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Senate Indicts CBN over Alleged $1bn Annual Repatriation by MTN

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  • Senate Indicts CBN over Alleged $1bn Annual Repatriation by MTN

The Senate on Wednesday indicted the Central Bank of Nigeria for causing the abuse of a monetary policy regulating capital repatriation by foreign investors.

It accused the apex bank of not bringing forth the observed deficiencies of the Foreign Exchange Miscellaneous Monitoring Act (FEMMA), instead opting to grant extensions and exemptions which became prone to abuse.

This followed the adoption of the report of its Committee on Banking, Insurance and Financial Institutions on alleged repatriation of $13.6 billion between 2006 and 2016 by MTN Communications translating to about $1 billion annually.

The committee however did not indict MTN Nigeria on grounds that while there was evidence of massive capital outflow, it did not receive proofs of collusion to contravene the foreign exchange laws.

The Senate also mandated the CBN to sanction Stanbic IBTC for improper documentation in respect of capital repatriation and loan repayments amounting to $388,195,183 and $199,440,952 respectively.

This is in addition to a mandate to the apex bank to sanction the activities of Stanbic IBTC nominees in the matter of shares transfer and splitting for the purpose of dividend repatriation and to henceforth render periodic status reports to the Senate on the performance of foreign investments inflows and outflows.

It also adopted the recommendation to mandate the CBN to propose an amendment of FEMMA with a view to ensuring the growth of the economy through massive foreign capital inflow and greater retention of foreign exchange.

“Whereas some of the contraventions were due to poor institutional supervision, systemic lapses and gaping opportunity for the rational investor to exploit,” the report read.

“No doubt there is a disturbing evidence of foreign exchange haemorrhage in Nigeria especially in the period of recession. MTN, for instance, repatriated over $1.3 billion annually since 2006 or $13.92 billion between 2006 and 2016. Just for one company, the phenomenon constitutes a huge outflow that could pose challenges for foreign exchange and national monetary stability,” the report said.

“The Committee did not receive proofs of collusion to contravene the foreign exchange laws. There was evidence of massive capital outflow, but that alone is not conclusive that a crime has been committed. This was relied on by banks, which claimed that despite regular audit by CBN, the CBN did not apply any sanction,” it added.

In another development, the Senate mandated its Public Accounts Committee to summon the Minister of Power, Works and Housing, Mr. Babatunde Fashola over the expenditure of $35 million unappropriated funds for the Afam Power Project.

It also mandated the committee to ascertain the balances from the July 2013 $1 billion Eurobond of the Federal Government from where $350 million was given to the Nigeria Electricity Bulk Trading Company (NBET) and another $350 million domiciled with the Nigerian Sovereign Investment Authority for reinvestment in low-risk investment.

The mandate followed a resolution by Senator Dino Melaye (Kogi APC) who accused the Fashola led Ministry of desperately trying to retrieve the money from NSIA and divert it to the Fast Power Projects.

“Further alarmed that since the introduction of the Fast Power Project by the Federal Ministry of Power, Works and Housing, a total sum of $35 million has been spent by the Ministry on Afam Power Project alone to pay $29 million to General Electric (GE) as cost for turbines and $6million in consultancy fees to other entities respectively, all without requisite feasibility study of the projects and appropriation by the National Assembly as required by the Constitution,” Melaye said.

He observed that a lot of questions are begging for answers as regards the $29 million paid to General Electric and the $6 million paid to other consultants as to “Who were the Consultants and how were they procured? Was there observance of due process in awarding the consultancy of $6 million and in paying General Electric $29 million for turbines? Why is the transaction cloaked in secrecy? What is the true value of Afam Fast Power? Why is the Ministry engaging in constructing new power plant while the government has several idle plants that are seeking buyers for?”

“Why is the Ministry that is supposed to be making policies, dabbling in constructing new power plants that we have all agreed are better handled by the private sector?” Melaye queried.

The Senate adopted the amendment proposals and therefore directed the Federal Ministry of Power, Works and Housing to stop or suspend all attempts or efforts to pressurise NSIA to release the sum of $350m meant for NBET to the Ministry for use on the controversial fast power projects.

