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Rebound in FAAC Payout for July

The latest gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N802.4bn in July (from June revenue).

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The latest gross monthly distribution by the Federation Account Allocation Committee (FAAC) to the three tiers of government and public agencies amounted to N802.4bn in July (from June revenue).

This was an increase of 18% or N121.6bn from June’s payout and 14.7% higher than the payout recorded in January ’22. YTD, the average monthly FAAC distribution is N690.7bn. This is an improvement when compared with the average of N649.5bn and N642.1 recorded in the corresponding period of 2021 and 2020 respectively.

According to the local media, companies income tax (CIT), petroleum profit tax (PPT), oil and gas royalties and import duty recorded significant increases over the previous month, while value added tax (VAT)and excise duties declined.

From the FAAC payout in July, the FGN received a total of N321.9bn while state governments received N245.4bn, including N52.8bn representing the 13% derivation for the oil producing states. In addition, local government councils received N182.3bn.

The headline figure consisted of N608.6bn in gross statutory distribution. This was an increase of 58.1% when compared with the previous month and 20% when compared to the amount recorded in January ’22. Additionally, N193.8bn came in from the VAT Pool.

It was -2.4% lower than the amount recorded for June ’22 (N198.5bn), but 3.4% higher than the amount recorded in January ’22 (N187.4bn). In July, the total deductions for cost of collection was N44.6bn and the total deductions for statutory transfers, refunds and savings was N373.2bn.

The committee put the balance in the Excess Crude Account (ECA) at USD376,655. This is compared with USD61m recorded in July ’21.The drawdown can be attributed to an advance payment for the purchase of new offshore patrol vessels for the Nigerian Navy.

It is important to highlight that the Nigerian National Petroleum Company Limited (NNPC Ltd) has not made any remittance to the federation account in 2022. This is largely due to low oil production levels and high fuel subsidy costs. The NNPC has spent N1.5trn (USD3.5bn), on PMS subsidies in H1 ’22. The FGN estimates that N4trn would be spent on subsidy in 2022 compared with N1.5trn spent in 2021.

Going forward we expect the fiscal strain across states to remain unchanged. A few states, led by Lagos, generate substantial internal revenue, and can still meet their spending commitments, including capital items. However, for most states that depend solely on the monthly FAAC distribution, the prospects are bleak.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Finance

CBN Starts Debiting Defaulters of Its Intervention Loans

The Central Bank of Nigeria (CBN) has begun debiting the account of intervention loan defaulters.

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Godwin Emefile

The Central Bank of Nigeria (CBN) has begun debiting the account of intervention loan defaulters.

The apex bank declared this at the last Monetary Policy Committee (MPC) meeting held in Abuja. It further noted that States Governments and smallholder farmers form a large part of the defaulter. 

It will be recalled that the Central Bank disclosed in August that about N791 billion was disbursed to more than 3 million farmers under the Anchor Borrowers’ Program (ABP) and Commercial Agric Credit. 

ABP was launched by Muhammad Buhari on November 17, 2015 to assist Smallholders Farmers. ABP was created to reduce the pains faced by farmers in accessing credit for their operations. It had a single interest rate of nine percent.

Some of the benefiting smallholder farmers are those engaged in the production of rice, maize, wheat, cotton, cassava, potatoes, yam, ginger, oil palm, cocoa, rubber tomatoes, fish and poultry among others.

According to the director of development finance of the CBN, Yusuf Yila, state governments’ monthly federation account allocation committee (FAAC) accruals are already being debited directly every month. He however did not specify the states involved.

“Every person(s) or state that took that loan (ABP) is going to pay. We have their BVN. These persons are smallholder farmers, who received funds for farming. We have started recovering loans from state governments. We have been doing a loan workout programme with them, and we are debiting their monthly Federal Allocation Account (FAAC) accruals directly for the loans”, he stated.

