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Siriki Pleads With Lawmakers Not to Reduce Aviation Sector’s Allocation

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hadi-sirika

Siriki Appeals to National Assembly Not To Reduce Aviation Sector’s Allocation

Senator Hadi Sirika, the Minister of Aviation, has pleaded with the National Assembly not to reduce the Aviation sector budgetary allocation.

Sirika made this appeal on Monday when he appeared before the Senate Joint Committee on Finance and National Planning at the ongoing stakeholders’ interactive session on the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper.

The Senate panel categorised agencies in the aviation sector as revenue – generating agencies that do not need allocation in the national budget because they were self-reliance.

Sirika, therefore, made it know to the lawmakers that from now till the first quarter of 2022 there would decline in revenues from the aviation sector due to the negative effects of COVID-19  on the sector.

He also disclosed that the aviation sector had been the fastest-growing sector prior to the outbreak of COVID-19, but due to the effect of COVID-19, the sector has not been able to generate as it used to.

Sirika said, “On the questions regarding the challenging times and whether the overhead of the agencies will be mopped up to fund the national budget, I don’t think so.

“Take for example the COVID-19, we are the greatest hit sector. At the time when we came and in order to implement our agenda, which is called aviation road map, when we began to implement it, we slowly became the second fastest growing sector.

“Within the three years of implementation of that roadmap, we became in 2018, the second fastest growing sector of the Nigerian economy and just before COVID-19, we became the fastest growing sector in the Nigerian economy.

“Unfortunately, COVID-19 came and we shut down. I think until quarter four of 2021 and perhaps quarter one of 2022, we will continue to see sharp decline in passengers and that is directly proportional to the revenue that we collect.

“People’s confidence has to be raised. They have to begin to want to fly again and certain factors that encourage propensity to fly are also being eroded during this period.

“So, we are in difficult and challenging times and we do not have solutions even as advanced countries are spending huge amounts of money to support civil aviation businesses.

“The government, because of the challenge of funding, has not been able to respond to civil aviation requests and civil aviation funding like other countries have done.

“If government is not able to fund us because of the challenge of income, then government should not take the little that we have.

“Every single agency in civil aviation is so critical that we need to fund it and because we understand the nature of this business, that was why we have now introduced the concession of our airports.

“We have now done the outline business case; we are now going ahead for the procurement to concession these airports.

“The reason is simple and that is because this government, the APC administration, is social democratic in nature; it does not want to sell national assets.

“It wants to keep the assets with the people but we can concession them and improve them to make them better.”

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Finance

Tax Tribunal Orders NLNG to Pay $27.5M to FIRS for 2016 Tax Settlement

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Value added tax - Investors King

The Tax Appeal Tribunal (TAT) has mandated Nigeria Liquefied Natural Gas Limited (NLNG) to pay $27.5 million to the Federal Inland Revenue Service (FIRS) as a full and final settlement for the revised Companies Income Tax (CIT) assessment for the year 2016.

The judgment, delivered by a five-member panel chaired by Mrs. Alice Iriogbe, came after extensive legal proceedings and negotiations between the parties.

The TAT’s decision was based on the terms of settlement agreed upon by both NLNG and FIRS.

The legal dispute began when NLNG contested FIRS’ notice of additional assessment dated December 15, 2021, which demanded $141.75 million in CIT for 2016.

Following FIRS’ refusal to amend this assessment in March 2022, NLNG filed an appeal with the TAT in April 2022 under the suit marked TAT/ABJ/APP/331/2022.

Despite the ongoing trial, both parties engaged in settlement negotiations, culminating in an agreement filed with the tribunal on July 10, 2024.

The certified true copy of the judgment, made available on Tuesday, revealed that NLNG agreed to pay $27.5 million as the final settlement if the payment was made by July 12, 2024.

The judgment stated, “The appellant (NLNG) on Monday, July 8, 2024, duly remitted the said sum of $27.5 million to the respondent (FIRS), being the full and final settlement amount agreed upon by the parties. The terms contained in the terms of settlement have been adopted and made the judgment of this honourable tribunal. This is the judgment of this Honourable Tribunal.”

Earlier in the proceedings, NLNG had filed an interlocutory motion seeking to disqualify the tribunal from hearing the case, citing potential bias due to the involvement of two tribunal members who were former FIRS employees.

However, this motion was dismissed by the tribunal, which found no substantial grounds for the disqualification request.

The tribunal’s ruling marks a notable resolution in the ongoing tax dispute between NLNG and FIRS, reflecting the effectiveness of the TAT in mediating complex tax-related conflicts.

It also underscores the importance of legal and procedural adherence in corporate tax matters in Nigeria.

The judgment has been met with varied reactions from stakeholders, highlighting the broader implications for corporate tax compliance and governance within Nigeria’s burgeoning energy sector.

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Banking Sector

Access Bank and FMO Sign Landmark $295 Million Syndicate Tier II Facility Agreement

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Access Bank Plc, sub-Saharan Africa’s largest bank by customer base, has reached a significant milestone in its enduring partnership with the Dutch Entrepreneurial Development Bank (FMO).

This collaboration, spanning over two decades, marked a historic moment on Tuesday with the signing of a monumental syndicate Tier II Facility agreement valued at $295 million, approximately N442.5 billion.

The relationship between Access Bank and FMO, which began in 2003, has been a testament to their shared commitment to economic development in Nigeria.

