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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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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.

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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,

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“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.

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“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.

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

[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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Business News

CBN’s MPC unlikely to cut rates, even as Nigeria’s foreign reserves hit $36.16 billion

Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira.

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CBN, GTBank, CBN disagrees with IMF, says land border closure boosting local production, Border closure: Emefiele says Benin, others must engage Nigeria before borders are reopened , bvn 2.0, CBN reveals banks’ foreign assets rise to N14.19 trillion in 2019

The CBN’s Monetary Policy Committee (MPC) is expected to leave the interest rate of 13.5% unchanged during its meeting later today.

The projection is coming on the heels of macroeconomic fundamentals released by the National Bureau of Statistics (NBS), which showed that inflation rose to 12.34%; its seventh consecutive monthly rise and highest level since April 2018.

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Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira. Therefore, in order to minimise the risk of exacerbating inflationary pressures, the CBN is unlikely to further cut rates. This possible outcome from the MPC meeting will help stimulate economic growth, just like it did in 2019.

Meanwhile, despite the foreign exchange liquidity crisis being experienced in the currency spot market, data obtained from CBN revealed that the country’s foreign exchange reserves have further increased to $36.16 billion (Gross Estimate) as of 28th of May, 2020.

(READ MORE: Naira depreciates to N460/$1 at the parallel market, despite improved liquidity)

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The surge in Nigeria’s external reserves is due to the fact that the price of crude had gained more than 40% since the deadly COVID-19 pandemic started, coupled with reports that foreign investors are returning to Nigeria. The disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to CBN has also been a contributing factor.

Nigeria’s foreign exchange reserves hit $36.16 billion, Nigeria’s Central Bank MPC meet today

Recall that the CBN Governor, Godwin Emefiele, had promised more liquidity in the currency market, assuring that all genuine dollar demands would be met.

However, an Interest rate expert, Ola Oladele, during a phone chat with Nairametrics, advised that the CBN should keep its word by boosting Nigeria’s Forex supply as the persistent downtrend in the currency black market continues. She said:

“The depreciation of the naira in the parallel market as a result of low supply of FX from official sources and less optimistic outlook on the economy due to falling oil prices.

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“The BDCs haven’t received supply from official sources since our borders were closed and the crash in oil prices has made natural sellers of FX more cautious.

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“We hope that the recent statements by the regulator will restore confidence and subsequently, supply to the market.”

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Economy & Politics

Fourth Mainland Bridge to begin before December

The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.

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Fourth Mainland Bridge to begin before the end of 2020

The Lagos state government has announced that in line with its vision for a smart city, work on the Fourth Mainland Bridge, will commence before the end of year 2020.

In addition to this, construction of the Lekki Regional road will also commence within the next seven months.

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Special Adviser to the Lagos State Governor on Works and Infrastructure, Engr. Aramide Adeyoye disclosed this during the Ministerial Press briefing organised by the State Government  

The architectural design done by NLE works proposed a design speed of 140km on the bridge, with 8 interchanges to facilitate effective interconnectivity between different parts of the State, and a Four-lane dual carriageway with each comprising 3 lanes and 2metres hard shoulder on each side.

(READ MORE: British High Commission releases flight schedule for final evacuation)

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The bridge is also designed to be a two-level bridge – the upper level will function as a means for vehicular traffic, while the lower level will stimulate and accommodate pedestrian, social, commercial and cultural interactions.

The proposed 38 km long fourth mainland bridge is expected to run through Lekki, Langbasa and Baiyeiku towns along the shoreline of the Lagos Lagoon estuaries, further running through Igbogbo River Basin and crossing the Lagos Lagoon estuaries to Itamaga Area in Ikorodu. It will then cross the Itoikin road and the Ikorodu – Sagamu Road to connect Isawo inward Lagos Ibadan Expressway at Ojodu Berger axis.

All of these routes are known to be traffic prone areas, and the construction of the bridge will ease traffic on these routes, thus reducing commute time for residents.

Recall that in April, the state government had shortlisted about 10 firms out of the 32 that expressed interest in the construction of the fourth mainland bridge. The bridge was estimated to be worth about N844 billion.

According to Engr. Adeyoye, the 10km long Lekki regional road will span “Victoria Garden City Scheme 1, connect VGC, Ikate Elegushi, Ikota, Chevron Drive, Ajiran, Pinnock Beach Estate, Gracefield Island and Orange Island, up to Freedom Road to Freedom Way at Lekki”

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Upon completion, this road will greatly ease traffic along the axis, serving as an alternative to the Lekki-Epe Expressway, which is already congested and is currently the only road serving the Lekki sub-region which connects directly to the Osborne/Third Mainland bridge corridor, Adeyoye assured.

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(READ MORE: LIRS further extends deadline for filing annual tax returns by one month)

More projects to come

Adeyoye noted that there are other ongoing projects such Agege-Pen Cinema, Agric-Ishawo Road and the Lagos-Badagry Expressway, as well as the infrastructural upgrade of Oniru network of roads, namely Muri-Okunola Extension, Ligali Ayorinde and Akin Olugbade, along with seven major junctions in Iru-Victoria Island Local Council Development Area.

Completed projects listed by Engineer Adeyoye include Iworo-Ajido and Epeme Roads phases 1 and 2, and the 6.65km two-lane single carriageway with a 300m bridge of 9m width, which was constructed by CCECC.

 

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Business News

Google signs in to Theta (blockchain) to transform the global digital economy

Theta fuel can be bought indirectly on most cryptocurrency exchanges like Binance and Coinbase. You will need to already own an Ethereum or Bitcoin (BTC) before you can trade with it.

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Google, Google updates user tools after probe against privacy rights, Experts laud Google’s decision to offer banking services , Google sacks workers over data violations on security policies , All Tech Companies eventually became Fintechs- Google to launch new debit card, Google signs in to Theta (blockchain) to transform the global digital economy

Google is collaborating with Theta Labs in a move to make video delivery networks more efficient through Google Cloud.

As part of the business partnership, Google is assisting Theta with its Mainnet 2.0 launch, a hard fork happening around noon Pacific time on Wednesday,” said Theta Labs’ Chief Executive Officer Mitch Liu.

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Allen Day, a developer for Google Cloud, explained that the distributed ledger technology “enables new business models that potentially transform the global digital economy, including the media and entertainment industry.” 

“We look forward to participating as an enterprise validator, and to providing Google Cloud infrastructure in support of Theta’s long-term mission and future growth,” He added.

(READ MORE:Google, Facebook extend remote working for employees)

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Google signs in to Theta (blockchain) to transform the global digital economy

Theta blockchain

Things you need to Know

Theta, which is blockchain-based, enables content-delivery with high-bandwidth content delivery using a decentralized system. It is a cryptocurrency with its own type of blockchain (Theta). It can also be described as the operational token of the Theta protocol. Individuals use Theta Fuel to complete transactions like interacting with or deploying smart contracts.

READ ALSO: Blockchain technology expected to tackle Africa’s challenges across industries

How to buy Theta Fuel?

Theta fuel can be bought indirectly on most cryptocurrency exchanges like Binance and Coinbase. You will need to already own an Ethereum or Bitcoin (BTC) before you can trade with it.

Google joins the likes of Gumi Cryptos, Blockchain Ventures, and Binance, as external enterprise validators that propose and confirm new blocks on the Theta blockchain. This statement defends the fact that Google Cloud is also becoming Theta Fuel preferred cloud provider with yesterday’s statement.

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“YouTube is particularly interesting because they utilize mostly internally-developed technology for video delivery and streaming, which makes experimentation a lot easier without having to rely on external platforms like Akama,” Liu said.

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