Business News

Bail-out Fund: FG negotiates with States Governors as NEC approves 100 billion for NLTP

The Federal Government has negotiated with States Governors on the initially planned bulk deductions of bail-out funds.

Published

1 year ago

September 20, 2019

FG foreign reserves Nigeria Yemi-Osinbajo, FG negotiates with Governors on bail-out fund, as NEC approves 100 billion for NLTP, bail-out fund States Governors, FG earns N28.6 trillion from VAT, others , Ease of doing Business: States must partner with Federal Government – Osinbajo , AfCFTA: Nigeria’s financial footprints to be extended across Africa – Osinbajo , FG seeks partnership with National Council of Registered Insurance Brokers, here’s why , Osinbajo says FG’s investment to take advantage of Africa’s $200bn tourism potential is massive, Pres. Buhari’s plan to tax US tech companies might provoke US trade war https://www.yemiosinbajo.ng/vps-lecture-at-the-national-defence-college-course-28-lecture-event/ https://punchng.com/digital-firms-to-pay-tax-under-new-finance-act-osinbajo-2/ https://www.nytimes.com/2020/01/31/business/economy/digital-tax-oecd.html Nigeria at risk of trade war with United States as the Nigerian Government says it will impose taxes on technology companies like Facebook, Google, and other digital companies that have been escaping tax payment in Nigeria due to their lack of presence within the country. The US has threatened tariffs on imports from countries that impose such digital taxes. The tech companies with heavy revenue footprint in Nigeria now have their backs against the wall because President Muhammadu Buhari-led administration want to tax them to grow Nigeria’s revenue; which has led to the development of the Finance Act. The Finance Act is the solution of President Buhari to the revenue problem which the Finance Minister, Ahmad Zainab, said Nigeria has. The Nigerian government is looking to grow its revenue through taxes, and one of such is the digital tax which Vice President, Yemi Osinbajo, said will commence despite the threat of the US which is aimed at protecting the silicon companies. No more back door operation: Facebook, Google, Amazon, YouTube and many more digital businesses have a sizeable market in Nigeria, but don’t have a physical structure for their operations; this has cost Nigeria tax revenue. These companies are known to prefer situating their companies in tax havens where taxes are low compared to other African and European countries. Ireland and Bermuda are some of the tax havens for these multinational companies. But according to Osinbajo, the period of making gains from their operation in Nigeria without paying tax is over. Osinbajo, while speaking at The National Defence College, Course 28 Lecture Event, said that, “Let me also briefly mention the new provisions on Taxation of Digital Economy and Non-Resident Companies. This is a very important aspect of our taxation policy. Before the Finance Act, only companies that had a physical presence or a fixed base in Nigeria could be taxed. “So, most digital companies, I mean any of the big technology companies, or multi-national digital companies, that did not have physical offices in Nigeria, made significant income from Nigeria from online activities, such as advertising, movie streaming, online gaming and e-commerce from subscribers in Nigeria, but paid no taxes whatsoever because they did not have a physical base in Nigeria. So now we are no longer relying on the fixed base or physical address criterion.” He added that, “Under the Finance Act, once you have a Significant Economic Presence (SEP) in Nigeria, you are liable to tax. Whether you are a resident here or you are not resident as a company, as long as your economic presence is significant, you are liable to tax. If you are streaming online, advertising using Google adverts, whether you are resident here or not, you are now subject to tax. “So, non-residents who previously had no fixed base and no Nigerian tax liability will now be liable to tax based on the SEP criterion. The Minister of Finance is empowered to issue a regulation defining what Significant Economic Presence means. So, she just defines the scope of what we will be looking out for in terms of Significant Economic Presence.” Osinbajo explained. Nigeria is not alone in this crusade: Nigeria is not the only country trying to tax these technology companies. The European Union have also been coming after them for taxes. The EU is also stating that if the technology companies are making economic gains through their operation despite the lack of physical presence in several European countries, then the tech conglomerates should be taxed. This has led to review of tax laws by the EU. According to a report by New York Times, new rules to tax these multinational companies are being discussed by about 130 countries through the Organization for Economic Cooperation and Development. The review has become necessary as digital economy begins to open new revenue sources. Should Nigeria tread carefully? The United States has threated to hit any country imposing taxes on the technology companies - which are mostly American – with tariffs on import. This put Nigeria at a rather impossible position, as the country is not economically strong enough to enter a trade war or go on a tit for tat battle with the US. According to Q3 report, the US is the fifth biggest export destination for Nigeria, having imported N322.2 billion (6.28%) goods from Nigeria, with crude oil constituting N329.8 billion. Although, the US is behind Ghana, India, Netherlands and Spain, it doesn’t change the significance of the US market to the Nigerian economy. Meanwhile, Nigeria’s top import sources include the U.S, accounting for N747 billion in H1 2019. Franch had moved to tax the online businesses but have now delayed the plan this year after a meeting with the US; the US has also paused its tariff threat against France. Britain is also one of the digital tax drivers. With such threat hanging over the digital tax, it’s unlikely Nigeria will go ahead taxing these technology companies, as US feels such tax is discriminatory against US firms, and have suggested these companies be allowed to decide if they want to operate with the new tax standards., FG will provide succor for daily wage earners as lockdown continues – Osinbajo

The Federal Government (FG) has negotiated with States Governors on the initially planned bulk deductions of bail-out funds.

