Amidst gross inefficiencies and the dilapidated state of port infrastructure in Nigeria, the
Nigeria Customs Service (NCS) has managed to sustain an increase in duties collection in H1 2019.
According to reports in the local media, the Nigerian customs recorded import duties revenue of N418.3bn in H1 2019, representing an increase of 18% y/y when compared to H1 2018 (N354.5bn). We also recall that the NCS announced a record revenue collection of N1.2tn (Import, Export and Excise duties) ahead of the target set by the Federal government in 2018.
The rise in customs revenue comes as the federal government continues to put in efforts to
diversify the government’s revenue base from the volatile oil revenue. We believe the improvement in trade activities as shown by Q1 2019 foreign trade statistics wherein total
trade grew by 7.5% further underscores the revenue growth recorded by the customs authorities.
Additionally, the implementation of Nigerian Integrated Customs Information
System II (NCIS II)- aimed at trade facilitation and tariff processing should have supported
the growth in customs revenue. Indeed, the customs authorities have since claimed this new technology has helped in improving efficiency in the tariff collection process and blocking leakages.
However, market participants such as the freight forwarders and customs brokers have
lamented multiple checks and increasing tariffs on imports into the country. We recall that
the customs authorities, as part of its efforts in driving revenue growth recently reviewed
the official exchange rate for duties payment from N306/US$ to N326/US$.
While this is expected to have a positive impact on customs revenue, we believe consumers will bear the brunt as importers shift the burden to consumers in the form of higher prices.
Despite the improved efficiency claimed by the port officials, traders have continued to
lament how multiple checks prolong clearing of goods. The traders after making payment
for duties have to wait for an extended number of days before the customs officials confirm
Additionally, congestion at the country’s major port in Apapa coupled with
dilapidated road infrastructure have increased the time it takes to move goods in and out of
the port after days in the clearing system.
Although foreign trade data has shown consistent improvement in trade volume in recent
years, tariff hikes and port infrastructure inefficiencies have seen Nigeria lose business to
In our opinion, it is imperative for the federal government to put in place the required infrastructure such as good road networks complemented with a rejuvenation of other ports in the country, in a bid to reduce congestion at the Apapa port. We believe this would drive faster growth in trade volumes and consequently improve revenue. This should have a better economic impact on the country as opposed to the current practice of multiple taxations and tariff hikes.
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BREAKING: Former minister and senator, Aisha Al-Hassan is dead
Ex-Women Affairs minister, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead
A former Minister for Women Affairs and ex-Governorship Candidate in Taraba State, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead.
According to media reports she died in a hospital on Friday in Cairo, Egypt at the age of 61.
Al-Hassan, who was a former senator of the Federal Republic of Nigeria from Taraba North Senatorial District, was the All Progressive Congress (APC) Governorship Candidate for Taraba in the 2015 general elections.
She later contested for the same seat on the platform of the United Democratic Party in the 2019 general elections after resigning from APC and as a minister in the administration of President Muhammadu Buhari on July 27, 2018.
The former senator was born on the 16th of September, 1959 in Jalingo, Taraba State, to Alhaji Abubakar Ibrahim, Sarkin Ayukan Muri.
Aisha Jummai Al-Hassan attended Muhammed Nya Primary School, Jalingo and LEA Primary School, Tudun Wada, Kaduna before proceeding to Saint Faith College (now GGSS) Kawo Kaduna where she studied between January 1973 and June 1977.
Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings
Moody’s explained why it might downgrade First Bank’s ratings.
Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.
Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’
In a quote, Moody’s said:
“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”
The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.
Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.
“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.
Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”
The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.
“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”
Will Moody’s downgrade First Bank?
The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.
“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”
Moody’s, however, poured water on any optimism around a rating upgrade.
Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.
Why is rating important?
Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.
Nairametrics | Company Earnings
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- FCMB Group Plc appoints Muibat Ijaiya as Director.
- Afromedia Plc reports a loss after tax of N27.3 million in Q1 2021.
- 2021 Q1 Results: FTN Cocoa Processor Plc reports loss after tax of N162.21 million
- Tantalizers Plc reports a loss after tax of N97.75 million in FY 2020 in Q1 2021.
- Courteville Business Solutions Plc proposes final dividend of 3 kobo per share for FY 2020.