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FG Records N2.3tn Shortfall From Revenue-earning Agencies

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  • FG Records N2.3tn Shortfall From Revenue-earning Agencies

Between January 2015 and August 2018, the Federal Government recorded a total shortfall of N2.38tn in independent revenue from its agencies captured under the Fiscal Responsibility Act.

The Act stipulates that any government agency that generates revenue must remit 80 per cent of their operating surplus to the Consolidated Revenue Fund account.

Some of the agencies are the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation, Securities and Exchange Commission, Nigerian Shippers Council, Nigerian Export Promotion Council, National Health Insurance Scheme, Nigerian Civil Aviation Authority, and Nigerian Communications Commission.

Over the years, many of the agencies have been underpaying revenue into the coffers of the government.

The development made the Director-General, Budget Office of the Federation, Ben Akabueze, to summon a meeting of the heads of the affected agencies to discuss how to address the revenue shortfall.

Speaking at the event on Tuesday in Abuja, Akabueze described the revenue performance of some of the agencies as “mostly insignificant.”

For instance, he said that between 2015 and August 2018, out of the cumulative budgeted revenue of N3.65tn, the actual revenue received during the period was just N1.27tn.

Giving a breakdown of the revenue for the period, the DG said that in 2015, the budgeted independent revenue of the government was N489.25bn, out of which N354.03bn was generated.

For 2016, he said the government was more ambitious by setting a target of N1.5tn only for the agencies to realise just N398.19bn.

He said the poor revenue performance made the Federal Government reduce the 2017 target to N807.57bn.

However, he said the actual collection was worse than what was earned in the previous years as only N216.66bn was the actual amount generated.

For the 2018 fiscal period, he said the revenue target was pegged at N847.95bn noting that about N302.66bn had been generated as revenue.

About 50 government-owned enterprises that generate independent revenue have yet to remit their operating surpluses running into over N2tn.

Some of the agencies, according to the presentation made by the Akabueze, are the Petroleum Products Pricing Regulatory Agency, N1.34tn; Central Bank of Nigeria, N801.18bn; Nigeria Ports Authority, N192.1bn; Nigerian Maritime Administration and Safety Agency, N66.08bn; and the Federal Airport Authority of Nigeria, N51.99bn.

The Nigerian Postal Service has yet to remit its operating surplus of N37.74bn; Nigerian Communications Commission, N30.85bn; National Inland Water Ways Authority, N30.83bn; National Information Technology and Development Agency, N30.7bn; and Nigerian Airspace Management Agency, N22.79bn.

Similarly, the National Examination Council has yet to remit its operating surplus of N16.3bn; Nigerian Television Authority, N15.64bn; Nigerian Shippers Council, N11.99bn; National Health Insurance Scheme, N8.81bn; National Pension Commission, N8.68bn; Corporate Affairs Commission, N7.71bn; and Standards Organisation of Nigeria, N5.5bn, among others.

Akabueze said, “The continuous underperformance of the government -owned enterprises has made it difficult to achieve enhanced domestic revenue mobilisation from operating surpluses of the GOEs.

“The President has mandated that urgent corrective action should be taken and for this reason, we have gathered here today.

“Despite the over N40tn the Federal Government has invested in the agencies, what is usually remitted to the treasury in terms of dividends or surplus at the end of each operating year is mostly insignificant.

“The record shows that few of the GOEs declare surpluses. In effect, the Nigerian taxpayers have not benefitted much from these investments.

“Out of the total projected sum of N807.57bn independent revenues in 2017, only N216.66bn, representing 26.8 per cent performance, was remitted by GOEs and revenue-generating Ministries, Departments and Agencies.”

He said, going forward, the Federal Government would strengthen its control mechanism to make the revenue process more transparent and inclusive.

To achieve this, Akabueze said reforms would be implemented with increased vigour to improve revenue collection and expenditure management.

He said achieving fiscal sustainability required bold, decisive and urgent action, adding that the budget performance between January and September had shown clearly that the country had a “serious revenue challenge.”

He gave some of the initiatives being taken to address the problems to include the deployment of new technology to improve the collection, upward review of tariffs and tax rates, stronger enforcement action against tax defaulters and tighter performance management framework.

He also said the government would be implementing tight expenditure control through the issuance of circulars to limit allowable expenses, the frequency of board meetings and other wasteful practices.

“Annual GOE capital budget may be mainstreamed into the Federal Government capital budget in order to ensure that they are subjected to the same level of scrutiny, procurement and monitoring processes.

“It shall be mandated for all GOEs to use the Treasury Single Account for all financial transactions. The accounts of GOEs shall henceforth be audited within five months after the end of each financial year,” he added.

Akabueze explained that the government would be amending relevant sections of the Acts establishing some of the agencies to reflect the economic realities and policy thrust of the government.

He said the need to amend the Act became imperative as some establishing Acts empowered the boards of agencies to serve as final approving authority over their spending plans.

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.

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Economy

World Bank Lauds Kogi’s 2020 Financial Statement

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The World Bank has heaped praise on the Government of Kogi State concerning the state’s audited financial statement for 2020. The financial institution was said to have described the financial report as a standard to look up to concerning transparency and accountability in the public sector.

In a statement which was dated November 21, 2021 it was said that the bank made the commendation in a letter which was sent to the Accountant General of the state.