This was disclosed by the Vice-President, Yemi Osinbajo, at the 97th National Economic Council (NEC) meeting on Thursday at the Council Chambers.

The details: Essentially, the update was contained in a press release signed by Laolu Akande, the Senior Special Assistant to the President on Media & Publicity, Office of the Vice President. While delivering updates on the bailout fund which has generated controversies, the Minister of State for Budget and National Planning, Clement Agba, stated that State Governments are expected to start servicing the loan from September 2019 and repayment is over 240 months period.

The Council also resolved that Governors should meet with the Ministry of Finance and Central Bank of Nigeria to sort out the details of repayment and the Vice President would ensure same and speedy resolution of the matter.

N100 billion for NLTP: Providing an update on the National Livestock Transformation Plan 2019 – 2028 (NLTP), Governor of Ebonyi State, Dave Umahi, Chairman Of NEC Technical Committee reminded NEC that the Committee was to address the Farmer/herder crisis.

According to Umahi, the Plan is not targeted at only cows but a holistic strategy to address animal husbandry. The Plan has six pillars which include Conflict Resolution, Justice and Peace, Humanitarian Relief and Early Recovery, Human Capital Development, Cross-cutting issues and Economic Development.

Speaking on the funding of NLTP, Umahi disclosed that N100 billion had been budgeted to support the project. According to him, FG is to contribute 80% in grant to support States, while States will contribute land, project implementation structure, personnel and 20% cost of the project.

The Council also emphasised the need to establish the fact that NLTP is a creation of NEC and State Governors and is completely distinct from RUGA.

“NEC adopted the National Livestock Transformation Plan on January 18, 2019. It is a creation of the National Economic Council. States will determine, whether or not they are willing to participate, as FG did not impose this plan. Participation remains voluntary. The role of the FG is to coordinate, monitor and help implement the plan,” Uhami Stated.

Ease of Doing Business: The Secretary of the Presidential Enabling Business Environment Council (PEBEC) Dr. Jumoke Oduwole gave an update on building an Enabling Business Environment. She informed Council that there is currently a reform wave in African countries, as contained in the African Development Bank (AFDB) Economic Outlook Report released in January 2019.

According to her, in the 2019 World Bank Ease of Doing Business ranking, Nigeria is ranked 146 with Micro Small and Medium Enterprises (MSMEs) making up to 90% of Business in Nigeria. Hence, the mandate is to make Nigeria rank among top 100 in the 2020 World Bank Doing Business index.

Bamidele Samuel Adesoji

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

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Hospitality & Travel

US imposes $15,000 visa bond on 15 African countries, others

The US has issued a visa rule requiring tourist and business travelers in some countries to pay a bond of up to $15,000 in addition to the visa fees.

Published

22 mins ago

November 24, 2020

Chike Olisah

Berger Paints' improved margins ride on the back of cost efficiency

The outgoing administration of US President, Donald Trump, on Monday, November 23, 2020, issued a new temporary visa rule that requires tourist and business travelers from 15 African countries and others to pay a bond of up to $15,000 in addition to the visa fees, which ranges from $16 to $300, in order to visit the United States.

According to TheCable, the US State Department said the visa bond pilot programme, expected to take effect from December 24 and end on June 24, 2021, is targeted at countries whose citizens have higher rates of overstaying B-2 visas for tourists and B-1 visas for business travelers.

The Trump administration said the six-month pilot program aims to test the feasibility of collecting such bonds and will serve as a diplomatic deterrence to overstaying the visas. Hence, overstay places significant pressure on Department of Justice and Department of Homeland Security.

The visa bond rule will permit U.S. consular officers to request tourist and business travelers from countries whose nationals had an overstay rate of 10% and above in 2019 to pay a refundable bond of $5,000, $10,000, or $15,000.

The countries whose tourist and business travelers fall into this category and subjected to the bond requirements are 24 countries, including 15 African countries. While these nations had higher rates of overstays, they sent relatively fewer travelers to the United States.

