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Low Implementation of Capital Budget Ruffles Lawmakers

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budget
  • Low Implementation of Capital Budget Ruffles Lawmakers

The low implementation of the capital component of the 2017 N7.441 trillion by the federal government is currently causing major unease among federal lawmakers amid fears that it may affect their bid for re-election into the National Assembly in the 2019 polls.

The constituency projects, also called zonal intervention projects, are contained in the N2.1 trillion capital component of the 2017 budget, out of which only N440 billion has been released.

The low release of funds has ensured that only high priority capital projects are currently receiving the attention of the government, causing a complete neglect of the constituency projects for which N100 billion was appropriated.

Investigation gathered that the executive has not released a kobo for any item listed under the constituency projects, even though some of the items have been listed in procurement adverts by several Ministries, Departments and Agencies (MDAs) of government.

The lawmakers are further ruffled by the recent push of the executive arm of government to restore the fiscal year from January to December to allow for an organic budget calendar, as this may further affect the performance of the 2017 budget.

While they generally accept that a predictable budget calendar ensures better economic planning particularly for the organised private sector which is dependent on public spending, the lawmakers fear that the proposal to roll over up to 60 per cent of capital projects would further affect the constituency projects.

At a recent hearing by the Senate on the performance of the 2017 budget, the Minister of Budget and National Planning, Senator Udo Udoma had told the Senate Joint Committee on Appropriations and Finance that MDAs have been instructed to roll over most of their capital projects, to the 2018 budget.

Investigation gathered that the lawmakers are highly concerned about the impact this would have on their re-election bid in the 2019 general elections.

A highly placed source said the decision to isolate the constituency project items under the N100 billion Zonal Intervention Funds, in a separate section from the statutory budget of the MDAs, was deliberate.

“Even if this has happened before now, the executive deliberately did it this time around because for them it is not priority. Despite any detente, the executive still considers the constituency projects a ploy to make money by the lawmakers. Remember the tensions caused by the constituency issue last year, at some point House members even said they would not entertain any request from the executive, until ZIFs (Zonal Intervention Funds) are released,” the source explain.

“2018 is just a few months away, and that is campaign year. 2019 is just the election year. If the projects are not done, it would affect the lawmakers. Many have promised their constituents that they would implement certain projects, and when such is not on ground during campaigns, they would not be able to point to what they have done, and why they should be re-elected,” the source said.

“The 2016 capital budget, N1.7 trillion was not fully implemented. Also, just about 80 per cent of the 2016 ZIF was released after intense negotiations. Obviously lawmakers who could not finish their constituency projects from that budget, would be relying on the current budget, and must have assured their people. Now no funds are being released under the 2017 budget, and it is obviously not a priority to the executive,” the source explained further.

The source disclosed that about 50 per cent of the ZIF could be released, but added that it would be hard for the lawmakers to get anymore than that in the current budget.

“It is not for nothing that the executive repeatedly says it is concentrating on priority projects, and these priority projects are in all the zones anyway,” the source said.
Lawmakers from the Senate and the House of Representatives who spoke off record expressed their displeasure at the development.

“We are the closest to our people, hence these projects. We promised our people, if we do not fulfill our promises, why would they re-elect us? Our constituents just want to see the boreholes, the primary health care centres, among others they would not understand the struggle here,” a lawmaker said.

Another lawmaker said it would be unfair to expect them to use their personal allowances for the constituency projects.

“Even our salaries are being delayed under this dispensation, and we get nothing extra. We cannot expend that on our constituencies. Admittedly, some of our colleagues use their personal funds for some things back home, particularly in places where the competition is stiffer. If you want to return, you cannot wait until the ZIF is released before fulfilling some of the promises to the constituents,” he said.

A House member further said that the hearing at the Senate was ‘closely monitored’ by the members of the green chambers who were happy with the resolutions.

“The resolution cautioned against selective implementation of the capital budget, which is where our projects are. That is our way of demanding of the implementation of the ZIF items” he said.

Reacting to the development, the Deputy Spokesman of the Senate, Senator Ben Murray Bruce expressed hope that the constituency projects would be funded, as they benefit the people more, not the lawmakers.

