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Reps Amends Finance Act, Includes Levies on Non-Alcoholic Drinks

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soft drinks

The House of Representatives Committee on Finance has resolved that it will amend the Finance Act to include levies on all carbonated and non-carbonated drinks.

The Committee made the resolution on Monday at the interactive session on the 2022-2024 Medium-Term Expenditure Framework (MTEF), holding at the National Assembly, Abuja.

This followed the plea by the Comptroller-General of Nigerian Customs Services, Hameed Ali, that all beverages companies should be made to pay levies.

Mr. Ali, while responding to a question of levy on non-alcoholic drinks, said he had been advocating that non-alcoholic drinks be re-excised.

According to him, non-alcoholic drinks are as harmful as alcoholic beverages, noting that there is a 30 percent excise levy on alcoholic drinks.

“On several cases, I have made submissions. My chairman (Leke Abejide, the Chairman House Committee on Customs & Excise Duties) is aware that I have been on this battle that we should re-excise the companies that were de-excised in 2019.

“What we have been fighting for is that if alcohol beverages and tobacco are injurious to our health and that is why the government decided to tax them, the carbonated drinks are equally injurious to our health and they should be taxed.

“I have sung this song for many years now, Coca-Cola is producing in this country and it is not being taxed. There is nowhere you go in the world that Coca-Cola is not paying tax to its host country, but Coca-Cola in this country is not paying anything because of the government’s unwillingness to re-excise those companies. For us, we have been battling for it, and I hope that one day, we will start collecting,” Mr. Ali said.

Responding to the demand of Mr. Ali, the Chairman of the House Committee on Finance, James Faleke, said the committee will consider amending the Finance Act along the line of argument of the Customs CG.

“We will be considering……..I am sure that the federal government will be coming up with the 2022 Finance Bill. There is a need for us to look at the possibility of charging excise duty on all drinks manufactured in this country, this is on all drinks, carbonated and non-carbonated.

“Carbonated is already part of the Finance Act, but companies cannot be operating and making huge profits. We are talking about excise….I am sure they are paying their income tax, but in terms of production tax…..even non-alcoholic are injurious, if you drink too much it is a wahala (problem). You will just be consuming sugar,” he said.

Also making a case for the levy on beverages, Mr. Abejide said the government needs to commence the implementation of the carbonated drinks levy.

He said the full implementation of the law would increase the revenue generation of Customs.

“Customs is doing well, and I am happy. This Finance Act that we passed in 2020, we should try and start making it work for carbonated drinks. It is already there as a law. Customs should partner with the ministry of finance so that they will get the approval in order for them to start collecting so that they can act and start collecting, If we implement that Act, it will be very easy to collect. Even if it is not up to N2.5 trillion, at least they can cross it,” Mr. Abejide said.

The Customs CG also blamed the lack of scanners at major ports for the smuggling of goods. According to him, agents connive with importers to devalue goods to reduce the percentage of duties.

“To be frank, apart from vehicle smuggling, most of the smuggling —evasion of duties — happens at the port because we do not have scanners and which means we cannot inspect every container and know the content,” Mr. Ali said.

“With due respect to stakeholders, most of our traders in conjunction with clearing agents always try to devalue the goods that are imported and therefore reducing the percentage. But if we have scanners…. I thank God very soon we will be deploying three major scanners at the major ports. That will help us tremendously to be able to reduce to the barest minimum the extent of smuggling. Because you have a company bringing 50 containers, you hardly can inspect all those and also we are mindful of the ease of doing business.

“Mr chairman, I assure you that now that the scanners are almost at our shores, once we deploy them I believe that we will realise the increment in terms of revenue.”

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Finance

ARISE IIP and Africa Finance Corporation Launch US$ 100M Capital Pool for African Entrepreneurs

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ARISE IIP, the pan-African developer and operator of world-class industrial parks, and Africa Finance Corporation (AFC), the leading infrastructure solutions provider in Africa, today announced the signing of a Memorandum of Understanding to establish a dedicated US $100 million capital pool for African entrepreneurs who are establishing operations within any of the Arise IIP Special Economic Zones (SEZ) in Africa. 

At the heart of this partnership is a shared vision to uplift African entrepreneurs by providing them with much needed financing and advisory services to catalyse growth.

AFC will also actively seek financing from Export Credit Agencies (ECAs), local and regional financial institutions to mobilise funding to support these companies.

