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Greater revenue collection and public spending efficiencies could fund governance in Africa – Mckinesy  

Greater efficiency in revenue collection by governments of African countries could deliver between $85 billion and $125 billion per annum.

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Greater revenue collection and public spending efficiencies could fund governance in Africa – Mckinesy  

Greater efficiency in revenue collection and public spending by governments of African countries could deliver between $85 billion and $125 billion per annum for Africa’s governance. This is the latest discovery of research carried out by McKinsey & Company.

According to The Nation, Acha Leke, a senior partner in McKinsey’s Johannesburg office and co-author of the report, disclosed that the solutions to financial difficulties amongst African countries  in the public sector already exist but proper implementation is all that is lacking

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“African governments have more scope than is often assumed to mobilize domestic resources for their own development and improve efficiencies in public spending.

“If scaled up across the continent, such solutions could eliminate Africa’s entire budget deficit or unlock sufficient funding to close the $100 billion infrastructure-spending gap within a few years,” said Acha Leke.

Greater revenue collection and public spending efficiencies could fund governance in Africa – Mckinesy  

Yaw Agyenim-Boateng

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Meanwhile, Mr Acha reportedly disclosed that several African countries are presently facing serious fiscal difficulties such as declining revenues and increasing fiscal deficits which are preventing the continent from growing and fulfilling its potential. Therefore, he called for urgent implementation of these solutions so as to bridge infrastructural deficit.

[READ MORE: FG sets up committee to boost revenue in mining sector]

Countries in Africa for 2018 raised $443 billion in government-revenue, representing 19% of Africa’s GDP which compared to 2016 dropped from 23%. By contrast, the ratio of public revenues to GDP in most non-African emerging economies stands between 25% and 35%.

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Yaw Agyenim-Boateng, co-author of the report and a partner in McKinsey’s Lagos office reportedly said that compared with other countries around the world, Africa generally has a low ratio of public revenues to GDP, meaning that the continent is not “monetising” its economy as much as it could.

Africa right now faces a perfect storm of a slowdown in growth, depressed commodity prices, stagnant tax revenues and rising public debt, without appropriate action, many governments will face mounting fiscal pressure and find their ability to invest severely constrained.”

A balanced focus on aggressive revenue growth and on cost control, with sustained pressure to maximise impact on both sides of the equation, will yield best results, and sufficient commitment to transformation, governments can create new headroom to pursue spending priorities without threatening fiscal sustainability,”  Agyenim-Boateng said.

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Economy & Politics

Nigeria only hit 56% of its target revenue in first five of months of 2020 

Nigeria’s earnings in the period were N1.48 trillion which is 56% off its main target.

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Zainab Ahmed, Pres. Buhari to review Finance Bill, tax reform yearly to finance budget 

Nigeria’s Minister of Finance, Zainab Ahmed revealed that Nigeria was only able to meet 56% of its target revenue from January to May as the global oil price crash affected government revenue due to the COVID-19 pandemic. 

Nigeria’s earningin the period were N1.48 trillion which is 56% off its main target, crude oil revenues accounted for half of Nigeria’s revenues, while non-oil revenues made up the rest in the first 5 months of the year. 

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On Friday, President Muhammadu Buhari signed the new 2020 revised budget of N10.8 trillion with the crude oil benchmark reduced from $57 per barrels in the earlier budget to $25 in the new budget.

The Minister said the budget had to be revised because of the effects of the COVID-19 pandemic on Nigeria’s economy. She added that Nigeria’s crude oil production would be an average of 1.86 million barrels per day next year and rise to 2.09 million the following year. 

 “Although Nigeria’s total production capacity is 2.5 million barrels per day, current crude production is about 1.4 million barrels per day — in compliance with the Organization of the Petroleum Exporting Countries’ production quota – and an additional 300,000 barrels per day of condensates, totaling about 1.7 million barrels per day,” she said. 

