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FG,States, LGs Share N2.27tn in Five Months

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  • FG,States, LGs Share N2.27tn in Five Months

The Federation Accounts Allocation Committee shared a total sum of N2.27tn among the three tiers of government in the first five months of this year.

An analysis of the FAAC distribution by our correspondent in Abuja on Friday also showed that the N2.27tn distributed between January and May this year represented an increase of N600bn over the N1.69tn, which the committee allocated to the federal, state and local governments in the corresponding period of 2016.

The committee, headed by the Minister of Finance, Mrs. Kemi Adeosun, is made up of commissioners of finance from the 36 states of the federation; the Accountant General of the Federation, Mr. Ahmed Idris; and representatives of the Nigerian National Petroleum Corporation.

Others are representatives of the Federal Inland Revenue Service; Nigeria Custom Service; Revenue Mobilisation, Allocation and Fiscal Commission; as well as the Central Bank of Nigeria.

The Federation Account is currently being managed on a legal framework that allows funds to be shared under three major components of statutory allocation, Value Added Tax distribution and allocation made under the derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments, 20.60 per cent.

The framework also provides that VAT revenue be shared thus: Federal Government, 15 per cent; states, 50 per cent; and local governments, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation formula.

A breakdown of the N2.27tn shared in the first five months of this year showed that in January, the three tiers of government got N430.16bn, out of which the Federal Government took N168bn; states, N114.28bn; and local governments, N85.4bn.

In February, the federation generated N514bn, out of which the Federal Government’s share was N200.6bn; the states, N128.4bn; and local governments, N96.52bn.

However, in March, revenue generation dipped to N466.9bn. From this amount, the Federal Government got N180.5bn; state governments, N116.5bn; and local governments, N87.5bn.

The allocation declined further by N52.07bn from N467.8bn in March 2017 to N415.73bn in April, with the Federal Government receiving N163.89bn; states N117.59bn; while the local government councils got N87.77bn.

In the month of May, the committee shared the sum of N462.4bn among the three tiers of government as statutory allocation, with the Federal Government receiving N147.7bn; states, N74.9bn; and local government councils, N57.8bn.

Speaking on the allocations to the three tiers of government, some finance and economic experts said that while the country had been badly hit by the decline in oil production and revenue as a result of the activities of militants in the Niger Delta, there were a lot of untapped resources at the states, which could be developed for economic prosperity.

Those who spoke to our correspondent on the issue were the Head of Banking and Finance Department, Nasarawa State University, Keffi, Uche Uwaleke; a former Managing Director of Unity Bank Plc, Mr. Rislanudeen Muhammed; and a former Managing Director, Nigeria Deposit Insurance Corporation, Mr. Ganiyu Ogunleye.

Uwaleke, an Associate Professor of Finance, told our correspondent that diversification of the economy would help address the socioeconomic challenges facing the country, adding that once the federating units were given the powers to control their resources, it would help promote competition.

He said with competition, the federating units would come up with innovative ways of stimulating their respective economies.

Uwaleke said, “Restructuring is the panacea for many of the socioeconomic challenges facing the country. This much came to the fore in the last national conference put together by the previous administration.

“The seemingly endless crises in the Niger Delta region will substantially abate if the country is restructured in a way that allows greater control of resources by the federating units. The present economic recession is a direct consequence of the drastic fall in government revenue, which has been blamed in part on militancy in the Niger Delta.”

In his comments, Muhammed said there was a need to come up with initiatives that would make all the states compete for economic development.

He stated, “Nigeria has huge economic potential outside the oil sector, which are largely untapped due to the so called Dutch Disease that has for years made us lazy and always relying on mono product commodity called oil as a source of income, notwithstanding the fact that oil constitutes only 10 per cent of our Gross Domestic Product.

“Economic restructuring will make all the states compete for development and uplifting the lives of their people. There are potential for growth in non-oil export in most states, and virtually all the states have one form of economic competitive advantage or the other.”

Ogunleye, on his part, said there was a need to diversify the economy, as it held the key to the economic development of the people.

He stated, “Restructuring is a necessity and I think that is what people have been advocating over the years, but the challenge is that it is either there is no serious commitment to it or the political will to implement it is lacking.

“Otherwise, when you talk about diversification, it’s almost the same thing as restructuring the economy. Over the years, we relied on oil revenue and now we can appreciate the risks of relying on one source of revenue.

“We are not a manufacturing country and so most of the things we use in this country are imported, so certainly there is a need to restructure the country in such a way that we can develop manufacturing capacity.”

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Finance

President Tinubu Orders Release of Minors Prosecuted for #BadGovernance Protests

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Following a recent viral video on the X app regarding the prosecution of minors who protested during the #BadGovernance movement, President Bola Ahmed Tinubu has ordered the immediate release of all prosecuted minors.

This was announced by the Minister of Information and National Orientation, Mohammed Idris, in a statement to the State House Correspondents in Abuja.

In a show of concern over the detention of minors, President Tinubu directed the Ministry of Humanitarian Affairs and Poverty Reduction to investigate and ensure that the law is fully applied to law enforcement agents involved in the unlawful act.

It was noted that the arrests violated human rights and the Child Rights Act, as the 32 detainees are under 18 years old.

