- Analysts Seek Strict Implementation as N’Assembly Passes 2019 Budget
The National Assembly yesterday passed the 2019 budget after jerking it up by N90 billion from N8.83 trillion to N8.91 trillion.
The passage of the appropriation bill is coming more than four months after the budget estimate was presented to the joint sitting of the National Assembly by President Muhammadu Buhari last December.
However, beyond the passage of the 2019 Appropriation Bill into law by the National Assembly, some economists and operators have, in separate interviews, called for strict implementation of the budget.
The analysts have also stressed the need for the federal government to return to the January- December budget cycle.
A former Director General of the West African Institute for Financial and Economic Management (WAIFEM), Prof. Akpan Ekpo, on his part, called for closed monitoring of the budget implementation when signed into law by the president.
Ekpo said: “The problem with Nigeria is that we just allocate money, we don’t monitor the outcome. The main thing is to get the result of what you are putting money into.
“So, allocation is no longer the issue, but budget implementation. For example, if, last year, money was allocated for security, how was it implemented? What did they buy for security? Was it properly utilised?
“Again, we are in the fifth month, and we are still talking about the 2019 budget. A budget is supposed to be a tool for macro stability. Once it is delayed for five months, it creates a lot of distortions in the economy. So, going forward, we need to return to the December-January budget cycle.”
The Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, described the passage of the budget by the lawmakers as a welcome development.
He said: “We only hope that the president can quickly assent to it so that implementation can start in earnest.
“We hope that there is no major discrepancy between what was submitted and what was passed by the lawmakers, because over the years that has always been the bone of contention and has always delayed the signing of the budget.
“Going forward, as we move to the next phase of this administration, we should endeavour to return to the December-January budget cycle.”
His counterpart at the Nigeria Employers’ Consultative Assembly, Mr. Timothy Olawale, regretted the avoidable delays, which had become traditional with very serious adverse implications for the economy.
“We hope the executive and legislative arms will bury their differences and work together for the good of the nation and the people they have agreed to serve,” he said.
An analyst at Ecobank Nigeria, Mr. Kunle Ezun, said he anticipated that the lawmakers would have raised the budget to N10 trillion, considering the new minimum wage.
He explained: “The budget, as it is presently, is not enough to stimulate economic growth in Nigeria. An economy of over $500 billion, with a population that has a three per cent growth rate, you can’t be having budget of this size.
“I am sure that in the life of this budget, a supplementary budget would be submitted before the end of the year. We expect the government to increase spending this year if it is to achieve its three per cent GDP projection and to achieve that, they would need to spend more.”
N’Assembly Increases Budget by N90bn
Meanwhile, the National Assembly yesterday passed the 2019 budget after jerking it up by N90 billion from the N8.83 trillion budget size presented by President Buhari to N8.91trillion.
The breakdown of the N90 billion added to the budget include N23.67 billion earmarked as severance gratuity for outgoing legislators and their aides and induction of new legislators; N10 billion added as federal government intervention for tackling humanitarian crisis in Zamfara State, and additional N66 billion for security agencies including Army, Navy, Air Force, and the Police to tackle insecurity and all forms of crimes in the country.
The budget reports were presented at yesterday’s plenary of the two chambers by the Chairman of Senate committee on Appropriation, Senator Danjuma Goje (Gombe Central), and his counterpart in the House of Representatives, Hon. Mustapha Dawaki, before the two chambers dissolved into their respective Committees on Supply to consider the clause-by- clause report of the budget.
Presenting the budget report earlier, Goje explained that the N23.678 billion severance package for outgoing legislators also included induction programme and inauguration of the ninth assembly.
He added that in implementing the just approved N30,000 minimum wage for public servants, the N160 billion proposed as service-wide votes was appropriated for, under the public service wage adjustment for Ministries, Departments and Agencies (MDAs).
All the parameters upon which the budget estimates were based by the executive were retained by both Senate and House of Representatives.
The parameters are $60 per barrel oil price benchmark, 2.3 million barrel per day production level, N350 to one US dollar as exchange rate.
