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Govt Records N3tn Revenue Shortfall in Nine Months

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Naira - Investors King
  • Govt Records N3tn Revenue Shortfall in Nine Months

The Federal Government recorded a revenue shortfall of N3.04tn from January to September this year, Ifeanyi Onuba reports

From January to September this year, the Federal Government generated a total amount of N6.93tn as revenue from oil and non-oil sources.

The N6.93tn revenue was arrived at based on the analysis of data obtained from the Central Bank of Nigeria.

A breakdown of the revenue showed that the sum of N2.08tn was generated in the first quarter while the second and third quarters recorded N2.31tn and N2.52tn respectively.

The amount generated in each of the quarter was far below the budgeted quarterly estimate of N3.32tn.

When spread over a nine-month period, the budgeted quarterly estimate amounts to about N9.96tn.

This implies that with the total actual revenue of N6.92tn, the government was unable to meet its revenue target which resulted in a revenue shortfall of N3.04tn during the nine-month period.

Out of the actual revenue of N6.93tn, the sum of N4.08tn was earned from oil sources.

This, according to the analysis of the data, is about 58.7 per cent of the total earnings of the country during the nine-month period.

An analysis of oil revenue figure of N4.08tn revealed that Petroleum Profit Tax and royalties accounted for a huge chunk of oil revenue with a total contribution of N2.68tn.

This is followed by other oil revenue with N1.08tn while crude oil and gas sales contributed the balance of N312bn.

For non-oil revenue, a breakdown of the N2.85tn collections showed that the sum of N820.95bn was generated from Value Added Taxes, N1.08trn from Companies Income Taxes while N509.08bn came in from Customs and Excise duties.

The balance of N433.36bn was generated from other non-oil revenue sources.

Speaking on the revenue shortfall, some finance and economic experts said the budgetary spending of the government needed to be reduced in a manner that would reflect the rate of revenue inflow.

The Director-General, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said, “We have so much relied on oil revenue within the last 45 years and with the level of uncertainty in oil revenue, the time has come now for us to review our fiscal position.

“There is a need for reform of the country’s tax administration system to enable the Federal Government to raise more revenue from capital gains tax. Our tax to Gross Domestic Product ratio is one of the lowest in the world and we need to address that.”

In his comment, the Head of Banking and Finance Department, Nasarawa State University, Dr. Uche Uwaleke, said there was a need for the National Assembly to come up with legislation to improve the level of coordination between fiscal and monetary policy authorities.

He said the law would enable both authorities to effectively come up with the right policy mix in addressing the fiscal challenges facing the economy.

He argued that the failure to properly coordinate both fiscal and monetary policies was having negative influences on the economy through deficit financing.

He added that a weak policy stance on one area could burden the other area and would make the economy to suffer in the long run.

He said, “The need for policy coordination arises in the cast of structural reforms and liberalisation of the financial sector.

“Such reforms can only proceed within the framework of a supportive fiscal policy that provides macroeconomic stability, fiscal discipline and avoidance of taxes that discriminate against the financial activity.

“The constitution empowers the legislature with three basic functions of representation, lawmaking and oversight.

“To this end, the National Assembly can facilitate synergy between monetary and fiscal policies towards economic diversification by making laws designed to put an end to budget delays and fiscal deficit.”

The Minister of Finance, Mrs Zainab Ahmed, had said the decline in revenue had made it imperative for state governments to reduce unnecessary overhead costs in order to enthrone fiscal discipline.

She said the move was vital in order to increase the Internally Generated Revenue of states so as to efficiently maximise the scarce resources needed to stimulate the economy.

Ahmed, who spoke at a conference with the theme: ‘Unlocking the potential of the non-oil sector as a sustainable source of government revenue’, maintained that states should look inwards to harness various avenues for revenue.

She said, “It is on record that due to persistent domestic fall in oil revenue over the past years, it became extremely difficult, if not impossible for us to meet duly budgeted obligations.

“This happened because of the age-long over-reliance on oil, even though Nigeria is abundantly endowed with multiple resources, which provide varied sources of revenue.

“There is stupendous potential for diversification of revenue. We can reflect soberly on our national endowments and make conscious efforts to exploit and manage them effectively.

“Let me remind us that we need to develop cost-effective strategies to increase our IGR, reduce unnecessary overhead costs, enthrone fiscal discipline and transparency so as to optimise available limited resources, while efforts are sustained to broaden our revenue base.”