This latest agreement, the third of its kind arranged by FMO for Access Bank, represents more than just a financial transaction; it symbolizes the deep-rooted trust and synergy between the two institutions.

This historic agreement is notably the largest syndication in FMO’s history, a substantial investment resulting from a collective effort involving a syndicate of Global Development Finance Institution (DFI) partners.

These partners include esteemed entities such as British International Investment (BII), Belgian Investment Company for Developing Countries (BIO), BlueOrchard, FinDev Canada, Finnfund of Finland, Norfund of Norway, Oikocredit, and Swedfund of Sweden.

The $295 million facility is earmarked to empower local small and medium-sized enterprises (SMEs), with a particular focus on underserved segments such as youth- and women-owned businesses, agricultural enterprises, and very small enterprises.

This significant infusion of capital aims to catalyze growth across various sectors, stimulate business development, create jobs, and deepen financial inclusion, aligning with Access Bank’s mission to drive progress and development throughout the continent and beyond.

The ceremony, held in the Netherlands, was attended by dignitaries including Oluremi Oliyide, Nigerian Ambassador to the Netherlands, and representatives from the Dutch government.

During the event, Roosevelt Ogbonna, MD/CEO of Access Bank Plc, expressed profound gratitude to FMO for their unwavering support and emphasized the bank’s commitment to becoming the world’s most respected African bank by adhering to global best practices and maintaining high standards of accountability.

“Today marks a significant milestone in our longstanding partnerships with FMO. This monumental syndicate Tier II Facility agreement underscores the deep-rooted trust and synergy among our institutions. This facility not only enhances our capital reserves but also strengthens Africa’s trade capabilities and export potential,” Ogbonna said.

“Putting these funds to use, we aim to catalyze growth across various sectors, stimulate business development, create jobs, and deepen financial inclusion.”

In his remarks, Michael Jongeneel, CEO of FMO, stated, “We extend our gratitude to our longstanding partner, Access Bank, and our syndication partners for their outstanding cooperation and collective effort in making this loan facility a reality. The syndicated loan provides significant support to SMEs in Nigeria, particularly underserved segments such as women and young entrepreneurs, aligning perfectly with our shared strategy to enhance financial inclusion and empower local entrepreneurs in the agribusiness and SME sectors.”

Marchel Gerrmann, representing the Dutch government, and members of the syndication partners—BII, Finnfund, and BlueOrchard—were among the distinguished guests who witnessed this historic agreement.

This landmark deal is set to bolster Nigeria’s private sector, providing much-needed support to SMEs and contributing significantly to the country’s economic development.

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Finance

Federal, State, Local Governments Receive N1.354 Trillion in July Disbursement

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FAAC

The Federation Account Allocation Committee (FAAC) announced that the disbursement to the federal, state, and local governments surged by N200 billion from N1.143 trillion in June to N1.354 trillion in July.

The FAAC, chaired by Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, detailed the distribution of funds among the three tiers of government.

The Federal Government received N459.776 billion, while the states were allocated N461.979 billion.

Local Government Councils received N337.019 billion, and the Oil Producing States benefited from N95.598 billion as Derivation, which accounts for 13% of Mineral Revenue.

The FAAC communique highlighted the distribution breakdown, stating that N92.112 billion was set aside for the cost of collection, while a substantial N1.037 trillion was earmarked for transfers, interventions, and refunds.

The total revenue distributable for June 2024, amounting to N2.483 trillion, was derived from various sources, including Statutory Revenue of N142.514 billion, Value Added Tax (VAT) of N523.973 billion, N15.692 billion from the Electronic Money Transfer Levy (EMTL), N472.192 billion from Exchange Difference, and an Augmentation of N200 billion.

The communique also indicated that the gross revenue from VAT for June 2024 stood at N562.685 billion, an increase of N65.020 billion from the previous month’s N497.665 billion.

From this amount, N22.507 billion was allocated for the cost of collection, and N16.205 billion was designated for transfers, interventions, and refunds.

The remaining N523.973 billion was distributed among the federal, state, and local governments, with the Federal Government receiving N78.596 billion, the states N261.987 billion, and the Local Government Councils N183.391 billion.

Further, the FAAC reported a gross statutory revenue of N1.23 trillion for June 2024. From this amount, N68.951 billion was allocated for the cost of collection, and N1.021 trillion was set aside for transfers, interventions, and refunds.

The balance of N142.514 billion was distributed among the three tiers of government, with the Federal Government receiving N48.952 billion, the states N24.829 billion, Local Government Councils N19.142 billion, and N49.591 billion allocated to derivation revenue for mineral-producing states.

The Electronic Money Transfer Levy (EMTL) yielded N16.346 billion, which was distributed as follows: the Federal Government received N2.354 billion, the states N7.846 billion, Local Government Councils N5.492 billion, and N0.654 billion was allocated for the cost of collection.

Also, N472.192 billion from Exchange Difference was distributed, with the Federal Government receiving N224.514 billion, the states N113.877 billion, Local Government Councils N87.794 billion, and N46.007 billion allocated for derivation revenue.

An augmentation of N200 billion was also noted, from which the Federal Government received N105.360 billion, the states N53.440 billion, and Local Government Councils N41.200 billion.

The FAAC communique concluded by noting that the balance in the Excess Crude Account (ECA) stood at $473,754.57 as of July 2024.

This significant financial distribution reflects an upward trend in government revenues, providing a much-needed fiscal boost across all tiers of government amid ongoing economic challenges.

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