Connect with us
nairametrics
UBA ads

Business News

FAAC disburses N327.68 billion to States and LGAs in September, as allocation drops again 

The FAAC disbursed the sum of N327.68 billion to the 36 states and the 744 local governments in September 2019.

Published

on

Office of Nigeria's Account General is reportedly engulfed in flames, Auditor-General, Accountant-General, grants, FAAC disburses N327.68 billion to States and LGAs in September, as allocation drops again,

The Federation Account Allocation Committee (FAAC) disbursed the sum of N327.68 billion to the 36 states and the 744 local governments in September 2019. This was disclosed after the monthly Federal Allocation Committee Meeting.

According to the communique released by FAAC chaired by the Accountant General of the Federation (AGF), Ahmed Idris, federal allocation to States and LGAs in Nigeria dropped to N327.68 billion in September 2019, from the N331.57 billion disbursed in the previous month (August). This means allocation dropped by 1.17%.

UBA ADS

[READ MORE: FAAC disburses N190 billion to 36 States in August as allocation drops [Full list]]

Idris Ahmed

Idris Ahmed

The breakdown showed that in the month of September, a total of N693.529 billion was disbursed among the three tiers of government. The Federal Government got the biggest share of N293.801 billion, states received N186.816 billion and the local government Councils shared N140.864 billion.

GTBank 728 x 90
  • Also, as part of the 13% derivation fund, the sum of N51.532 billion was disbursed to the oil-producing states while revenue-generating agencies received N20.517 billion.
  • Also, the committee, in the communique, stated that as at 17th October 2019, the balance of the Excess Crude Account stood at $323.692 million.
  • The amount disbursed comprised of N599.701 billion from the Statutory Account, N92.874 billion from Valued Added Tax (VAT) and N954 million exchange gain.
  • The communique also stated that in September 2019, revenue from Petroleum Profit Tax (PPT) and Company Income Tax (CIT) decreased while Royalties, Import and Excise Duties, and Value Added Tax increased considerably.

Revenue Concerns: In the light of declining federal allocation revenue and growing debt stock of states, a quick check at the IGR numbers for half-year 2019 showed that some states in Nigeria borrowed over 700% of revenue generated within just 6 months.

  • This implies that several states in Nigeria are technically bankrupt without debt financing and Federal Government monthly allocation.
  • Also, the decline in FAAC could imply that there will be pressure on the government to use borrowing to fund recurrent expenditure instead of highly craved capital expenditure which is almost becoming the norm with state governments.

[READ ALSO: Central Bank disbursed N299 billion loans through these Agricultural schemes in 2018]

In the meantime, as earlier published on Nairamerics, the call for a review of the federal allocation sharing formula by state governments to adjust to the realities of dwindling revenue might get increasing attention, in the light of continuous decline in FAAC.

The State and LGAs are expecting to get more money if the revenue sharing formula are reviewed as planned by the Federal Government.

app
Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Business News

REMINDER: FGN Ijara Sukuk Bond auction closes on 2nd June 2020

Proceeds from the Ijara Sukuk Bond auction will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country.

Published

on

The Debt Management Office (DMO), on behalf of the Federal Government, has reminded the general public that the offer for subscription to the N150 billion FGN Ijara Sukuk Bond will close on Tuesday June 2nd, 2020.

The offer for subscription was announced some days ago by the DMO, as Nairametrics reported. Below are the details of the offering.

UBA ADS

The Auction: N150, 000,000,000 – Rental Rate of 11.20% per annum IJORA SUKUK FGN JUNE 2027 (7-Yr Opening)

Arranger: FBNQuest Mechant Bank Limited and Lotus Financial Services Limited.

Opening Date: May 21, 2020

GTBank 728 x 90

Closing Date: June 2, 2020

Settlement Date: June 9, 2020

Summary of the Offer

Instrument Type: Ijarah (Lease) Sukuk

Issuer: FGN Roads Sukuk Company 1 Plc. on behalf of the Federal Government of Nigeria.

Units of Sale: N1,000 per unit subject to a minimum Subscription of N10,000 and in multiples of N1,000 thereafter.

app

Rental Payment: Payable Half Yearly.

Patricia

Redemption: Bullet repayment on the date of maturity

Use of Proceeds: Proceeds will be used solely for the construction and rehabilitation of key roads across the six geopolitical zones of the country.

(READ MORE: FG impounds aircraft for illegal flight operations)

About Sukuk bonds  

Sukuk is derived from the word Sakk, which can be translated to mean legal instrument, deed, and cheque. Sakk can also mean to strike a deal on a paper document.

The origin of Sukuk dates to 7th century AD, where the first Sukuk transaction took place in Damascus, Syria in the Great Mosque of Damascus (Umayyad Mosque).

app

Since Islam prohibits usury – collecting interest from your loans – interest-based bonds are banned in Muslim nations.

Difference between Sukuk and regular bonds

Sukuk indicates ownership of an asset. The assets that back Sukuk are compliant with Shariah. In other words, such assets adhere to the Islamic prohibitions on gambling, alcohol, tobacco, narcotics, and adult entertainment products and services.

Sukuk notes pay a fixed percentage return as a profit-sharing percentage of the underlying assets’ revenues.

Regular bonds, on the other hand, pay a fixed rate of return as interest (coupon) semi-annually or annually. 

Continue Reading

Business News

Just In: PPPRA reduces petrol price to N121.50 per litre

“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price…”

Published

on

NNPC, Reduce funding oil subsidy - IMF to Nigeria , Oil marketers, PENGASSAN call for subsidy removal 

The Petroleum Products Pricing Regulatory Agency (PPPRA) has announced a new retail price band for oil marketers.

In a circular dated May 31st, as seen by Nairametrics, the downstream regulator said oil marketers are now expected to sell petrol within the price range of N121.50 and N123.50. Part of the circular said:

UBA ADS

“Please recall the recently approved pricing regime which became effective March 19, 2020, and the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations.

“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price with the corresponding ex-depot price for the month of June 2020, as follows; price band N121.50 – N123.50 per liter.”

Details later…

GTBank 728 x 90

Continue Reading

Business News

Hedge funds, institutional investors rush to own stakes in Bitcoin

Hedge funds are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

Published

on

Bitcoin users rise in Nigeria despite Senate, CBN campaign against it, Nigerians losing millions to crypto fraud, Investing in cryptocurrencies in this economic shutdown, Bitcoin could hit above $100,000 by August 2021, Hedge funds, Institutional investors rush to have a stake in Bitcoin

With global economic uncertainty gradually becoming a daily norm, institutional and hedge funds around the world have been rushing to have a stake in crypto assets which  all have been outperforming other financial assets in 2020).

Just recently, a popular hedge fund based in New York –Grayscale Investments –caught the investment world by surprise by buying up Bitcoin (BTC) at a great rate in recent months.

UBA ADS

Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been seeking for other options, not just to provide returns, but also to hedge their existing portfolio from downside risks. Neo said:

“Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin. I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.” 

(READ MORE:The Empirical Truth about an average Nigerian’s price point)

GTBank 728 x 90

 

In addition, Paul Cappelli, a portfolio manager at Galaxy Fund Management, explained in detail the reasons for this demand. According to him, “we’re seeing increased interest from multiple levels of investors’ wealth channels, independent RIAs, and institutions.

“The recent BTC halving came at an interesting time amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.” 

Also, Michael Sonnenshein, the Managing Director of Grayscale Investments, explained briefly why his firm uses Bitcoin as an option in hedging its firm’s portfolio position.

“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks,” he said.

app

What you need to know about Hedge Funds

They are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

Patricia

Continue Reading