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Business News

Governors may push for 42% of federal allocation in new sharing formula

It has been revealed that state governors in Nigeria may request 40% of the total federal allocation, as the federal government is reportedly set to inaugurate the allocation review committee in the coming week.

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President Buhari signing 2019 Budget, List of President Buhari's Cabinet members, Ministries Departments and Agencies of Nigeria, Governors federal allocation

State governors in Nigeria may request for 42% share of the total federal allocation, as the Federal Government finalises plans to inaugurate the Revenue Allocation Review Committee in the coming week.

According to a source, there are strong indications that state governors will revert to and adopt the recommendation of an earlier report submitted by a sub-committee previously set up in 2011, to demand 42% of the federal allocation as against the 26.72% they currently get.

The details: Ahead of the review of the revenue sharing formula, which is expected to start next week, governors are preparing to also ask the Federal Government to slash its share from the current 52.68% to 37%, while requesting that the share of local governments be increased from the current 20.60% to 23% in the new formula.

The source further disclosed that, “A committee was set up by the Nigerian Governors’ Forum and that proposal on the revenue sharing formula is the position of the Forum. The sub-committee met as far back as 2011 and it was made up of six governors, headed by the then Governor of Lagos State, Mr Babatunde Fashola.

“The other members of the sub-committee were Murtala Nyako of Adamawa State; Sullivan Chime of Enugu State; Babangida Aliyu of Niger State; Rotimi Amaechi of Rivers State and Aliyu Wamakko of Sokoto State.

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“From the report they submitted to the Forum, they recommended that the Federal Government should now get 35%; states should get 42% and local government should get 23%. That was the recommendation and that is what we have continued to push for.”

The back story: Earlier on Tuesday, the Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Mr Elias Mbam, revealed that the commission would set up a committee in the coming week to review the revenue sharing formula for federal, states and local governments due to the current economic realities.

[READ MORE: FG to review revenue sharing formula]

  • The RMAFC chairman revealed that the purpose of the review is to expand and increase the scope of revenue collection in the country and allow states and local governments to have a bigger share of the “national cake.”
  • The current revenue allocation formula, which was designed during the administration of former President Olusegun Obasanjo, recommended that the Federal Government gets 52.68%, while the states and local governments will receive 26.72% and 20.60% of the total amount respectively.
  • Similarly, the 13% federally collected revenue from oil and gas is given to the oil-producing states as derivation revenue to compensate for ecological disasters arising from oil production.

The Governors’ concern: Meanwhile, governors are reportedly concerned about the minimum wage implementation, insisting that for the new N30,000 minimum wage to see the light of the day, the allocation must accommodate the states’ financial short-coming.

The governors noted that managing states today is becoming very expensive and the responsibility is on state governments to inject funds to help the agencies function. The source reportedly disclosed the following that,

“The cost of securing the states has simply become more expensive and the burden is now heavy on the states. The population has also increased over time and these people are in the respective states.

“During the negotiation for this minimum wage, the governors again presented their position. They were initially reluctant to agree to the N30,000 but eventually gave in but stated, that if it (minimum wage) must be implemented with ease, there must be an adjustment in the revenue sharing formula. The report was again sent to the Federal Government but nothing was done about it.”

In the meantime, members of the Nigerian Governors’ Forum (NGF) are ready to share their perspectives with the Federal Government on how to have a new revenue formula with the revenue commission.

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Over time, the allocation formula has generated controversies and remained a key factor in the clamour for restructuring in the country.

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[READ ALSO: FAAC disburses N617 billion as South-South scoops highest allocation]

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Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Economy & Politics

Senate President lists benefits of PIB as public hearing on the bill opens

Ahmad Lawan has listed the benefits of the PIB presently before the National Assembly for consideration.

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Senate president warns about dangers of youth unemployment, National Assembly to ensure youth empowerment schemes are realized - Lawan

The President of the Senate, Ahmad Lawan, has said that the Petroleum Industry Bill (PIB) which is presently before the National Assembly for consideration and passage will ensure that Nigerians benefit optimally from crude oil production and sale of fossil fuel reserves.

According to a statement that was issued by the Special Assistant, Press to the Senate President, Tabiowo Ezrel, this disclosure was made by Lawan, while declaring open a 2-day public hearing on the bill by the National Assembly on Monday, January 25, 2021.

The Senate President pointed out that the National Assembly in its consideration of the piece of legislation would ensure that the bill when passed into law, guarantees improved revenue earnings for the country.

What the Senate President is saying

Lawan in his statement said, ‘’Let me say this, we (National Assembly) will pass this bill not without ensuring that it is a bill that satisfies certain conditions. Nigeria is blessed with these resources, we want Nigeria to benefit optimally from them. In fact, we are in a hurry because we have lost so many years of benefits that we could have had.’’

He, however, noted that the non-passage of the PIB had been a major drag on the industry over the years, significantly limiting its ability to attract both local and foreign capital at a time when many other countries are scrambling to exploit their oil and gas resources.

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Going further, Lawan said, ‘’The mere knowledge that the nation’s oil industry is still being governed by laws enacted more than 50 years ago is ludicrous and extremely disappointing.

‘’As legislators, we will strive to deliver a Bill that will enhance the growth of our oil and gas industry, modernize our fiscal system and enhance competitiveness, while creating harmony for all stakeholders. This is a promise we have made and that we shall achieve.’’

‘’Nigeria must have an oil and gas industry that benefits its people. Equally, our oil and gas industry must be competitive. We must create a sustainable investment climate, where business in the sector will flourish,’’ he said.