Activist organizations, including the Arewa Consultative Forum (ACF), National Human Rights Commission (NHRC), Civil Society Legislative Advocacy Centre (CISLAC), Resource Centre for Human Rights and Civic Education (CHRICED), and Concerned Parents and Educators (CPE), condemned the actions and denounced the treason charges filed against the detained minors.

In a call to action, the Socio-Economic Rights and Accountability Project (SERAP) urged the president to instruct the Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, SAN, to immediately and unconditionally release all protesters arrested during the #EndBadGovernance movement.

SERAP stated, “The immediate and unconditional release of all #EndBadGovernance protesters, including 32 hungry and malnourished children, is necessary.”

According to SERAP, for the peaceful exercise of fundamental human rights, including freedom of expression, assembly, and association without fear of persecution or undue restriction, all detained protesters should be released.

In response to the president’s directive, the Attorney General of the Federation (AGF), Lateef Fagbemi, commented that his office “will need to review the matter to enable me to make an informed decision.”

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Banking Sector

FBN Holdings To Invest N103.1bn In Corporate, Retail Businesses

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FBN Holdings

As part of means of actualizing its expectation of raising N150 billion from its existing shareholders by way of rights issue, the management of FBN Holdings said it has budgeted an estimated N103.1 billion for its corporate business and retail business lending segments of the market.

The Holdings recently held the signing ceremony to begin the rights issue offering of 5,982,548,799 ordinary shares of 50 kobo each at N25.00 per share to its existing shareholder on the basis of one new ordinary share for every six ordinary shares held as of October 18, 2024.

Extracts from the offer raising prospectus of the financial institution revealed that lending to the corporate business segment gets N77.34 billion, while lending to the retail business segment gets a budget of N25.78 billion.

This covers 68.95 per cent of the N150 billion proposed rights issue the management seeks to raise from existing shareholders.

Out of the N150 billion, a total of N29.46 billion was budgeted to support international business expansion and N14.73 billion for investment in automation and digital banking.

According to the financial institution, seamless and convenient banking experience for its customers would be guaranteed through its significant investment in automation and digital banking.

Through its mobile banking app, FirstMobile, and its internet banking platform, FirstOnline, the management of FBN Holdings said it has effectively acquired a broad cross-section of the target demography, with a clear proposition of owning bank accounts and utilising various financial services from the comfort of their locations.

It added that the bank plans to upgrade the FirstMobile and FirstOnline apps with additional features while driving customer adoption of the platforms, noting that the development is in line with First Bank’s commitment to providing customers with the best-in-class electronic banking experience.

The offer, however, is part of the company’s plan to recapitalise its commercial banking subsidiary, First Bank of Nigeria Limited,  with a view to increasing the bank’s capacity for business development and growth.

Chairman, FBN Holdings, Olufemi Otedola in a statement from the document urged shareholders to support the Rights issue by accepting their rights, stating that the company will be well positioned to achieve its strategic objectives and to deliver improved returns to all stakeholders.

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Finance

Currency Outside Banks Increases By 66.2% As Nigerians Shun Formal Banking Channels

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New Naira notes

A recent data has revealed that currency outside banks increased by 66.2 percent in September 2024.

To this end, money outside traditional banking channels rose to N4.02 trillion compared to N2.42 trillion reported in September 2023.

This represents an increase of N1.60 trillion in just one year.

This was revealed in the Money and Credit Statistics data of the Central Bank of Nigeria.

According to the data, on a month-on-month basis, currency outside banks grew by 3.8 percent in September 2024 from August’s figure of N3.87 trillion, translating to an increase of N147.9 billion.

The trend suggests a growing inclination among the public to retain cash outside formal banking channels, a shift that could impact banks’ liquidity and shape monetary policy dynamics.

The CBN data further shows that a considerable proportion of Nigeria’s currency is held outside the banking system.

In September 2024, approximately 93.1 percent of currency in circulation was outside banks, a rise from 87.5 percent recorded in September 2023.

This shift may reflect limited trust in banking services, inflationary pressures, or a structural dependence on cash in Nigeria’s largely informal economy.

Such a high percentage of currency outside banks poses potential challenges for channelling funds into productive investments, potentially hindering economic growth.

The CBN report also highlights a parallel rise in overall currency in circulation, which encompasses both bank-held and outside cash.

In September 2024, currency in circulation rose beyond 56.1 percent year-on-year to reach N4.31trn, up from N2.76trn in September 2023, reflecting an increase of N1.55trn.

This indicates that the volume of currency retained outside the banking sector outpaced the total released for circulation within the past year.

Compared to August 2024, currency in circulation rose by 4.0 percent month-on-month, adding N166.2bn from the previous figure of N4.14trn.

Earlier in September, the CBN announced plans to sanction banks that fail to dispense cash through their automated teller machines, as part of efforts to improve cash availability in circulation.

The CBN also revealed plans to release an additional N1.4 trillion into circulation over the next three months to ease cash flow within the banking system.

This strategy aims to ensure that ATMs and bank branches have sufficient cash, addressing ongoing challenges faced by customers over cash shortages.

In related developments, it was observed that Nigeria’s money supply grew significantly by 62.8 percent year-on-year in September 2024, despite the Monetary Policy Committee’s tightening stance intended to manage excess liquidity to control inflation.

According to CBN data, M3 reached N108.95 trillion in September 2024, up from N66.94 trillion in the same period last year.

On a month-on-month basis, money supply rose by 1.6 percent, increasing from N107.19trn in August 2024.

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