Speaking in a telephone interview, Ben Bruce said the project is for the people who get angry when they are not implemented as promised by “If you promised a link road that costs N20 million, and you do not have the link road, then people would be angry. If you promise a borehole because people have dirty water and they have monkeypox, because of the dirty water and dirty environment, and you cannot provide clean water, then they would be angry, because they put you into office and you cannot provide them clean water.”

“In a place like Bayelsa state which is riverine, no toilets anywhere, people use the bathroom (ease themselves in the waters) and drink it at the same time, are you surprised there is monkey pox? So something as simple as water, which does not benefit the senator or the House of Representatives, it benefits the poor man who needs clean water, and then you do not deliver, first you have sick people, you have an epidemic, you have angry people, people who cannot understand that in a modern economy, some people do not have clean water to drink, who do you blame?”

“Last year, my constituency project was providing solar power, so children can do their homework at night. This year, its agriculture (fish, corn, rice) , people have to feed. If I do these, how would that have a negative impact on the economy, and why would the government not fund such projects? None of the projects benefit me, they benefit the people who voted me into office. So constituency project is not a bad word, not a bad thing to do and i am glad we have it in the budget. I hope they fund it,” the Senator said.

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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Economy

CBN Worries as Nigeria’s Economic Activities Decline

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has expressed deep worries over the ongoing decline in economic activities within the nation.

The disclosure came from the CBN’s Deputy Governor of Corporate Services, Bala Moh’d Bello, who highlighted the grim economic landscape in his personal statement following the recent Monetary Policy Committee (MPC) meeting.

According to Bello, the country’s Composite Purchasing Managers’ Index (PMI) plummeted sharply to 39.2 index points in February 2024 from 48.5 index points recorded in the previous month. This substantial drop underscores the challenging economic environment Nigeria currently faces.

The persistent contraction in economic activity, which has endured for eight consecutive months, has been primarily attributed to various factors including exchange rate pressures, soaring inflation, security challenges, and other significant headwinds.

Bello emphasized the urgent need for well-calibrated policy decisions aimed at ensuring price stability to prevent further stifling of economic activities and avoid derailing output performance. Despite sustained increases in the monetary policy rate, inflationary pressures continue to mount, posing a significant challenge.

Inflation rates surged to 31.70 per cent in February 2024 from 29.90 per cent in the previous month, with both food and core inflation witnessing a notable uptick.

Bello attributed this alarming rise in inflation to elevated production costs, lingering security challenges, and ongoing exchange rate pressures.

The situation further escalated in March, with inflation soaring to an alarming 33.22 per cent, prompting urgent calls for coordinated efforts to address the burgeoning crisis.

The adverse effects of high inflation on citizens’ purchasing power, investment decisions, and overall output performance cannot be overstated.

While acknowledging the commendable efforts of the Federal Government in tackling food insecurity through initiatives such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming, Bello stressed the need for decisive action to curb the soaring inflation rate.

It’s worth noting that the MPC had recently raised the country’s interest rate to 24.75 per cent in March, reflecting the urgency and seriousness with which the CBN is approaching the economic challenges facing Nigeria.

As the nation grapples with a multitude of economic woes, including inflationary pressures, exchange rate volatility, and security concerns, the CBN’s vigilance and proactive measures become increasingly crucial in navigating these turbulent times and steering the economy towards stability and growth.

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Economy

Sub-Saharan Africa to Double Nickel, Triple Cobalt, and Tenfold Lithium by 2050, says IMF

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In a recent report by the International Monetary Fund (IMF), Sub-Saharan Africa emerges as a pivotal player in the global market for critical minerals.

The IMF forecasts a significant uptick in the production of essential minerals like nickel, cobalt, and lithium in the region by the year 2050.

According to the report titled ‘Harnessing Sub-Saharan Africa’s Critical Mineral Wealth,’ Sub-Saharan Africa stands to double its nickel production, triple its cobalt output, and witness a tenfold increase in lithium extraction over the next three decades.