He also added that the determination by the legislature to pass the Bill is driven by the need to overhaul a system that has refused to operate optimally in line with global standards, resulting in loss of continental competitiveness, transparency, accountability, good governance and economic loss for the petroleum industry and the country.

The Different chapters of the PIB

The Senate President revealed that the PIB comprises of 4 chapters that outline;

  • How to create efficient and effective governing institutions with clear and separate roles for the petroleum industry,
  • Establish a framework for the creation of a commercially oriented and profit-driven National Petroleum Company,
  • Promote transparency, good governance and accountability in the administration of the petroleum resources of Nigeria among others.

Other benefits of the PIB

He also noted that the PIB upon passage and assent into law by the President;

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  • Would foster sustainable prosperity within host communities, provide direct social and economic benefits from petroleum operations to host communities,
  • Create a framework to support the development of host communities among others
  • Establish a progressive fiscal framework that encourages investment in the Nigerian Petroleum Industry,
  • Balancing rewards with risk and enhancing revenues to the Federal Government of Nigeria,
  • Provide a forward-looking fiscal framework that is based on core principles of clarity, dynamism and fiscal rules of general applications,
  • Establish a fiscal framework that expands the revenue base of the Federal Government while ensuring a fair return to investors.

Lawan assured that the National Assembly during the public hearing would deal with all issues relating to the oil and gas industry with thoroughness and effectiveness so as to avert colossal losses to the nation’s economy.

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Spotlight Stories

Nigeria’s Sparkle partners with Network International for virtual and physical payment cards

Nigeria’s Sparkle signs with payment experts Network International for virtual and physical payment cards.

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Nigerian fintech startup Sparkle, a digital ecosystem providing financial, lifestyle, and business support services, has partnered with Network International, to power its recently launched payment card offering.

This is coming months after collaborating with Visa to enable them to issue Visa cards to its users.

Founded by former Diamond Bank chief executive officer (CEO) and tech entrepreneur, Uzoma Dozie with the aim of providing seamless solutions to Nigerian individuals, SMEs, and retailers. Sparkle’s new virtual and plastic debit cards are targeted at SMEs and upwardly mobile, unbanked consumers across Nigeria, bringing them the convenience, flexibility, safety, and security of cashless payments across various channels.

What they are saying

  • According to Uzoma Dozie, “Digital adoption and customer experience are going to be dependent on the people, platform, and partnership. In the area of payment processing and data insights, Network International brings that to our platform, and we are truly excited about the future of the partnership and what it means for the enablement and transformational impact for Nigerians anywhere in the world who are connected to the Sparkle platform.”
  • Also speaking on this new partnership, Andrew Key, Managing Director – Africa, Network International, said, “We are delighted to strengthen our strategic alliance with Sparkle as it seeks to further disrupt the payments offering to consumers and retailers in Nigeria. Building on our two decades of experience within payments and deep insight of the African market, we look forward to deploying our trusted platform and best-in-class technology towards supporting digital and financial inclusion of Nigerian consumers and businesses.”

Sparkles’ collaboration with Network International is based on their shared commitment to further the adoption of digital payments among emerging markets across Africa and the Middle East. Its users can make in-app payments with the new virtual card, and also make e-commerce transactions with the cards attached to their Sparkle profile.

This collaboration will offer Sparkle access to the Network’s years of experience and expertise in creating card solutions for emerging markets. The company can also benefit from Network’s advanced digital infrastructure and robust security protocols, avoiding the need to invest in expensive card management infrastructure.

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Appointments

AFEX appoints Kamaldeen Raji as MD of AFEX Fair Trade Limited

Mr Kamaldeen Raji has been appointed as the Managing Director of AFEX Fair Trade Limited.

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AFEX appoints Kamaldeen Raji as Managing Director of AFEX Fair Trade Limited

Leading commodities market player, AFEX has announced the appointment of Kamaldeen Raji as the Managing Director of AFEX Fair Trade Limited (AFEX Fair Trade).

This information was contained in an exclusive disclosure sent to Nairametrics today the 25th of January 2021.

According to the information contained in the press statement, the appointment is in line with AFEX’s mandate of strengthening trade infrastructure for Nigeria’s commodities market, while providing support for smallholder farmers, who are key players in the agricultural value chain.

What they are saying

The CEO of AFEX, Ayodeji Balogun, who commented on the appointment of the New Managing Director, said:

  • “I am delighted to have Kamaldeen stepping into the leadership at AFEX as the Managing Director of AFEX Fair Trade. This is in alignment with AFEX’s five-year strategy that consolidates the best aspects of our business into business units that will deliver impressive wins in trading, financing and market system development for Africa’s commodities market.”

Kamaldeen Raji, Managing Director, AFEX Fair Trade limited said:

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  • “AFEX has delivered on its promise for a working commodities exchange model for West Africa after six years of operations in Nigeria. I am excited to join the executive leadership to contribute to our next five years as a business.”
  • “As I drive our strategy to reach one million farmers and expand our national storage capacity to 500,000 MT over the next five years, AFEX Fair Trade will build on the success of previous years.”
  • “Through AFEX Fair Trade, AFEX will continue to contribute to impact metrics that align with the United Nation’s Sustainable Development Goals (SDGs) 1, 2, 5, and 8; no poverty, zero hunger, gender equality, and decent work and economic growth.”

Kamaldeen prior to his appointment as the Managing Director of AFEX Fair Trade Limited had previously served in Commercial Manager’s capacity for AFEX. This position monitored all commercial partnerships with a focus to drive revenue activities and growth opportunities.

It is important to note that, AFEX Fair Trade is one of AFEX’s business units, responsible for commodities trading and storage, the company is charged with the task of providing extension services to farmers in a bid to boost their productivity and incomes across all segments of the agricultural value chain.

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