This concerted effort underscores ARISE IIP and AFC’s commitment to fostering industrialisation, job creation and economic prosperity in Africa.

Under this partnership, AFC’s comprehensive suite of financial services will extend beyond financing to include financial advisory support for corporate finance, equipment financing and market entry including assisting with joint ventures and technical partnerships for sponsors that may require it, to ensure they are well-equipped to seize opportunities and thrive within the SEZs.

By tapping into AFC’s extensive network and expertise, ARISE IIP aims to cultivate a vibrant ecosystem that nurtures entrepreneurship and drives sustainable economic development across the continent.

Gagan Gupta, CEO of ARISE IIP said about this partnership: “ARISE IIP is about empowerment. By empowering our customers, and ensuring they have the robust financial support needed to meet their operational objectives, this collaboration with Africa Finance Corporation, our long-lasting partner, takes us one step closer to realising our vision of an industrialised and prosperous Africa.

Samaila Zubairu, President & CEO of AFC said: This partnership marks a significant milestone in our commitment to offer strategic financial advisory and corporate finance services to firms focused on value capture and import substitution projects in Africa. By collaborating with our investee company Arise IIP and African entrepreneurs in our Special Economic Zones, we aim to foster an ecosystem that will increase trade, create jobs, and drive economic advancement on the continent.

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Finance

United Capital Plc Reports Stellar Growth with 65% Profit Increase, Announces Dividends

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United Capital - Investors King

United Capital Plc (NGX: UCAP) has unveiled its unaudited financial results for the period ending June 30, 2024.

The company reported a 38% increase in gross earnings year-on-year to N15.15 billion. Profit before tax soared by 63% to N9.06 billion while profit after tax surged by 65% to N7.74 billion.

Total assets rose by 27% in the first half to N1.19 trillion, and shareholders’ funds increased by 33% to N120.34 billion.

These robust results have prompted United Capital to declare an interim dividend of N0.90 per 50 kobo ordinary share, alongside a generous bonus share offering of “2 for 1.”

Peter Ashade, Group CEO, expressed satisfaction with the strong financial outcomes, highlighting the company’s commitment to creating wealth and delivering superior value to shareholders.

“This marks a historic moment with our first-ever interim dividend and bonus share announcement, demonstrating our dedication to stakeholder value,” Ashade stated.

The company remains confident about sustaining its growth trajectory throughout 2024, bolstered by nearly N1.3 trillion in funds under management.

United Capital continues to prioritize activities that enhance and preserve value for stakeholders, maintaining its competitive edge and profitability.

With a focus on trusts, mutual funds, and professionally managed investments, the group is strategically positioned to achieve its growth objectives, ensuring sustainable returns for all involved.

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Banking Sector

Nigeria Plans 50% Windfall Tax on Banks’ Currency Profits

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Central Bank of Nigeria (CBN)

Nigerian President Bola Tinubu has announced a one-time 50% tax on windfall profits that banks reaped from currency gains following last year’s naira devaluation.

This decision was part of the government’s strategy to navigate the ongoing cost-of-living crisis.

The naira, which has depreciated by about 70% against the dollar since foreign exchange rules were relaxed in June 2023, allowed banks holding dollar assets to significantly boost their income.

However, the Central Bank of Nigeria had advised lenders to retain these profits as a buffer against potential future losses.

The proposed tax will apply to the 2023 financial year, with non-compliance resulting in hefty fines.

The move has already impacted the NGX Banking Index, which fell by 1.3% as of midday trading in Lagos. Notable declines were seen in FBN Holdings Plc and Zenith Bank Plc, dropping 3.2% and 2.5% respectively.

This initiative mirrors similar actions in Europe, where countries like Italy and Hungary have imposed taxes on banks to address what they view as excessive profits during periods of high inflation and interest rates.

European banks have criticized these measures, warning of potential impacts on economic growth due to constrained lending capabilities.

President Tinubu’s administration believes this tax will help manage Nigeria’s fiscal challenges while addressing social needs.

Lawmakers are expected to support the measure, alongside a proposal to increase government spending by 6.2 trillion naira ($3.8 billion).

While banks have benefited from currency revaluations, many customers, particularly manufacturers with dollar-denominated loans, faced significant losses as they struggled with the weaker naira.

The new tax policy highlights the government’s broader efforts to stabilize the economy and attract foreign investment, aiming to ensure a more equitable distribution of financial gains.

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