- Debts Exceed Statutory Revenues in 32 States, Says FRC
The consolidated debts of 32 states of the federation exceeded their gross statutory revenues in 2017, a report of the Fiscal Responsibility Commission has shown.
As of December 2017, the 36 states of the federation had total public debts of N4,495,027,062,300.37 while they had gross statutory revenues totalling N2,098,615,470,240.44 and net revenues totalling N1,739,290,877,423.07.
This means that collectively, the debts of the 36 state governments exceeded their statutory revenues for the whole year by N2, 396,411,592,060 or by 53.31 per cent.
It also means that the states spent a total of N359, 324,592,817.3 or 17.12 per cent of their statutory revenues to service their debts within the one year period.
According to analyses presented by FRC, all the states of the federation except Anambra, Katsina, Sokoto and Yobe had debts to statutory revenues exceeding 100 per cent.
The report obtained by our correspondent in Abuja on Wednesday showed that of all the states of the federation, Osun State had the highest debt burden going by its debt-to-gross revenue ratio.
The report revealed that Osun had a debt to gross revenue ratio of 425.6 per cent. The situation became more precarious as the state enjoyed a debt-to-net revenue ratio of 1,607.79 per cent.
Debt to net revenue ratio measures how much the state is left with after debt servicing charges are deducted from the statutory revenue of a state.
The statutory revenue is what a state gets from the federation account on a monthly basis. It constitutes the bulk of a state’s income on a monthly basis as most states are known to make only marginal revenues from Internally Generated Revenue sources.
Osun had a total public debt of N167, 801,453,519.46. Its gross statutory revenue amounted to N39, 427,491,639.62 while it had net statutory revenue of N10, 436,789.071.78.
Lagos had a public debt of N811, 938,493,497.41; gross statutory revenue of N123, 421,828,999.27 and net revenue of N89,694,754,919.47 while Cross River had a public debt of N177,032,983,556.52; a gross statutory revenue of N41,963,126,084.71 and a net statutory revenue of N23,451,782,733.
Ekiti had a total public debt of N141,380,068,783.48, gross statutory revenue of N37,754,966,137.46 and net statutory revenue of N25,633,665,721.06 while Ogun had a public debt of N139,409,946,526.63, gross statutory revenue of N40,708,133,204.84 and a net statutory revenue of N26,185,030,796.11.
The report said, “Osun State recorded the highest debt-to-net statutory revenue with 1,607.79 per cent. The main reason for this high debt-to-net statutory revenue percentage can be explained by the deduction of N28,990,702,567.84 at source from its Gross Statutory Revenue of N39,427,491,639.62.
“This can be translated to mean that out of every N100 due to Osun State as Gross Domestic Revenue, only about N27 actually went to the coffers of the state government, thereby accounting for the abnormally high 1,607.79 Debt-to-Net Statutory Revenue.
“Lagos State has the next highest Debt-to-Net Statutory Revenue of 905.22 per cent followed by Cross River State with 754.88 per cent. Ekiti State accounted for the fourth highest Debt-to-Net Statutory Revenue percentage of 551.54 per cent while Ogun, Plateau and Oyo states followed with 532.4 per cent, 444.13 per cent and 354.68 per cent respectively.
“On the other hand, Anambra State had the least Debt-to-Net Statutory Revenue of 69.32 per cent followed by Yobe with 89.93 per cent. Sokoto, Jigawa and Katsina states followed with 93.65 per cent, 96.15 per cent and 111.96 per cent respectively.”
With a total public debt of N28, 905,189,191.27, Anambra had gross statutory revenue of N43, 089,159,428.87. This translates to debt to gross statutory revenue of 67.08 per cent. With net revenue of N41, 338,238,321.08, the state had a debt to net revenue of 69.92 per cent.
Regarding the debt sustainability of the states, the Fiscal Responsibility Commission said that since the Gross Domestic Product of each state had not been figured out, the debt sustainability could not be determined.
Nonetheless, it added that the level of borrowing by the states could be gauged by the regulation of the Debt Management Office that the debt status of each state at any particular time should not exceed 50 per cent of its statutory revenue in the preceding 12 months.
If this rule is applied, even Anambra State with the least debt to revenue ratio of 67.08 per cent can be said to have over-borrowed having exceeded the limit by 17.08 per cent.
The Fiscal Responsibility Commission said that states whose proportions of debt-to-revenue exceeded 50 per cent were assumed to have violated Section F (C) of DMO 2012 Debt Management Guidelines.
However, it added, it would be legally wrong to conclude that such states had over-borrowed as the overall debt limits for the governments had not been set.
Our correspondent reports that the Fiscal Responsibility Act vests on the President the power to set the borrowing limit for subnational governments in the country. No such limit has been set.
Gov Emmanuel Attracts $1.4b Fertilizer Plant to Akwa Ibom
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.
ICPC Says Nigeria Loses $10bn to Illicit Financial Flows
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)
African Development Bank, Egypt Signs Agreements Worth €109 Million to Transform Sewage Coverage in Rural Areas
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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