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2018 budget: FG Targets N311bn From Asset sale, Privatisation

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  • 2018 budget: FG Targets N311bn From Asset sale, Privatisation

The Federal Government is aiming to generate of N311bn from privatisation of public properties and the sale of national assets next year to partly finance the 2018 budget.

This is contained in the 2018 budget proposals submitted last Tuesday to a joint session of the National Assembly by President Muhammadu Buhari.

The Minister of Budget and National Planning, Udo Udoma, during a public presentation of the 2018 budget proposals in Abuja on Tuesday, stated that the sum of N306bn was being expected from privatisation proceeds, while the balance of N5bn would come from the sale of government assets.

Present at the event were the ministers of Education, Adamu Adamu; Finance, Mrs. Kemi Adeosun; Information, Alhaji Lai Mohammed; Petroleum Resources, Dr. Ibe Kachikwu; and the Head of the Civil Service of the of the Federation, Mrs. Winifred Oyo-Ita, among others

Udoma said the amount was part of the financing items of N6.6tn that would be used to fund the 2018 budget of N8.6tn.

Giving a breakdown of the expected sources of revenue, he stated that crude oil would contribute 37 per cent of the total revenue for the budget, adding that Companies Income Tax, Value Added Tax and customs duties would account for 12 per cent, 3.1 per cent and 4.9 per cent, respectively of the projected revenue for the 2018 fiscal year.

Others are recoveries, 7.8 per cent; tax amnesty, 1.3 per cent; signature bonus, 1.7 per cent; Joint Venture equity restructuring, 10.7 per cent; grants and donor funding, three per cent; and others, 5.5 per cent.

Udoma said the 2018 revenue projection reflected new funding mechanism for Joint Venture operations, allowing for cost recovery in lieu of the previous cash call arrangement.

He added that there would be additional oil-related revenues, including royalty, new marginal field licences, early licensing renewals and a review of fiscal regime for oil production sharing contracts.

According to him, the government is restructuring its equity in the JV oil assets, adding that the proceeds would be reinvested in other assets.

In addition, the minister said there were plans to increase excise duty rates on alcohol and tobacco, noting that this would help improve the revenue performance of the government.

Providing insights into the revenue performance of the 2017 budget, Udoma stated that oil revenue as well as that of the Nigeria Customs Service performed according to their respective targets.

For instance, he said the sum of N1.6tn was earned from oil between January and September, while the revenue generated by the Customs was N207bn out of the N208.17bn pro-rated as of the end of September.

This, he noted, was a performance of 99 per cent for the NCS.

He put collections from Companies Income Tax and Value Added Tax at N407.59bn and N95.57bn, respectively, adding that this implied revenue performance of 67 per cent and 53 per cent, respectively of the pro-rated budget.

Udoma, however, lamented that independent revenue did not perform according to target as only N155.14bn, which was just 20 per cent of the target, was remitted by agencies of government.

He said as a result of the poor performance of the agencies, the Federal Government was considering a review of their operational efficiency to make them more fiscally responsible.

The minister stated, “Despite the delay in the passage of the budget, we have been able to spend N450bn as of October 31, 2017. As a result of the challenges in the economy, our growth target for 2017 is revised downwards from 2.19 per cent to 1.5 per cent.

“Engagements are continuing with stakeholders in the Niger Delta to ensure stability in oil production. Efforts are also ongoing to ensure that all taxable Nigerians and companies comply with the legal requirements to declare income from all sources and remit taxes due to the appropriate authorities.

“In addition, we are working to improve government-owned enterprises’ revenue performance by reviewing their operational efficiency and cost-to-income ratios, and generally ensuring they operate in a more fiscally responsible manner.”

On the focus of the 2018 budget, the minister said the government would continue to spend more on ongoing infrastructure projects that had the potential for job creation and inclusive growth.

He added that the Federal Government would continue to leverage private capital and counterpart funding for the delivery of infrastructure projects.

The minister said for the 2018 capital projects, the government would carry out huge projects in transportation; power, works and housing; health; water resources; agriculture and rural development; mines and steel development; industry, trade and investment; and education, among others.

For instance, he said N35.4bn had been set aside for the Federal Government’s National Housing Programme; N10bn for the Second Niger Bridge; N294bn for construction and rehabilitation of major roads nationwide; N8.9bn for procurement of vaccines; and over N50bn for water supply, rehabilitation of dams and irrigation projects nationwide.