Ahmed said the Federal Government would continue to ensure that all federation revenues were accounted for in the most transparent manner and managed efficiently.

She said, “Let me acknowledge and commend the wisdom behind the development of the new revenue reporting template that was engineered by the Commissioners for Finance.

“It is imperative to mention that its implementation will be one of the key reforms in revenue remittances into the federation account.

“The administration of President Muhammadu Buhari has demonstrated necessary political will and has been very supportive in our drive to explore other relevant revenue sources, so as to be able to turn the tide in favour of the federation account and the nation in general.”

She further urged state governments to develop various sectors in their states to consolidate on the revenue allocation they receive from the federation account.

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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Banking Sector

A Failed Attempt to Trigger a Run on Banks

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Fidelity Bank
As market sentiment remains highly volatile and driven by news flow, banks liquidity levels can become vulnerable due to spread of inaccurate information.
As Nigerian banks put finishing touches to their recapitalisation plans as directed by the Central Bank of Nigeria (CBN), industry watchers have seen how social media mercenaries and their hirelings are deliberating distorting the truth and pushing campaigns that spread false information which could result in deposit outflows from their targeted banks.
Earlier this month when the Central Bank of Nigeria (CBN) revoked the banking licence of Heritage Bank, it gave reasons for the decision.
The reason was clearly stated! “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” CBN noted.
The CBN said Heritage Bank had continued to suffer and had no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step.
A statement by Hakama Sidi Ali, acting Director, Corporate Communications of the CBN, said the apex bank acted in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act, BOFIA, 2020.
Many market watchers, particularly those following developments in the banking industry did not think the CBN should have done otherwise and subsequent appointment of the Nigeria Deposit Insurance Corporation, NDIC, as the liquidator.
Mischievous ‘list’ of other banks
Shortly after the apex bank hammer fell on Heritage Bank, social media mischief makers released their own ‘list’ of other banks they felt will go the Heritage way – not minding the illegality of assuming such a regulatory position.
Thanks to Central Bank of Nigeria (CBN) for quickly debunking the fake news which had mentioned the names of other banks – Fidelity Bank, Wema Bank, Polaris Bank and Unity Bank.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to some information circulating in the public domain, suggesting that the CBN is set to revoke the licenses of three additional banks following its regulatory action against Heritage Bank Plc on Monday, June 3, 2024.
“The CBN unequivocally states that these allegations are false and intended to trigger panic in the financial system. The Nigerian financial system remains safe, sound, and resilient. Our banks have begun submitting implementation plans for the Banking Sector Recapitalisation Programme in compliance with the CBN Circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs).
“These plans are currently being reviewed by the Bank. In addition to enhancing buffers to withstand economic shocks, this proactive measure by the CBN to require CMNIBs to recapitalise will result in increased capital for Nigeria’s banks, enabling them to provide much-needed credit to critical sectors of the economy. This will increase the financial system’s contribution to the growth and development of a $1 trillion Nigerian economy.
“The CBN would like to reassure all stakeholders of its unwavering commitment to ensuring the financial system’s stability. Our financial system remains on a solid footing, and the CBN will continue to take all necessary steps to maintain its safety and soundness,” said CBN’s Sidi Ali said in a June 4 statement in response to the false allegations of license withdrawals.

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Banking Sector

MIPAD Announces Onyeali-Ikpe Among Global Top 100 Trade Champions of African Descent Worldwide

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In acknowledgment of her outstanding impact on global trade, Dr. Nneka Onyeali-Ikpe, the Group Managing Director and Chief Executive Officer of Fidelity Bank Plc, has been recognized as one of the honorees in the 2024 Most Influential Global Top 100 Export and International Trade Edition.

Themed, “Championing the Vision of Global Africa as a Unified Economic Block and Single Market,” the initiative which was announced on May 25, 2024 in celebration of Global Africa Day, lists several leaders in the global trade space of African descent, including the President, African Export–Import Bank (Afreximbank), Prof. Benedict Okey Oramah,); Minister of Trade and Export Promotion, Algeria, H.E. Kamel Rezig; Chairman, World Trade Centre Accra, Ghana, H.R.H Togbe Afede; the Nigerian Minister of Industry, Trade and Investment, Dr. Doris Nkiruka Uzoka-Anite; Executive Director and CEO, Nigerian Export Promotion Council (Nigeria), Nonye Ayeni; Executive Vice President, Intra-African Trade Bank (IATB), Kanayo Awani; Director, Trade Development (Africa & Caribbean), World Trade Centre Miami, US, Kemi Arosanyin; Secretary of State for Business and Trade and President of the Board of Trade (United Kingdom/Nigeria), Kemi Badenoch; President, US-Africa Business Centre at US Chamber of Commerce, Kendra Gaither; and President of the Buenaventura Chamber of Commerce (Colombia), Milady Garces Arboleda.