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Coronavirus

African Union begins COVID-19 vaccine trial group

CONCVACT plans to capture more than ten late-stage vaccine trials at the earliest.

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coronavirus, COVID-19: Infections rise to 42 as 2 new cases are confirmed, COVID-19: Western diplomats warn of disease explosion, poor handling by government

The African Union Commission just recently facilitated a program called the new Africa Centres for Disease Control and Prevention (Africa CDC) Consortium for COVID-19 Vaccine Clinical Trial (CONCVACT).

The program is part of the Africa Joint Continental Strategy for stopping the deadly COVID-19 onslaught that has disrupted human activities. The goal is to prevent severe COVID-19 infections and deaths in African countries, reduce the economic damage caused by the pandemic, and help minimize the general disruption to everyday life.

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Quick fact about COVID-19: Although for some individuals, the COVID-19 virus causes only mild illness, it can make other individuals seriously ill. The disease can be very fatal, especially among older individuals, and those with compromised immunities (such as diabetes, high blood pressure, or heart problems) appear to be more susceptible.

South Africa’s leader, Cyril Ramaphosa, said, “Success in developing and providing access to a safe vaccine requires an innovative and collaborative approach, with significant local manufacturing in Africa.

“We need to support the contribution of African scientists and healthcare professionals. We need to act with urgency.”

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CONCVACT plans to capture more than ten late-stage vaccine trials at the earliest, via collaborations with global vaccine developers, sponsors, and African businesses that enable clinical studies.

The African group also hopes to secure the safety and efficacy data of promising vaccine candidates for the African population in order to validate their launch after approval.

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Economy & Politics

2021 Budget: FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion

This tops 2020 budgeted expenditure of N10.8 trillion.

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FG projects spending plan of N11.86 trillion and deficit of N5.16 trillion,IMF, International monetary fund, Zainab Ahmed, Nigeria's Minister of Finance, Budget and National Planning

The Federal Government is projecting to spend N11.86 trillion for 2021. This was disclosed by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed at a virtual presentation of the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) held on Friday.

According to the finance minister, the government is planning to spend N11.86 trillion against revenue of N6.98 trillion meaning the government will have to grapple with a fiscal deficit of  N5.16 trillion.

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Zainab Ahmed;

“The 2021-2023 MTEF&FSP is the pre-budget statement that provides the framework for the development of the 2021 budget. It is being framed against the backdrop of challenging global macroeconomic environment as well as domestic factors.

“We aim to keep the deficit within the three percent ceiling over the medium term and are therefore working on identifying new revenue sources and or cost of reduction.”

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The minister noted that the 2021-2023 draft had been prepared against the backdrop of heightened global economic uncertainty.

Earlier today President Buhari signed the revised 2020 national budget of N10.8 trillion, which was passed by the National Assembly in June. The National Assembly passed a revised budget of N10.8 trillion on the 11th of June after the Federal Executive Council (FEC) approved a revised budget of N10.523trillion in May. 2020 Budget is based on a revised oil benchmark of $25 per barrel as against $57 while crude production was reduced from 2.18 million to 1.94 million barrels per day  Budget deficit for 2020 is estimated at N5.365 trillion.

As of March 2020, the FG was running a 52% shortfall in the first quarter of the year with actual revenue collected of N950 trillion compared to budgeted revenue  N1.96 trillion.

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What this means: Nigeria is facing an unprecedented revenue crisis exacerbated by the Covid-19 pandemic and the crash in oil prices. At N5.16 trillion, Nigeria’s projected budget deficit will be 43% of spending and about 3.6% of GDP if the budget is passed. A budget deficit means the government will have to borrow heavily next year to fund its expenditure programs.

The government received a $3.4 billion funding from the IMF in April and expects another $3.5 billion from the World Bank in August 2020. The government also revealed it has no plans to access the commercial market for foreign debts as it takes advantage of lower interest rates in the domestic market.

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