“If a state government has taken N1 billion and is already in default, over six months, we debit them N150 million every month. So, we’ve started that programme.” He continued. So, every single loan that has been given out through any of our intervention programmes must be paid back.” He added

Yila, also mentioned that the CBN has put sentiment aside and is determined to collect the money it is owed. 

 “There is absolutely no mercy. We have started; we are in recovery mode. At the development finance department, we have begun to recover the loans”, he stated.

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Finance

Five Million Passengers Used Abuja Airport in 2021

More than five million passengers used Nnamdi Azikiwe International Airport, (NAIA) Abuja, between January and December 2021.

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More than five million passengers used Nnamdi Azikiwe International Airport, (NAIA) Abuja, between January and December 2021.

The Federal Airport Authority of Nigeria (FAAN) has disclosed that 5,323,905 passengers were processed through the Nnamdi Azikiwe International Airport (NAIA) Abuja in 2021. This represents a 37.23 per cent increase from 2020.

Speaking in Abuja at the celebration of the 40th anniversary of the Airport, the Managing Director of FAAN, Captain Hamisu Yadudu noted that the airport continued to wax stronger and higher. 

Captain Hamisu further noted that for easy movement of passengers, the Federal Government has completed and commissioned a world-class, brand-new international terminal. 

“I am glad that the airport has continued to grow in leaps and bounds since then. In the year 2021 for example, a total of 5,323,905 passengers were processed through the airport, which was a whopping 37.23% increase on the year 2020 figures. In terms of the facility upgrade, the airport also has been quite progressive”. The MD stated.

Hamisu also noted that Abuja airport was adjudged the Best Airport in Safety for the year 2018 by Airport Council International, Africa Region while the airport also received ACI’s Airport Service Quality Award in the year 2020, among several others laurels. 

The MD, therefore, laud the contributions of all staff, both past and present, as well as partners and stakeholders for the last 40 years.

Meanwhile, the Regional General Manager/ Airport Manager of NAIA, Abuja, Kabir Mohammed revealed that the Federal Executive Council (FEC) has approved the construction of a new runway at Abuja airport. 

He added that the new runway will come with a new terminal and a new fire station. 

Nnamdi Azikiwe International Airport (NAIA) is one of the most used and functional airports in Nigeria. It was established on the 29th of September, 1982. Sited at the seat of power, the airport is often used by the president, majority of the public office holders, visiting presidents and foreign diplomats. 

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Finance

World Bank Approves $750 Million Loan For Nigeria

The World Bank has approved a sum of $750 million to help Nigeria in its efforts to create more jobs. 

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The World Bank has approved a sum of $750 million to help Nigeria in its efforts to create more jobs. 

A statement released by the World Bank on Thursday commended the Nigerian government in its efforts to eliminate constraints in the business environment through the Presidential Enabling Business Environment Council (PEBEC). 

The world bank further noted that although Nigeria’s ability to attract both domestic and international foreign investment remains low when compared to its peers, the country is capable to drive private investment to high growth

According to the statement which was released on Thursday,  the World Bank nonetheless stated that the fund will help Nigeria to accelerate the implementation of critical actions that will improve the business-enabling environment in the country.

Investors King learnt that though Nigeria moved by 38 places on the global ranking of ease of doing business between 2016 and 2019 from 169 to 131, the previous gains seem to have been wiped out after the adverse effect of covid19 and the current economic challenges. 

Similarly, in June 2022, a publication by the World bank also decried the cumbersome customs procedures in Nigeria, especially at the Nigeria port. 

The report stated that Nigeria’s tariffs are among the highest in the world, especially for capital, intermediate and consumer goods. 

In recent times, there has been a series of complaints about the activities of the Nigerian Customs Service which could be detrimental to goods importation. Manufacturers and importers have an alleged arbitrary approach that the Nigeria Custom is using for duty valuation. 

They argued that it was not helpful for Customs to use the Consumer Price Index (CPI) to compute value and charge duty, given the high cost of local production.

Consumer Price Index is used to measure the overall change in consumer prices based on a representative basket of goods and services over time. 

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