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FAAC disburses N650.8 billion in December 2019, South-South states receive highest share

FAAC disbursed a sum of N650.83 billion to the three tiers of government in December 2019 from the revenue generated in November 2019.

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Ten States in Nigeria, Foreign Investors abandoned 27 States, as Lagos and Abuja attracted $5.8 billion, tax revenue, Foreign investors dump 29 states in Nigeria, as Lagos attracts $4.97 billion in 3-month , Foreign investors ship $21.14 billion to 22 States in 10-month , 36 states contravene DMO rule, took debt more than revenue, FAAC disburses N650.8 billion as South-South states receive highest share

The latest report from the Federation Account Allocation Committee (FAAC) released by the National Bureau of Statistics (NBS) stated that the sum of  N650.83 billion was shared among the three tiers of government in December 2019.

The report shows that Nigeria’s revenue allocation decreased by 7.29% in December 2019 compared to N702.02 billion disbursed in November and decreased by 6.16% compared to 693.53 billion disbursed in October 2019.

The amount disbursed comprised of N491.88 billion from Statutory Account; N53 billion from FOREX Equalization Account; N15 billion from Good and Valuable Consideration Account; N784.83 Exchange Gain Allocation and N90.17 billion from Valued Added Tax (VAT).

Details

The breakdown showed that the Federal Government received the giant share of N274.76 billion; States received a total of N176.1 billion; Local Governments received N132.66 billion while N51.07 billion was shared among oil-producing states as 13% derivation fund.

  • N208.68 billion was disbursed to the Federal Government Consolidated (CRF) account.
  • Also, N8.35 billion was allocated for the development of Natural resources.
  • Share of Derivation and Ecology was stated at N4.97 billion.
  • Revenue generating agencies such as Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Department of Petroleum Resources (DPR) received N5.42 billion, N6.86 billion and N3.9 billion respectively as cost of revenue collections.
  • N5.8 billion was allocated to FCT, Abuja.

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

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South-South States received N57.81 billion

Out of the six geo-political zones in the country, South-South states scooped the largest share followed by North West, which received a total of N26.06 billion and North East (22.95 billion).

South West received N20.02 billion, South East received N16.43 billion while North received the least allocation of N15.65 billion.

FAAC disburses N650.8 billion as South-South states receive highest share

States with highest allocation 

Delta State received the highest allocation in December 2019, as it scooped N15.89 billion, indicating 9.02% of the total states’ allocation followed by Akwa Ibom’s N12.58 billion (7.14%) and Rivers State which received N11.13 billion gross allocation.

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Bayelsa, Kano, Edo and Lagos States received N10.87 billion (6.18%), N4.88 billion (2.77%), N4.25 billion (2.42%) and N4.13 billion (2.34% respectively.

Meanwhile, Kwara State received the least gross allocation in the month of December 2019, as it received N2.74 billion (1.56%) and Ekiti State took away N2.75 billion (1.56%).

READ ALSO: FIRS records lopsided tax base as Lagos contributes 70% of Nigeria’s tax revenue

Drop in revenue

It is important to stress that government revenue has dropped in recent times due to the development in the global oil market as the oil price war between Russia and Saudi Arabia intensifies, forcing the price of the commodity down in the global market. As at the time of writing this article, oil was sold for $36.23 per barrel which is below the $57 per barrel 2020 budget benchmark.

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The Federal Inland Revenue Service (FIRS) did not meet up to its set revenue target of N8.8 trillion. According to data from FIRS, the agency generated N5.26 trillion in 2019, which is just 59.8% of the target.

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Upshot

Seeing as many states are struggling to meet their financial obligations, a reduction in revenue allocation from the Federal Government could further compound their financial difficulties. Meanwhile, this should serve as a challenge to state governors to seriously consider and put in place strategy to increase their internally generated fund to aid self-sustainability.

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Financial Services

Niger Insurance Plc gets shareholders nod to restructure business

Niger Insurance Plc has announced plans to restructure its insurance business into distinct but mutually dependent business entities.

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Edwin Igbiti

Niger Insurance Plc has obtained shareholders’ approval to restructure its insurance business into general, life and business insurance, with each segment to be structured as a separate legal entity.

This is part of the resolutions passed at the 50th Annual General Meeting of Niger Insurance Plc., held on 20th of January, 2021 at Peninsula Hotel in Lekki, Lagos.

The decision to restructure the company is in a bid to make it more efficient and profitable to stakeholders, especially as efforts are geared towards overturning a loss of about 1,1723.2% Year-on-Year, earlier made by the company in its last reported financial statement, Q2, 2020, as reported by Nairametrics.

Other key decisions reached at the 50th AGM include;

  • The re-appointment of Mr Ebi Enaholo and Mrs. Olufemi Owopetu as Directors of the company.
  • Acceptance of the presented financial statement for the year ended December 31, 2019 and the report of the audit committee, directors and auditors.
  • Directors were authorized to fix the remuneration of the auditors.
  • Directors were authorized to appoint external auditors to replace retiring auditors of the company.
  • The appointment of four individuals as members of the audit committee.
  • A decision to restructure the company’s business capital was also reached.

