogun State which generated IGR of N72.98 billion compared to FAA of N57 billion representing 127 per cent.

Others with impressive IGR include Rivers with N85 billion compared to FAA of N134bn representing 63 per cent; Edo with IGR of N23bn compared to FAA of N59 billion representing 38 billion.

Kwara State however with low receipt from the Federation Account has greatly improved in its IGR of N17 billion compared to FAA of N49 billion representing 35 per cent while Delta with IGR of N44 billion compared to FAA of N126 billion representing 6.88 per cent.

The ASVI further showed that only three states in the entire Northern region have IGR above 20 per cent.

They are Kwara, Kano, and Kaduna States. Meanwhile eight states in the South recorded over 20 per cent IGR in 2016. They are Lagos, Ogun, Rivers, Edo, Delta, Cross River, Enugu, and Oyo States State.

The states with the poorest IGR of less than 10 per cent in the South are Imo, Bayelsa, Ekiti, and Ebonyi States while in the North we have Niger, Nasarawa, Sokoto, Katsina, Gombe, Yobe, Jigawa, Kebbi and Borno States.

It, however, said he IGR of the respective states can improve through aggressive diversification of the economy to productive sectors rather than relying on the monthly Federation Account revenue that largely come from the oil sector.

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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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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