The President of the Senate, Dr. Bukola Saraki, in his remarks, said issues are repeatedly raised concerning the power sector.

“It is not having proper oversight. First, I am told that they don’t require any confirmation for their appointment by the Senate; there is no report to the Senate, and this is an organisation that is controlling over $1.5bn and a lot of monies are being sent there, and it is growing every day with no oversight at all. I think there is the need for relevant committees to duly carry out a diligent investigation on the activities of the NSIA.”

In another development, the Senate yesterday decided to suspend consideration of its motion on the illegal extension of the tenure of the Board of the Niger Delta Development Commission (NDDC), to allow the new Secretary to the Government of the Federation, Mr. Boss Mustapha, to ensure that any irregularities are corrected.

This decision was taken after a motion was presented on the matter by Senator Emmanuel Paulkner (Bayelsa PPDP) who accused the immediate past Acting SGF, Dr. Habiba Lawal of illegally extending the tenure of the board to four years.

“Observes that the NDDC Act also states that “where a vacancy occurs in the membership board it shall be filled by the appointment of a successor to hold office for the remainder of the term of his predecessor, so however, that the successor shall represent the same interest and shall be appointed by the President, Commander-in-Chief of the Armed Forces subject to the confirmation of the Senate in consultation with the House of Representatives.”

“Observes that the Board headed by Senator Victor Ndoma Egba, was appointed by the President, Commander-in-Chief of the Armed Forces to replace the one headed by Senator Bassey Henshaw;

“Observes further that Section 5 (3) of the Act dictates that the Board headed by Senator Victor Ndoma Egba, serves out the remainder of the term of the board chaired by Senator Bassey Henshaw will terminate in December 2017; Notes that contrary to the clear provisions of Section 5 (3) of the NDDC Act, the tenure of the present Board of the Commission has been illegally extended to 4 years by the immediate past Acting Secretary to the Government of the Federation, Dr. Habiba Muda Lawal,” he said.

The senator argued that the contravention of the NDDC Act portends grave danger to the relative peace in the Niger Delta.

Checks revealed that the decision to allow the new SGF resolve the matter was borne out of the need to provide a foundation for the cordial relationship he is trying to promote between the Executive and the Legislature to take hold.

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

FIRS Sets N5.9 Trillion Revenue Target for 2021

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FIRS to Generate N5.9 Trillion Revenue  in 2021

Mohammed Nami, the Chairman of Federal Inland Revenue Service, FIRS, on Friday said the agency is projecting total revenue of N5.9 trillion for the 2021 fiscal year.

Nami stated this while meeting with the House of Representatives Committee on Finance led by Hon. James Falake on the Service’s 2021 budget defence of its proposed Revenue and Expenditure Estimates.

According to the Chairman, N4.26 trillion and N1.64 trillion were expected to come from non-oil and oil components, respectively.

However, Nami put the cost of collecting the projected revenue at N289.25 billion or 7 percent of the proposed total revenue for the year, higher than the N180.76 billion spent in 2020 to fund the three operational expenditure heads for the year.

He said: “Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against the budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.

Speaking on while the agency failed to meet its 2020 target, Nami said “There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves travelling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the taxpayers, we pay rent for those offices and this could be the reason why all these things went up.

“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.

 

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Economy

Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom

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The Governor of Akwa Ibom State, Mr. Udom Emmanuel has signed an agreement for the citing of a multi billion fertilizer plant in his State.

Governor Emmanuel was part of a Nigerian delegation led by the Minister of State for Petroleum Resources, Chief Timipre Sylva, that visited Morocco to set out the next steps of the $1.4 Bln fertilizer production plant project launched in June 2018.

The agreement between the OCP Africa, the Nigerian Sovereign Investment Authority and the Akwa Ibom State Government will birth one of the biggest investments in the fertilizer production industry worldwide.

The signing ceremony took place at the Mohammed VI Polytechnic University (UMP6).

Mr. Emmanuel signed one of the agreements of the partnership, which covers a memorandum of understanding between OCP Africa, the Akwa Ibom State in Nigeria and the NSIA on land acquisition, administrative facilitation, and common agricultural development projects in the Akwa Ibom State.