In case you missed it: The shareholders of Niger Insurance Plc in the 49th Annual General Meeting approved the decision by the company’s board to raise additional capital to the tune of N15 billion, in a bid to meet the revised recapitalization targets for general and life insurance companies.

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What you should know: The House of Representatives had in December 2020 directed NAICOM to suspend the mandatory deadline for the first phase of 50%-60% of the minimum paid-up share capital for insurance and reinsurance firms.

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Energy

Nigeria’s Qua Iboe crude exports resume as ExxonMobil lifts force majeure

ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil exports as production resumes.

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ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil export terminal, as crude exports resume for the first time in almost six weeks after a fire at the terminal halted operations.

This is according to a company spokesman yesterday, who confirmed the company had lifted force majeure on Qua Iboe crude loadings.

Qua Iboe production started to ramp up to normal levels of 200,000 b/d in the past week, according to sources, with the release of both the February and March loading programs.

The VLCC Dalia was also in the process of loading a 1-million-barrel stem at the Qua terminal since January 21, 2021, according to data intelligence firm Kpler. This will be the first export of Qua Iboe since December 15, 2020, after a fire hit the facility and injured two workers.

The company has been under pressure since the closure and prices have taken a hit as a result of the disruption. S&P Global Platts last assessed the grade at a discount to Dated Brent of 50 cents/b, down from a premium against the benchmark in December.

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Bonny Light, a mainstay Nigerian crude which typically trades at roughly the same level as Qua Iboe, was last assessed 30 cents/b higher.

What they are saying

One trader said: “If you get a cargo of Qua now it could be 50 cents to a dollar below Bonny even – a January cargo is completely out of cycle and the reliability issues mean people won’t touch it.”

Another trader stated that: “[The return of Qua Iboe] is not what West African crude assessments (WAF) differentials needed.”

What you should know

  • Qua Iboe is one of Nigeria’s largest export grades, and is very popular among global refiners, with India, the US, Canada, Italy, Spain, Indonesia, and the Netherlands being key buyers.
  • Qua Iboe is light sweet crude, which has a gravity of 36 API and sulfur content of 0.13%. The crude, produced from fields 20-40 miles off the coast of southeast Nigeria, is brought to shore at the Qua Iboe terminal via a seabed pipeline system.
  • Indian demand has steadied following a buying spree late last year, and European demand has been hit by renewed coronavirus lockdowns in the region.
  • Prices for Nigerian crude have suffered in recent weeks, even with lower supply due to the outage.
  • February and March loading programs have been issued for Qua Iboe averaging 169,643 b/d and 153,226 b/d respectively.
  • Production of this key grade ranged between 180,000-220,000 b/d in 2020, according to S&P Global Platts estimates.

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Financial Services

CBN says revised new cheque book to become fully operational from April 1, 2021

The CN has announced plans to discontinue the use of old cheque books with effect from March 31, 2021.

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The Central Bank of Nigeria (CBN) has in a circular to all Deposit Money Banks (DMBs), accredited Cheque Printers/Personalisers, and the Nigeria Interbank Settlement System (NIBSS), stated that the revised cheque book will become fully operational from April 1, 2021.

The apex bank has directed all DMBs to enlighten their customers on the revised cheque book, introduced across all banks as full enforcement of its usage will commence on the stated date.

READ: CBN reviews minimum interest rates on savings deposit to 1.25%

The disclosure is contained in a circular that was issued by the CBN and signed by its Director Banking Services, Mr Sam Okojere.

The CBN in the circular noted that the clarification became necessary as some stakeholders had been interpreting the circular differently from the intended purpose.

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READ: CBN moves to ring-fence Disco collections

The CBN in the circular stated, ‘’Please refer to our circular dated 9th December, 2020, referenced BKS/DIR/CIR/GEN/02/042 on the above subject.

It has come to our notice that some stakeholders interpret the circular differently from the intended purpose. Consequently, it has become imperative for the CBN to issue the following clarifications;

  1. The parallel run, in which old and new cheques are allowed to co-exist, will end on 31st March 2021, and thus only new cheques would be allowed in the clearing system from 1st April 2021.
  2. Full enforcement of the second edition of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2.0 will commence April 1, 2021 and the NCS/NICPAS 2.0. Sanction grid will be fully operational on April 1, 2021.
  3. All deposit money banks are (therefore) directed to actively enlighten their customers and ensure necessary provisions are put in place for a smooth migration to the New standard.
  4. The extension of full implementation date from Jan. 1 to April 1, 2021 is due to outbreak of the Covid-19 pandemic and the impact it had on the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version. 2.

READ: CBN grants approval for banks to debit accounts of loan defaulters 

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What you should know

  • It can be recalled that in an earlier circular issued on the revised cheque book, the CBN had put the cut-off date for the parallel run of the old and new cheques at August 31, 2020.
  • This was further extended to December 31, 2020, with only new cheques intended to be allowed in the clearing system from January 1, 2021, due to the outbreak of the coronavirus pandemic and the impact it had on the project.
  • This further adjustment of the deadline gives room for more sensitization by the deposit money banks to their customers, taking into consideration the disruptions that have happened in the economy.

READ: CBN temporarily suspends cheque clearing during Coronavirus lockdown

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