According to a statement by Most Influential People of African Descent (MIPAD), the organisers of the initiative, “These honorees are recognized for their groundbreaking achievements in Trade & Export and are called upon to champion the vision of a unified Global Africa as an economic block. This recognition aligns with the ethos of the International Decade for People of African Descent, highlighting MIPAD’s ongoing commitment to celebrating individuals, organizations, and governments demonstrating outstanding leadership in advancing people of African descent globally.”

Commenting on the initiative, Dr Onyeali-Ikpe said, “This recognition demonstrates our market leadership in the international trade space at Fidelity Bank and our devotion to helping Nigerian businesses play a more active role in the global trade space.

Since 2022, we have hosted the largest private-sector driven trade expo tagged the Fidelity International Trade and Creative Connect (FITCC) with hundreds of export businesses from Nigeria, off-takers in the UK and USA, investors, regulators, media and other key stakeholder in the trade sector. Through FITCC, we have closed deals totaling $450million. Our commitment as a bank is to do more in this space and we thank MIPAD for the recognition.”

The Most Influential People of African Descent (MIPAD), is a global civil society initiative in support of the International Decade for People of African Descent, proclaimed by United Nation’s General Assembly resolution 68/237, to be observed from 2015 to 2024. MIPAD identifies high achievers of African descent in public and private sectors from all around the world as a progressive network of relevant actors to join together in the spirit of recognition, justice and development.

Ranked as one of the best banks in Nigeria, Fidelity Bank is a full-fledged commercial bank with over 8.3 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.

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Banking Sector

Heritage Bank Liquidation: NDIC Opens Bidding for Assets and Branches

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heritage bank- Investors King

The Nigeria Deposit Insurance Corporation (NDIC) has commenced the process of liquidating the bank’s assets across Nigeria.

This move comes as part of NDIC’s role as the liquidator of the failed bank, aimed at recouping funds and resolving outstanding liabilities.

The NDIC, through an advertorial published in major newspapers, has announced the sale of 48 properties belonging to Heritage Bank.

These properties include the bank’s head office located at 143 Ahmadu Bello Way and its annex at 130 Ahmadu Bello Way, Victoria Island, Lagos.

Also, the liquidation covers chattels such as vehicles, office equipment, plant, and machinery spread across 62 locations nationwide.

Interested parties are invited to participate in a public competitive bidding process. They have been given the opportunity to inspect the assets and submit bids to acquire them.

The bidding process requires potential buyers to submit bids accompanied by a Certified Bank Draft amounting to 10% of their bid.

Successful bidders will be required to settle the balance within two weeks of notification of their successful bid.

The liquidation process marks a significant step in NDIC’s efforts to manage the fallout from Heritage Bank’s closure effectively.

The corporation has also commenced the verification and payment of depositors with balances of N5 million or less, a category that constitutes about 99% of the bank’s customer base. According to Bello Hassan, the Managing Director of NDIC, Heritage Bank had approximately 2.3 million depositors with total deposits amounting to N650 billion, while its loan portfolio stood at about N700 billion.

The decision to revoke Heritage Bank’s license was made by the CBN due to the bank’s persistent breach of regulatory requirements and its inability to improve its financial position despite intervention measures.

This action underscores the CBN’s commitment to maintaining financial stability within the banking sector and protecting depositors’ funds.

Stakeholders within the banking industry, including the Bank Directors Association of Nigeria (BDAN) and the House of Representatives, have expressed support for the regulatory actions taken.

BDAN’s Chairman, Mustapha Chike-Obi, emphasized the necessity of such decisions in safeguarding the overall health of the banking sector.

Meanwhile, the House of Representatives has passed a resolution urging the CBN to investigate the management and leadership of Heritage Bank to ascertain if any mismanagement or wrongdoing contributed to its failure.

The resolution also called for a comprehensive review of NDIC’s operations to ensure it is adequately equipped to fulfill its mandate as a deposit insurer and investor in failed banks.

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