Major highlights of the N8.916 trillion budget passed by the National Assembly are N502.058 billion for Statutory Transfers; N500 billion for Special Intervention and N4.055 trillion for recurrent expenditure.
Others are N2.094 trillion for capital expenditure, N1.908 trillion as fiscal deficit within the ambit of 1.37 per cent deficit to GDP (Gross Domestic Product).
Within the service wide votes allocation in the approved budget, N5 billion is earmarked for payment of outstanding death benefit to civil servants and police personnel, N15 billion as additional support for universities and N65 billion for Presidential Amnesty Programme on reintegration of transformed ex- militants.
Within the capital expenditure component of the budget, N394.906 billion is earmarked for the Federal Ministry of Power, Works and Housing, N107.218 billion for the Ministry of Agriculture and Rural Development, N159.125 billion for Ministry of Defence and N92.178 billion for Ministry of Water Resources.
Others are N58.689 billion for Ministry of Education, N179.384 billion for Ministry of Transportation, N53.678 billion for Ministry of Interior and others.
However, in the recurrent expenditure component of the budget, the Ministry of Interior has the highest appropriated votes of N564.222 billion, followed by Ministry of Education with N463.395 billion.
Others include N502, 058,892,965 set aside for statutory transfers, N2,254,014,113,092 for debt servicing, N4,055,940,383,684 for recurrent (non-debt) expenditure, while N2,094,950,709,632 was earmarked as contribution to the development fund for capital expenditure for the year ending December 31, 2019.
Under the statutory transfers, the National Judicial Council (NJC) got N110,000,000,000; Niger Delta Development Commission (N100,188,921,129); Universal Basic Education (N112,471,421,836); National Assembly (N128,000,000,000); Public Complaint Commission (4,398,550,000,000); INEC (N45,500,000,000); National Human Rights Commission (N1,500,000,000); Independent Corrupt Practices and Related Offences (N5,380,108,639); Ministry of Niger Delta Affairs (N2,199,690,571); and Federal Ministry of Youth and Sports Development (N122,668,019,823).
Other statutory transfers are: Federal Ministry of Women Affairs (N1,521,618,086); Federal Ministry of Education (N463,395,832,111); Federal Ministry of Health (N315,717,344, 56); Federal Ministry of Environment (N18,774,175,241); and National Population Commission (N6,013,849,931).
Speaking after the Appropriation Bill passed third reading, Senate President, Dr. Bukola Saraki, said: “With passage of this bill for third reading today, the executive must ensure full implementation of the budget, sector by sector for the benefit and well- being of Nigerians.
In a related development, the House of Representatives at plenary also yesterday appropriated N8,916,964,099,373 for the 2019 fiscal year.
This followed the consideration of the report of the Hon. Mustapha Bala Dawaki-led Committee on Appropriation Bill for an Act to authorise the issue from the Consolidated Revenue Fund of the Federation the total sum of N8.916 trillion.
Briefing journalists about the processes that led to the conclusion of the budget, Dawaki said: “The budget has been passed by both chambers. Today, we are happy that the National Assembly has passed the budget at the end of April – on April 30, 2019. I believe that by Thursday it will be transmitted to the president for assent.
“The proposal that was laid before the National Assembly; there are two components of the budget, the exchange rate and crude oil production. All these items, the way they were presented by the President, the National Assembly sustained them. The crude oil production (output) was 2.3 million barrels per day and the exchange rate was N305 to a dollar. The benchmark was $60 per barrel. The National Assembly sustained all these; we did not change anything in the executive proposal.
“The only area that is affected is the area of deficit; the deficit sent to us was N1.906 trillion. There was an increment of N53 billion. The reason is that there were so many outstanding items that were not captured in the 2019 budget proposal. One, there was a resolution by the Senate that urged the federal government’s intervention in the security situation in Zamfara, to which N10 billion was proposed. We had to make that available in the capital supplementation under the Service Wide Vote.
“There is also a severance benefit of the outgoing legislators and legislative aides, which was not captured in the 2019 proposal. These benefits and expenses always happen in the transition year; that is, the fourth year when legislators are exiting and new ones are coming. We had to make a provision for that, which amounted to N24.6 billion. There is also salary arrears of legislative aides that have not been paid for the period of four years, for which N3 billion was provided.