Udoma added that N25.1bn had been earmarked for the promotion and development of value chains across 30 different commodities; N4bn for agri-business and market development; N46.3bn for special economic zone projects across the geo-political zones to drive manufacturing and exports; and N19.28bn in form of tax credit to support export through the Export Expansion Grant, among others.

He added, “Our journey out of recession has helped us rest our priorities and to focus on more reforms and activities that have both short and long-term bearings on sustainable economic growth. Already, diversification efforts are yielding positive results with significant growth in the non-oil sector.

“Government will continue to create the enabling environment for the different sectors to increase their investments and contribute significantly to job creation and economic growth. The goal of the 2018 budget is to consolidate the gains recorded so far by this administration and ensure that all Nigerians benefit from economic progress.”

Also speaking at the event, Adeosun stated that the government would continue to come up with reforms that would boost tax revenue.

She stated that the current administration did believe in granting tax waivers to businesses, noting that rather than giving waivers, it was working on how to make the investment climate friendlier for enterprises to thrive

The Finance minister blamed the country’s low tax paying culture for the failure of previous administrations to emphasise the collection of taxes because of the huge money that the country was making from oil revenue.

She said now that oil revenue was no longer coming like it was in the past, there was a need to look inwards on how to raise the country’s tax to Gross Domestic Product ratio above the current six per cent.

Adeosun lamented that out of the estimated 69 million working population in the country, only 14 million of were actually paying taxes, a situation she described as unacceptable.

She said many high net-worth individuals were not paying taxes, stating that this was what made the government to come up with the nine-month amnesty window under the Voluntary Asset and Income Declaration Scheme.

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

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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Economy

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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Economy

African Development Bank, Egypt Signs Agreements Worth €109 Million to Transform Sewage Coverage in Rural Areas

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The African Development Bank Group has signed financing agreements of €109 million with the Government of Egypt to improve sanitation infrastructure and services for rural communities in Luxor Governorate in Egypt’s Upper Nile region.

The financing consists of a €108 million loan from the Bank, and a grant of €1 million from the Rural Water Supply and Sanitation Initiative (RWSSI) – an Africa-wide initiative hosted by the African Development Bank.

The funding, provided in a challenging global context, will help meet the Egyptian government’s financing requirements in the light of the COVID-19 pandemic, and support a sound water and sanitation infrastructure base, a key enabler for the country’s inclusive development.

The Integrated Rural Sanitation in Upper Egypt-Luxor (IRSUE-Luxor) project is set to boost sewage coverage in the region from 6% to 55%, improving the quality of life of citizens, including women and children, who are most affected by poor sanitation.

“Promoting efficient, equitable and sustainable economic development through integrated water resources management is a priority for the Government of Egypt. The IRSUE-Luxor initiative unlocks the socio-economic development potential for inclusive and green growth,” said Rania Al-Mashat, Minister of International Cooperation, who signed the agreements on behalf of the Egyptian government.

About 22,000 households (240,000 inhabitants) will benefit from on-site and off-site facilities, through an integrated system of sewerage networks, sludge treatment and wastewater treatment plants.

IRSUE-Luxor contributes to the National Rural Sanitation Program established by the Ministry of Housing, Utilities and Urban Communities, which aims to expand nationwide access to sanitation services from 34% currently to 60% in 2030.

The project also complements the national Haya Karima (Decent Life) initiative that aims to help rural communities across Egypt access essential infrastructure services to improve their living conditions and livelihoods.

Furthermore, the project includes a staff training component to strengthen performance within the Luxor Water and Wastewater Company.

“This intervention is not just about infrastructure development. An essential part of the project is supporting ongoing sector reforms,” said Malinne Blomberg, the Bank’s Deputy Director General for North Africa.

One of several initiatives supported by the African Development Bank in Egypt to optimize the use of the country’s water resources, IRSUE-Luxor will enable about 30,000 cubic meters of treated wastewater per day to be discharged into drainage and irrigation canals and re-used to enhance agricultural output.

The initiative is in line with the Bank’s water sector policy, which promotes efficient, equitable and sustainable development through integrated water resources management. In addition, the operation supports tariff regulation to achieve full cost recovery, which is one of the basic principles of the Bank’s water sector policy.

The partnership between Egypt and the African Development Bank Group dates back more than half a century. More than 100 operations have been deployed, mobilizing more than $6 billion across multiple strategic sectors.

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