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FG Projects 50% Decline in Monthly Revenue Allocations

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By Tony Obiechina, Abuja


Following significant drops in the global crude oil prices, the Federal Government on Monday projected that monthly revenue allocations to the three tiers of government may decline to below N400 billion, in the next three to six months.


This is against the N888.

5 billion projected in the 2020 Appropriation Act monthly Federation Account Allocation Committee (FAAC) disbursements to the Federal and State Governments.


Minister Finance, Budget and National Planning, Mrs Zainab Ahmed made the projections at a press conference  while announcing government stimulus to ameliorate the COVID 19 pandemic.


She said based on the fiscal assumptions underpinning the 2020 Appropriation Act, monthly federation account (FAAC) disbursements to the federal and state governments were projected at N888.

5 billion.

The Minister however, explained that “due to the significant drop in international oil prices, FAAC monthly disbursements have declined in recent months to N716.3 billion in January and N647.4 billion in February and N581billion in March 2020”.


The Minister said, “Our experience shows that monthly FAAC receipts must average at least N650 billion for the federal and state governments to meet their current obligations. Unfortunately, we project that monthly receipts may decline to below N400 billion, over the next three to six months.”
According to her, “In order to address the emerging fiscal risks, Mr. President has given a number of approvals. He has approved that the sum of US$150 million be withdrawn from the Nigeria Sovereign Investment Authority (NSIA) Stabilisation Fund to support the June 2020 FAAC disbursement. The Stabilisation Fund was created for such emergencies and is to be utilised for this purpose.


“Mr. President has also approved that the Federal Ministry of Finance, Budget and National Planning should engage with the Central Bank of Nigeria (CBN) to agree on a debt and interest moratorium for states on federal government and CBN-funded loans, in order to create fiscal space for the states, given the projected shortfalls in FAAC allocations. 


“Accordingly, once monthly average FAAC receipts fall below a specific threshold, interest and capital payments by states shall be suspended till monthly average FAAC receipts exceed the threshold. The details of this moratorium will be expeditiously worked out with a view to submitting the final proposals for Mr. President’s guidance and final approvals,” Ahmed stated.


In her words: “The intervention is vital to create fiscal space for the States, as they deal with the health and economic impact of the crisis. States will also be encouraged to explore similar arrangements on their outstanding debts to commercial banks”.


On ensuring adequate supplies of essential food items and critical medical supplies, as well as appropriate stewardship of donated items and funds, the Minister noted that the responses to the COVID-19 Pandemic and the impact of the 14-days’ lockdown would have a significant impact on the transportation, distribution and availability of essential food items and medical supplies. 


 According to her, the government recognises the adverse implications of these extraordinary measures for our market women, farmers, traders and smaller businesses.


Referring to the Finance Act, 2019, Ahmed said “The Finance Act, 2019 fortuitously provided significant tax relief for micro, small and medium-sized enterprises (MSMEs). Corporate tax rates for medium-sized enterprise were cut from 30 percent to 20 percent, and SMEs are completely exempt from corporate taxation. 
“This tax relief will be invaluable for businesses in the large informal sector that earn N25 million or less in a financial year.

The Finance Act, 2019 has also expanded the value added tax (VAT) exemption list for essential food, medical supplies and other basic items that are critical in our efforts to address the COVID-19 pandemic.”


Acknowledging the contributions of public-spirited Nigerians towards the fight against the pandemic, the Minister said: “We deeply appreciate the overwhelming show of solidarity by public-spirited individuals and corporate bodies towards combating the COVID-19 pandemic through financial and material contributions.


” In this regard, the government recognises its responsibility to put an adequate framework in place for the collection, management and reporting of these donations. Accordingly, the Federal Ministry of Finance, Budget and National Planning has developed a comprehensive framework for the transparent management of the contributions.” 
She said in the interim, “Mr. President has also approved the opening of five commercial bank accounts as transit accounts to the treasury single account (TSA)”.


 This, according to her, is in order to better mobilise donations from the generality of the people and corporate bodies across the nation, create flexibility and make it easy for citizens that want to donate while maintaining the sanctity of the TSA. 
She said, “Going forward, the COVID-19 donor accounts, which will form part of the existing TSA arrangement, have been opened with the following banks: Zenith bank, Access bank, Guaranty Trust bank, UBA; and First bank. “Other banks will be included in this initiative as the need arises. These accounts will be linked to the main TSA for ease of monitoring and reporting. 


“Finally, we will be issuing circulars and Ministerial Orders to ensure that charitable donations by benevolent companies to support our COVID-19 pandemic efforts are tax deductible, in line with Section 25 of the Companies Income Tax Act”.
Also considering the place of the amendment of 2020 Appropriation Act, Ahmed said: “The 2020 Appropriation Act was based on certain fiscal assumptions, which we have been compelled to revisit, given the emerging economic realities. 


“Specifically, projected oil revenues have been significantly affected in that: Dated Brent oil prices fell to as low as US$19.125/barrel (03.04.2020) as compared with the 2020 budget benchmark of US$57/barrel; and oil production in 2020 year-to-date is 1.9mbpd (before the current crises) as compared with the 2020 budget’s projection of 2.18mbpd.”


“We are therefore revising the benchmark oil price for 2020 to US$30/barrel and oil production to 1.7mbpd. We have similarly had to adjust downwards our non-oil revenue projections, including various tax and customs receipts, as well as proceeds of privatisation exercises. 