Speaking while signing the agreement, Governor Emmanuel said, “Our state is receptive to investments and we are prepared to offer the necessary support to make the project a reality.

“With a site that is suitably located to enable operational logistics and an abundance of gas resources, all that is left is for the parties to accelerate the project development process”, Mr. Udom said.

The agreement reached between the Nigerian Government and the OCP further links OCP, Mobil Producing Nigeria (MPN), the NNPC, the Gas Aggregation Company Nigeria (GACN), and the NSIA.

The two partners agreed to strengthen further their solid partnership leveraging Nigerian gas and the Moroccan phosphate.

This project will lead to a multipurpose industrial platform in Nigeria, which will use Nigerian gas and Moroccan phosphate to produce 750,000 tons of ammonia and 1 million tons of phosphate fertilizers annually by 2025.

The visit of the Nigerian delegation to Morocco takes place within the frame of the partnership sealed between OCP Group and the Nigerian Government to support and develop Nigeria’s agriculture industry.

Following the success of the first phase of Nigeria‘s Presidential Fertilizer Initiative (PFI) and the progress of the fertilizer production plant project launched in 2018 by OCP and NSIA, the Moroccan phosphates group and the Nigerian government delegation have agreed on the next steps of their joint project which is rapidly taking shape.

Several cooperation agreements were inked on Tuesday at the Mohammed VI Polytechnic University (UM6P) by OCP Africa and the Nigerian delegation. Through these deals, OCP reaffirms its unwavering support of agricultural development initiatives in Nigeria including PFI.

OCP Africa and the NSIA have agreed, inter alia, to set up a joint venture which will oversee the development of the industrial platform that will produce ammonia and fertilizers in Nigeria.

The OCP has also pledged to supply Nigerian famers with quality fertilizers adapted to the needs of their soil at competitive prices and produced locally.

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ICPC Says Nigeria Loses $10bn to Illicit Financial Flows 

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The Independent Corrupt Practices and Other Related Offences Commission (ICPC) says Nigeria accounts for 20 per cent or 10 billion dollars (N3.8 trillion) of the estimated 50 billion dollars that Africa loses to Illicit Financial Flows (IFFs).

Chairman of ICPC, Prof. Bolaji Owasanoye, said this during a virtual meeting to review a report on IFFs in relation to tax, Mrs Azuka Ogugua, spokesperson for ICPC, said in a statement released in Abuja on Friday.

The ICPC Chairman said, “the African Union Illicit Financial Flow Report estimated that Africa is losing nearly 50 billion dollars through profit shifting by multinational corporations and about 20 per cent of this figure is from Nigeria alone.”

The ICPC boss explained that taxes played “very strategic role in the nation’s political economy.”

He said the objective of the meeting was to improve on the awareness on IFFs, especially in the areas of taxation.

The ICPC boss added that the meeting would give participants the opportunity to openly discuss how to effectively use the instrumentality of taxation to curb IFFs through risk-based approach.

“Risk-based approach, that is: monitoring and audit; due process in tax collection; structured tax amnesty framework skewed in public interest; data privacy; timely resolution of audits and payment of tax refunds and intelligence sharing among revenue generating, regulatory and law enforcement agencies,” he said.

Owasanoye also stated that for the contemporary tax man to remain relevant, he must build his capacity in areas of technology management, solution architects and an astute relationship manager.

The Executive Chairman of Federal Inland Revenue Service (FIRS) Mr Muhammad Nani, expressed concerns that IFFs posed a serious threat to the Nigerian economy as the act robbed the nation of resources that were needed for development.

Nani declared that tackling IFFs would expand the country’s tax base and improve revenue generation, which was required for development.

He consequently pushed for policy reforms that would make it difficult for “capital flights” from occurring so that the country would be placed on the path of growth.

Other discussants at the event identified weak regulatory framework, opacity of financial system and lack of capacity amongst others as some of the factors that fuelled IFFs.

The discussants emphasised the need for capacity building of relevant stakeholders as one of the ways to stamp out illicit financial flows.

They commended ICPC for leveraging its corruption prevention mandate to open a new vista in IFFs discourse in Nigeria. (NAN)

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