“There is also an addition to the security agencies generally because of what is happening in Nigeria regarding the security situation. We still believe that providing more fund for them – it can never be enough – will make them to discharge their constitutional responsibilities diligently; and the various allowances to take care of their personnel. These are the areas where the National Assembly intervened.”
Bothered by the quantum of money allocated to the office of the National Security Adviser as against what came to sections of the National Assembly, Kano lawmaker, Hon. Damburam Nuhu, on his part, said it is important for Nigerians to note that one office got as much as N86 billion.
“My worry is, we are passing a budget of N86.8 billion for the office of the National Security Adviser alone and the entire budget of the National Assembly N128 billion. This comprises the recurrent plus the capital and everything, which is not only for legislators; it is also for the commission and all other aides and co.
“The people of the country need to know that if a single agency like the National Security Adviser’s office will be taking N86bn, then there is cause for worry; when people say perhaps we are taking too much in this place; that is why I am raising this observation for everybody to know,” he stated.
Other caveats in the budget include: “The department of government charged with the responsibility of certifying that due process have been complied with in the processing of implementation of projects shall ensure that all processes of approval are completed within the specified period as provided for in the Public Procurement Act.
“All accounting officers of Ministries, Parastatals and Departments of government, who control heads of expenditure, shall upon the coming into effect of this bill, furnish the National Assembly on quarterly basis, with detailed information on the Internally Generated Revenue (IGR) of the agency in any form whatsoever.
“All accounting officers of ministries, parastatals and departments of government, who control heads of expenditure, shall upon the coming into effect of this bill, furnish the National Assembly on quarterly basis, with detailed information on all foreign and domestic assistance received from any agency, persons or organisation in any form whatsoever. For the purpose of this bill the term ‘schedule’ includes the detailed estimates of expenditure.”
The House of Representatives also noted: “In line with the provisions of Section 318 of the constitution of the Federal Republic of Nigeria, 1999, as amended, this bill will run for a course of 12 months starting from the date it is assented into law.
President Buhari had on Wednesday, December 19, 2018 unveiled a federal budget proposal of N8.83 trillion for the 2019 fiscal year.
More Stimulus is Welcomed – But What’s Needed is Smarter Stimulus
Stock markets are cautiously upbeat that a stimulus package can be agreed in the U.S. before the November 3 election – but even if it does happen, it’s likely to be a “short-lived sticking plaster” that masks the major long-term issue: unemployment.
This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organizations.
It comes as House Speaker Nancy Pelosi and Secretary Steven Mnuchin spoke again on Tuesday – the deadline imposed by the Speaker – as the two sides try and strike a deal over another significant fiscal stimulus package ahead of the election.
Earlier this month, Republican senators slammed a $1.8 trillion offer made by the Trump administration to the Democrats as too big, an offer Ms Pelosi dismissed as “insufficient.”
Discussions are due to continue on Wednesday upon the Secretary’s return to Washington.
Nigel Green warns: “No doubt, a breakthrough of the deadlock that would allow for more stimulus would provide a lifeline to millions and millions of Americans.
“U.S. and global markets are, generally, cautiously optimistic that a deal can be agreed by the two sides.
“There’s a sentiment that something will have to materialize – and this is fueling markets.
“However, the window of opportunity is closing and it is not yet a done deal.
“If talks collapse, the markets will inevitably be disappointed and there’s likely to be a short-lived sell-off.”
He continues: “Even if Pelosi and Mnuchin can get another massive stimulus package agreed, and U.S. and global markets rise, this is likely to serve only as a sticking plaster.
“A market rally is going to be difficult to be sustained due to the enormous uncertainty created by other factors including the presidential election, a possible looming constitutional crisis in the world’s largest economy, and the growing Covid-19 infections in America and other major economies.”
The deVere CEO goes on to add: “Getting over the political impasse would help boost the economy and deliver much-needed money to Americans, but the major, lasting issue triggered by the pandemic remains: mass unemployment, which will hit demand, growth and investment.
“As such, a swift rebound for the U.S. economy is doubtful as unemployment claims continue to rise.