“In this regard, the Budget Office is currently working on amendments to the medium-term expenditure framework (MTEP 2020-2022) and the 2020 Appropriation Act. The proposed amended budget will provide for the COVID-19 Crisis Intervention Fund and other adjustments required, due to the decline in international oil prices. 


“We have also commenced consultations with the leadership and key Committees of the National Assembly to discuss our plans, such that once the Executive’s 2020 Amendment Budget is completed, we shall expeditiously seek presidential and legislative approvals for this revised appropriation”, she added. 

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Economy

Value Addition is new Standard in Mining Operations – Alake

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The Minister of Solid Minerals Development, Dr Dele Alake has declared value addition as the new indispensable standard for mining operations in the country.

Alake made the declaration in a statement issued by his Special Assistant on Media, Mr Segun Tomori, on Tuesday in Abuja.

The minister had earlier said that the federal government had resolved to ensure compliance to value addition before permitting investors to operate.

He said that his seven-point agenda for the ministry had placed the mining sector on the global front burner since assuming office, which had generated renewed interest from the international community in Nigeria`s mineral resources.

According to the statement, the minister lauded a mining company, African Natural Resources and Mines Ltd.

(ANRML), during an inspection tour in Kaduna State, for its 600 million dollar facility dedicated to the mining and processing of magnetite iron-ore.

He described the move as in line with the government`s resolve for value addition, which is especially apt given President Bola Tinubu`s quest to develop the solid minerals, to boost Nigeria`s economic profile and to meet the global upsurge in energy transition.

“The company aligns with our vision of value addition and beneficiation through its processing of iron-ore, and I urge other mining companies to take a cue from them, “ he said.

He reiterated the government`s commitment to abstain from granting mining licenses to companies that lack the necessary plans for value addition.

The minister acknowledged that resilience, courage and laying a solid foundation were critical in contributing to the company success.

He added that such factors also serve as guidelines for President Tinubu`s administration in its efforts for economic transformation.

“ We have set our minds in this administration and invariably in Nigeria to achieve success, that is why Mr President is restructuring the economy.

“When this company (ANRML) started seven years ago, we saw one of the foundations through the video documentary, the amount of concrete that went in to erect a foundation, just to carry a giant edifice.

“That is what we are going through. When we get through the gestation period, the results will manifest, and it will herald prosperity, “he said.

The minister had stated that no license would be granted to companies wishing to enter the mineral sector without presenting a plan for value addition, such as processing and refining which has multiplier effect on the economy. (NAN)

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Economy

Life Insurance Records 95% Net Claims in Q4 2023-NAICOM

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The National Insurance Commission (NAICOM) says Life insurance business recorded about 95 per cent net claims of the total claims in the fourth quarter of 2023.

A report by NAICOM in Abuja on Tuesday hinted that the record was due to the direct reflection of the ongoing regulatory measures by the Commission regarding claims settlements.

NAICOM said the insurance market average stood at about 71.

4 per cent of the N536.
5 billion gross claims reported at the close of the fourth quarter.

The Commission said the market also recorded retention of about 87.7 per cent for the life business, 54 per cent for non-life while the aggregate market average retention stood at 66.

7 per cent for the period.

It showed that the insurance industry sustained its progressive trend of positive market performance at the close of 2023 fourth quarter.

According to NAICOM, the insurance market recorded a milestone growth to close at N1.003 trillion, representing about 27 per cent growth compared to the N790 billion recorded in 2022.

”Major growth drivers in the non-life segment of the market were oil and gas and fire Insurances contributing 27.3 per cent and 24.1 per cent respectively.

”In a direct reflection to the “no-premium no-cover” policy of the Commission, the outstanding premium continues to decline.

”The premium posted 1.6 per cent as outstanding of all the premiums generated in the market during the period.

”Statistics also shows that the market recorded total assets of about N2.67trillion and capitalisation of N851billion in 2023,” NAICOM said. (NAN)

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Economy

No Mining License without Mineral Value Addition Plans-Alake Warns

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The Minister of Solid Minerals Development, Dr Dele Alake has warned that no mining license would be issued to prospective investors without requisite plans for value addition on minerals.

Alake gave the warning in a statement  by his Special Assistant on Media, Segun Tomori on Tuesday.

He said the Federal Government had resolved to ensure compliance before permitting investors to operate.

He said that his Seven -Point Agenda for the ministry had placed the mining sector on global front burner since assuming office, which had generated renewed interest from the international community in Nigeria’s mineral resources.

He said the support of the executive and the legislature had enabled the ministry to showcase the solid minerals sector globally, resulting in his election as the Chairman of the Africa Minerals Strategy Group (AMSG) at the Future Minerals Forum in Riyadh, Saudi Arabia.

According to him, with the pact that led to the formation of the AMSG, there is now unity of purpose on the African continent regarding the issue of local value addition.

“We are no longer going to allow anybody or license any company that wants to go into the mineral sector without giving us a plan for local value addition,  like processing, refining and this has a multiplier effect on the economy.

“It instantly generates employment rather than a few people carting away lithium, gold, and the likes to other countries to sell.

“These minerals must now be processed in Nigeria, creating more value and beneficiation for local communities where they are sourced, ” he said.

Reports says that the minister had earlier received members of the House Committee on Solid Minerals who were on oversight visit to his office.

The minister commended the lawmakers for their support in repositioning the mining sector, stressing that boosting the economic profile of Nigeria required joint task by both the executive and legislature.

He acknowledged the significant contribution of sub-nationals to mining development, emphasising that state chairmen of  Mineral Resources and Environmental Management Committee (MIREMCO) and five committee members were nominated by state governments. (NAN)

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