This surge is attributed to the global transition towards clean energy, which is driving the demand for these minerals used in electric vehicles, solar panels, and other renewable energy technologies.

The IMF projects that the revenues generated from the extraction of key minerals, including copper, nickel, cobalt, and lithium, could exceed $16 trillion over the next 25 years.

Sub-Saharan Africa is expected to capture over 10 percent of these revenues, potentially leading to a GDP increase of 12 percent or more by 2050.

The report underscores the transformative potential of this mineral wealth, emphasizing that if managed effectively, it could catalyze economic growth and development across the region.

With Sub-Saharan Africa holding about 30 percent of the world’s proven critical mineral reserves, the IMF highlights the opportunity for the region to become a major player in the global supply chain for these essential resources.

Key countries in Sub-Saharan Africa are already significant contributors to global mineral production. For instance, the Democratic Republic of Congo (DRC) accounts for over 70 percent of global cobalt output and approximately half of the world’s proven reserves.

Other countries like South Africa, Gabon, Ghana, Zimbabwe, and Mali also possess significant reserves of critical minerals.

However, the report also raises concerns about the need for local processing of these minerals to capture more value and create higher-skilled jobs within the region.

While raw mineral exports contribute to revenue, processing these minerals locally could significantly increase their value and contribute to sustainable development.

The IMF calls for policymakers to focus on developing local processing industries to maximize the economic benefits of the region’s mineral wealth.

By diversifying economies and moving up the value chain, countries can reduce their vulnerability to commodity price fluctuations and enhance their resilience to external shocks.

The report concludes by advocating for regional collaboration and integration to create a more attractive market for investment in mineral processing industries.

By working together across borders, Sub-Saharan African countries can unlock the full potential of their critical mineral wealth and pave the way for sustainable economic growth and development.

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Economy

Lagos, Abuja to Host Public Engagements on Proposed Tax Policy Changes

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tax relief

The Presidential Fiscal Policy and Tax Reforms Committee has announced a series of public engagements to discuss proposed tax policy changes.

Scheduled to kick off in Lagos on Thursday followed by Abuja on May 6, these sessions will help shape Nigeria’s tax structure.

Led by Chairman Taiwo Oyedele, the committee aims to gather insights and perspectives from stakeholders across sectors.

The focal point of these engagements is to solicit feedback on revisions to the National Tax Policy and potential amendments to tax laws and administration practices.

The significance of these public dialogues cannot be overstated. As Nigeria endeavors to fortify its economy and enhance revenue collection mechanisms, citizen input is paramount.

The engagement process underscores a commitment to democratic governance and collaborative policymaking, recognizing that tax reforms affect every facet of society.

The proposed changes are rooted in a strategic vision to stimulate economic growth while ensuring fairness and efficiency in tax administration. By harnessing diverse viewpoints, the committee seeks to craft policies that are not only robust but also reflective of the needs and aspirations of Nigerians.

Addressing the press, Chairman Taiwo Oyedele highlighted the importance of these consultations in refining the nation’s tax architecture.

He said the committee’s mandate is informed by insights gleaned from previous engagements and consultations.

The evolving nature of Nigeria’s economic landscape necessitates agility and responsiveness in policymaking, traits that these engagements seek to cultivate.

The public engagements will provide a platform for stakeholders to articulate their perspectives, concerns, and recommendations regarding tax reforms.

Participants from various sectors, including business, academia, civil society, and government agencies, are expected to contribute to robust discussions aimed at charting a path forward for Nigeria’s fiscal policy.

As the first leg of the engagements unfolds in Lagos, followed by Abuja, anticipation is high for constructive dialogue and meaningful outcomes.

The success of these engagements hinges on active participation and genuine collaboration among stakeholders, underscoring the collective responsibility to shape Nigeria’s fiscal future.

In an era marked by economic challenges and global uncertainty, proactive and inclusive policymaking is paramount.

The forthcoming public engagements represent a tangible step towards fostering transparency, accountability, and citizen engagement in Nigeria’s tax reform process.

By harnessing the collective wisdom of its citizens, Nigeria can forge a tax regime that propels sustainable economic development and fosters shared prosperity for all.

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