“That V-shaped recovery talked about by so many? That will be impossible with so many millions facing long-term unemployment.”
Whilst it is certainly positive that unemployment has fallen from 15% in the U.S. to 11% in recent weeks, it should be remembered that this is still at the same rate of the 2008 crash.
In addition, a second wave of soaring unemployment could hit imminently as some support measures wind-down and business’ and households’ savings and resources have been already run-down.
Mr Green concludes: “Near-term support for sure, but a long-term strategy – a multi-year vision – for growth and investment is essential.
“What’s needed is not just more stimulus, but smarter stimulus.”
The Highest Corporation Taxes Around the World and the Main Drivers Behind them
Taxes Pay by Corporation Around the World and the Main Drivers Behind them
While corporation tax rates are influenced by the country’s definition, there’s clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country.
The top five richest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08%, Norway at 22%, Iceland at 20%, Switzerland at 18% and Ireland at 12.5%. It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.
On average, Africa has the highest corporation tax rate throughout the world’s continents at 28.45% and South America, the second highest with an average rate of 27.63%. However, Europe stands at the lowest rate of 20.27%. Does this contradict the claim that developed countries pay higher tax?
OECD explained that corporation tax plays a key part in government revenue. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. Let’s take a closer look at two continents, South America and Africa, paying the highest corporation tax rates in the world.
South America has most countries in highest corporation tax top 10
According to data analysed, Brazil and Venezuela have the highest corporation tax at 34%, followed closely by Colombia at 33%, and Argentina at 30%, making South America the continent with the most countries in the top 10 who pay the highest corporation tax.
It is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. According to research, South America is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business friendly and others are harder to penetrate.
Africa: the continent with the highest average corporation tax
Being the poorest continent in the world, Africa unsurprisingly has the highest average corporation tax at 28.45%. With the highest in this data being Zambia at 35% and the lowest being Libya and Madagascar at 20%, South Africa stands roughly in the middle at 28%, slightly above average for Africa overall. Does this mean that South Africa is the safest bet for business?
South Africa is one of Africa’s largest economies, with 54 diverse countries in terms of political stability, development, growth, and population. As South Africa has been a relatively slow growth area over the years, corporation tax dropped from 34.55% in 2012 to the current rate — but was this effective? GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa doesn’t currently have. Furthermore, South Africa’s government debt to GDP sits roughly in the middle of the continent’s countries — is this influencing their corporate tax rate?
|Puerto Rico||North America||37.5|
|Sri Lanka||Asia Pacific||28|
|New Zealand||Asia Pacific||28|
|South Korea||Asia Pacific||25|
|United States||North America||21|
|Saudi Arabia||Middle East||20|
|Hong Kong||Asia Pacific||16.5|
Lucy Desai is a content writer at QuickBooks, a global company offering the world’s leading accountancy software.
Nigeria’s Crude Oil Production Declined to 1.31mbpd in September
Nigeria’s Crude Oil Output Declined from 1.37mbpd in August to 1.31mbpd in September
The Organisation of the Petroleum Exporting Countries (OPEC) reported that Nigeria’s crude oil production declined by 58,000 barrels per day in the Month of September when compared to the nation’s oil production of August.
In its latest oil market report, the cartel said Nigeria produced 1.37 million barrels per day in the month of August but that number declined by 58,000 to 1.31 million barrels per day in September. Bringing the total decline for the 30 days of september to 1.74 million barrels.
On oil price movement in September, the organisation said prices settled lower in the month under review after four consecutive months of gains.
OPEC Reference Basket declined by 8.1 percent or $3.65 in September to $41.54 per barrel, while it moderated to $40.62 per barrel from the year-to-date.
Commenting on the recent changed in Nigeria’s monetary policy rate, the oil cartel said “the recent cut is a part of the policy to continue supporting the economy that plunged 6.1 per cent in the second quarter hit by the global pandemic.
“Nevertheless, Nigeria’s annual inflation rate surged to the highest rate since March 2018 in August 2020, as it rose to 13.22 per cent year-on-year from 12.82 per in in July.”
Oil prices sustained bullish trend on Thursday after data showed U.S oil inventories declined last week.
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