The countries include Afghanistan, Angola, Bhutan, Burkina Faso, Burma, Burundi, Cape Verde, Chad, the Democratic Republic of the Congo (Kinshasa), Djibouti, Eritrea, the Gambia, Guinea-Bissau, Iran, Laos, Liberia, Libya, Mauritania, Papua New Guinea, Sao Tome and Principe, Sudan, Syria, and Yemen,

Nigerian travelers escaped paying the temporary visa rule, as their overall score was below the threshold of 10% and above overstaying rate.

Economy & Politics

Senate approves issuance of N148bn promissory notes to Bayelsa, 4 others

Promissory notes worth N148,141,969,161.24 has been approved by the Senate as refund to Bayelsa, Cross River, Ondo, Osun and Rivers States

Published

1 hour ago

November 24, 2020

Omokolade Ajayi

Senate approves issuance of promissory notes worth N148 billion as a refund to five states

Promissory notes worth N148.141billion have been approved by the Senate as a refund to Bayelsa, Cross River, Ondo, Osun, and Rivers States for projects executed on behalf of the Federal Government.

The approval which was given by the Senate at the plenary on Tuesday, 24th November 2020, came after the presentation of a report by the Committee on Local and Foreign Debts, led by Senator Ordia Clifford (PDP-Edo).

According to a news report by NAN, this is a go-ahead to the Federal Government, who had sought the approval of the Senate for issuance of promissory notes for a refund on federal projects executed by State governments.

The request was contained in a letter addressed to President of Senate, Dr. Ahmad Lawan by President Muhammadu Buhari, and read at plenary. The Senate referred the matter to the Committee on Local and Foreign Debts for further legislative input.

Senator Ordia Clifford, while presenting the report of the committee, said the Permanent Secretary, Federal Ministry of Finance; Federal Commissioners of Finance and Works in the five states, had briefed the committee on details of the projects.

He said the Committee was presented with documents relating to the approvals of the Federal Government through the Federal Ministry of Works and Housing for the execution of the projects and certificates of completion, amongst other documents.

At the plenary today, Senator Ordia moved the motion that the Senate approves the Committee’s recommendations by approving the issuance of the promissory notes to the State governments.

According to him, the amount due to the five states is N148.14billion.

Bayelsa was allotted N38.40billion
Cross River was allotted N18.39billion
Ondo was allotted N7.82billion
Osun was allotted N4.57billion
Rivers was allotted N78.95billion

What they are saying

The President of the Senate, Ahmad Lawan, disclosed that records showed PDP states had the highest refund, he said: “If you look at the list of states, only two are APC states and they have the least in terms of refund, this is fantastic and a mark of leadership by the Federal Government. This shows tolerance and leadership by this administration.”

Business News

Interswitch Group becomes Finastra’s lead technology partner in Nigeria

nterswitch Group has unveiled a consolidated partnership with Finastra, one of the world’s most influential Fintechs.

Published

1 hour ago

November 24, 2020

Chidi Emenike

Interswitch Group becomes Finastra’s Lead technology partner in Nigeria

In a bid to further develop its market and expand, Interswitch Group has unveiled a consolidated partnership with Finastra, one of the world’s most influential Fintechs.

This is according to a verified post by Interswitch Group on Linkedin, as seen by Nairametrics.

What this means

The strategic partnership enables Interswitch to become Finastra’s lead technology partner and will avail the latter the opportunity to bring the broadest set of financial software solutions to financial institutions in Nigeria and across Africa, in conjunction with Interswitch’s strong understanding of the local banking and payments landscape, as well as the ability to deploy solutions across these markets.

Some of Finastra’s financial software solutions that will be incorporated into Interswitch’s digital solution include: Fusion Kondor and Fusion Trade Innovation, which will consolidate Interswitch’s position as a hub for financial solutions, including treasury and trade solutions.

What they are saying

Commenting on the partnership, the Founder and Group Chief Executive Officer of Interswitch, Mitchell Elegbe, was quoted by Tech economy saying: “Our partnership with Finastra is consistent with our strategic growth plan and we both share the vision of deepening access to financial services by providing world-class technology and innovative solutions.

“The partnership enables Finastra to seamlessly deploy its technology in this market. For Interswitch, we will be leveraging our proven success and expertise in delivering transaction banking solutions to support Finastra in localizing and implementing their technology in this region.’’

On the other hand, the Head of Partner Ecosystem MEA & CIS at Finastra, Hamid Nirouzad, said: “Interswitch has a proven track record of delivering solutions to commercial banks, as well as, a strong understanding of the local banking landscape across Nigeria and sub-Saharan Africa.

“Finastra is committed to providing its solutions to financial institutions across the world, and partnerships such as this will result in successful projects, with rapid delivery at a reasonable cost.”