As said in the statement, the letter which was taken by the Kogi State Accountant General on November 2025 was signed by Deborah Hannah Isser, the Task Team Leader of the States Fiscal Transparency, Accountability and Sustainability Programme (SFTAS), Nigeria Country Office, Western and Central African Region.

SFTAS is a $750 million programme which has been set up to reward states for meeting any or every one of the indicators which demonstrate improvements in fiscal transparency, sustainability and accountability.

The indicators, which are nine in number were a byproduct of the former Fiscal Sustainability Plan of the federal government where States would be rewarded for meeting up to 22 targets.

The World Bank had previously backed the federal government to give incentives to the states in order to properly execute the 22-point Fiscal Sustainability Plan, which has now gone under a revamp as the nine Disbursement Linked Indicators under SFTAS.

Some of the criteria on which judgement will be based on are: improvement in financial reporting and budget reliability, improved cash management, increased openness, citizen participation in the budget process, reduced revenue leakages through the execution of State Treasury Single Account (TSA), a strengthened Internally Generated Revenue (IGR) collection, biometric registration and Bank Verification Number (BVN) used to reduce payroll fraud.

The World Bank commended the Kogi State government for preparing its audited financial statements in line with the basis of the International Public Sector Accounting Standards.

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Economy

Nigeria’s Rigid Forex Policy Discouraging Investors, Fueling Inflation – World Bank

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The World Bank has blamed the Central Bank of Nigeria’s rigid forex policy for the drop in Nigeria’s capital importation and rising inflation rate.

The bank disclosed in its November report, Nigeria Development Update.

Explaining modalities for its position, the World Bank stated that there had been constant pressure on the Nigerian Naira with the current forex policy, forcing the central bank to consistently increase its nominal official exchange rate in an effort to ease some of the pressure.

This, it blamed on the rigid foreign exchange management system of the Central Bank of Nigeria, saying the system has also been responsible for the rising inflation rate in Nigeria.

The report read in part, “The government’s exchange rate management policies continue to discourage investment and fuel inflation. Exchange rate stability is a key CBN policy objective, and to preserve its external reserves the CBN continues to manage FX demand and limit the supply of FX to the market.

“Pressure on the naira remains intense, and while the CBN has raised the nominal official exchange rate three times since the start of the pandemic (by 15 per cent in March 2020, five per cent in August 2020, and seven per cent in May 2021), FX management remains too rigid to respond to external shocks. Meanwhile, exchange-rate management has emerged as one of the key drivers of inflation.”

The World Bank further stated that the central bank foreign exchange system needs to be more flexible to withstand external shocks, especially given Nigeria’s mono-product nature. It added that the NAFEX rate does not reflect the true market rate but the central bank managed rate.

It read in part, “While the CBN supplied an average of $2.5bn to the Investors and Exporters forex window in the months just prior to the COVID-19 crisis, it only supplied an average of $0.5bn in the months thereafter.

“The NAFEX rate, which is now the guiding exchange rate for the economy, continues to be managed and is not fully reflective of market conditions. The parallel market premium over the NAFEX rate reached 29 per cent in August 2021 after the CBN cut off its weekly supply of $20,000 per bureau de change. The CBN has intermittently supplied forex to BDCs since 2005, providing ample opportunities for currency round-tripping.”

The institution however advised that Nigeria adopt a more predictable, transparent and flexible foreign exchange management system in order to attract and sustain private investment flows.

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Nigeria’s Non-oil Revenue Now N1.15 Trillion – Minister of Finance

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Mrs. Zainab Ahmed, the Minister of Finance, Budget and National Planning, has said that Nigeria’s non-oil revenue is now N1.15 trillion, representing 15.7 percent above the country’s target. This, she claimed, was a result of the federal government’s efforts at diversifying the nation’s economy.

Mrs. Ahmed disclosed this at the Institute of Directors (IoD) 2021 Annual Directors Conference which was held on Wednesday in Abuja.

According to the News Agency of Nigeria (NAN) the event with the theme: “Creating the Future: Deepening the Corporate Governance Practice through Multi-Sectoral and Multi-Generational Collaborations,” was meant to discuss economic development.

Mrs Ahmed added that the recent development was in line with President’s commitment to further diversifying the Nigerian economy which is heavily dependent on oil. She observed that Nigeria was showing resilience in recovery from recession from coronavirus (COVID-19) pandemic which intensely affected global economies.

The minister said the federal government alongside the private sector had implemented a wide range of monetary measures to stimulate economic recovery, growth and development, job creation and improved standards of living.

She also explained that the government was doing everything to improve and diversify Nigeria’s revenue generation.

Nigeria was quickly able to exit recession and is on her way to path of sustainable growth and we are intensifying efforts to grow and diversify our revenue sources to grow revenue from the current 8 per cent.”

“Our non-oil revenues have grown to N1.15 trillion, representing 15.7 per cent above set target. We are working on the 2021 finance bill and it’s nearing completion. Also, the recent approval of the medium-term national development plan is an important milestone of Buhari’s commitment to delivering sustainable growth and we require strong support and monitoring during implementation,” she said.

Mrs Ahmed reinforced the government’s decision to do something about infrastructure and reduce the cost of production for businesses in the country.

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