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Excess Crude Account: SERAP, CSOs Flay NEC for $1bn Approval to Fight B’Haram

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Economy
  • Excess Crude Account: SERAP, CSOs Flay NEC for $1bn Approval to Fight B’Haram

The National Economic Council, on Thursday, asked the Federal Government to withdraw $1bn from the $2.3bn currently in the Excess Crude Account and use it to fight insurgency in the North-East.

The decision was taken at a meeting of the council presided over by Vice-President Yemi Osinbajo at the Presidential Villa, Abuja.

The council chaired by the Vice-President has all state governors as members.

Some civil society groups and analysts, however, faulted the move by the Federal Government on the basis that past allocations to defence and the anti-terrorism operations had yet to be judiciously accounted for.

Edo State Governor, Godwin Obaseki, disclosed the decision of NEC to State House correspondents at the end of the meeting.

Obaseki said council members expected that the money would be spent on the purchase of security equipment, procurement of intelligence and logistics, among others.

He said the Chairman of the Nigeria Governors’ Forum, Alhaji Abdulaziz Yari of Zamfara State, announced the governors’ decision at the meeting.

The governor stated, “The NEC also resolved through the Chairman of the NGF to support the effort of the Federal Government in the area of security.

“Pleased with the achievements that have been made till date in the fight against insurgency, particularly in the North-East, the governors of Nigeria, through their chairman, announced at the NEC meeting that the governors have given permission to the Federal Government to spend the sum of $1bn on the fight against insurgency.

“This money is supposed to be taken from the Excess Crude Account.

“As you know, the issue of security, particularly as regards the North-East, is a very comprehensive response by federal forces. So, we expect that the contribution of the states to these efforts will cover the whole array of activities required to secure the country and counter-insurgency.

“We expect that the amount will include but not limited to the purchase of equipment, procuring intelligence and logistics and all things required to ensure that we finally put an end to the scourge of insurgence.”

Towards the end of the administration of former President Goodluck Jonathan in 2015, the Federal Government requested and got approval from the National Assembly for a loan of $1bn to fight the Boko Haram menace.

No explanation has been given on how the money was expended to date.

FG threatens to stop budget support facility to defaulting states

Meanwhile, Gombe State Governor, Ibrahim Dankwambo, said the Minister of Finance, Kemi Adeosun, gave an update on the budget support loan granted to states by the Federal Government.

The governor quoted the minister as complaining that most states had failed to meet certain conditions for the loan as earlier agreed.

He further quoted the minister as saying that the Federal Government would not hesitate to stop giving the support to defaulting states.

Dankwambo added, “The Minister of Finance informed council that the budget support facility to states is also based on certain conditions as agreed under the fiscal responsibility plan.

“She complained that most states are yet to comply, adding that non-compliance will make her ministry stop any further payment to states that do not comply.”

The governor added that the council received the update report on the forensic audit of revenue that accrued into the federation account up to 2015.

He said as a follow-up to the report that was submitted last month, the council was informed that KPMG was still conducting the audit of the Nigeria Customs Service and the Nigerian Communications Commission.

Dankwambo also quoted the Accountant General of the Federation as putting the balance in the Natural Resources Development Fund Account as of December 13 at N106.984bn.

The balance in the Excess Crude Account was also put at $2.317bn while that of the Stabilisation Fund Account was put at N7.78bn.

Don’t touch account, SERAP, other CSOs warn NEC

But civil societies have lambasted NEC for planning to take $1bn from the ECA to fight terrorism, noting that earlier funds expended to fight Boko Haram had yet to be accounted for.

The President, Campaign for Democracy, Usman Abdul, said, “This is what happens when you have leaders who are not thinkers. They cannot think outside the box. We are bound to be faced with such challenges.

“The military have come out to say that Boko Haram was technically defeated and Camp Zero was captured. I don’t see then any rationale behind dipping our hands into our excess crude account.

“These are the proceeds of our generality and we have other presidential sources of revenue going into the North-East. What is the Presidential Committee on the North-East Initiative doing? The political leaders are rather looking for ways to steal money for the 2019 campaigns.”

Also, the Executive Director, Centre for Anti-Corruption and Open Leadership, Debo Adeniran, believed the past allocations to defence and the military should be accounted for before voting another huge amount for military operations.

Adeniran added, “Let us first know how the budgetary allocations for defence and the military have been expended. We all recall the $2.1bn Dasuki loot. The governors should not put their eyes on the excess crude oil account.

“The Ministry of Defence and the services should first give account of how the monies on fighting the Boko Haram insurgency were spent before we can start talking about dipping hands into our excess crude account.”

On its part, the Socio-Economic Rights and Accountability Project said the decision to take $1bn from the excess crude account was not rational, adding that anything outside the budgetary allocations must be tabled before the National Assembly for consideration and approval.

SERAP Director, Adetokunbo Mumuni, stated, “Whatever is not properly appropriated for should not be considered. That is the only way we can maintain sanity in our public expenditure.

“The Presidency may want to say that security matters are fundamental. But we cannot continue to have all manner of expenditures on Boko Haram. That will be reckless to me.”

North-East crisis needs extraordinary approach –Utomi, security experts

However, a frontline political economist, Prof. Pat Utomi, told one of our correspondents that the crisis in the North-East was a big issue that needed extraordinary approach to be adequately addressed

He said, “An extraordinary intervention of the nature of what you have described is needed. As a student of history, I think the North-East matter is important and should be given the right priority because we need to do something strategic about that region.

“This is because the situation in the North-East is very much akin to the situation in Ethiopia and Somalia back in the 1980s that fuelled the old view of Africa, which was known as Afro-pessimism, meaning that Africa was a lost continent of diseases and wars, etc. That is what the North-East crisis has caused Nigeria.”

Also, a security analyst, Ben Okezie, said no amount was too much to fight insurgency, noting that without addressing the security issues, there could be no development.

Okezie, who lauded the move, explained that countries like the United States had spent billions of dollars to fight insurgency and insecurity within and outside their borders.

“No amount is too much to spend on fighting insurgency because without peace, there cannot be social or economic development. I think it is a good development,” he noted.

A retired Commissioner of Police, Alhaji Abubakar Tsav, also endorsed the decision to withdraw money from the excess crude account, noting that without security, no development could take place.

The ex-Lagos CP added, “It is a good move but the government should ensure that it is judiciously utilised. I also want President Buhari to caution the governors and other office seekers against arming thugs to win elections. Insecurity is the result of proliferation of arms.”

Between 2011 and 2014, N6.21tn was shared from the Excess Crude Account by the three tiers of government.

A former Minister of Finance, Dr Ngozi Okonjo-Iweala, had while releasing the figure said the Federal Government received N3.29tn, while the 36 states got a total of N2.92tn from the ECA within the four year period.

The opening balance was $4.56bn in 2011 and reached a peak the following year at $8.7bn before declining to $2.3bn in 2013.

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

Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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Economy

UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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