Columnists
Questioning Nigeria’s fiscal federalism and resource sharing models
All states, except just a few, cannot meet their obligations from Internally Generated Revenues (IGR). These include states governed by the APC, APGA, and PDP political parties.
Why are states in Nigeria not paid their share of the oil and gas earnings in the currency it was earned in, i.e., the United States Dollars (USD)?
The crude oil in Nigeria is owned by the Federation — the Federal, State, and Local Governments. It’s shared as follows: First, 13% is deducted and paid to the oil and gas producing States under the principle of derivation; next, the Federal Government (FGN) gets 52.68%; the States get 26.72%, and the Local Governments get 20.60%.
When Nigerian crude oil is sold, the proceeds of that sale are in USD and get paid to the NNPC/CBN/JPMorgan Account in the United States. The Oil and Gas taxes, e.g., Petroleum Profit taxes, are also charged in USD and are collected by the Federal Inland Revenue Service (FIRS) and paid to the Central Bank of Nigeria (CBN). The same thing applies for the royalty bonus collected by the Department of Petroleum Resources (DPR) and paid to the CBN. The CBN then converts the USD sales proceeds to Naira.
The CBN and Ministry of Finance then fund Federal agencies like NEMA and the Consolidated Revenue Fund in Naira, even the 13% derivation is paid in Naira. In other words, while the CBN retains the USD, the Federal, States, and LGAs get Naira. The CBN thus becomes the biggest player in the Foreign Exchange (Forex) markets, with Forex “earned” from the Federation. Why is this the case? Is it their money?
(READ MORE: COVID-19: Nigeria risks supply chain bottleneck, loss of N2.27 trillion in trade)
Why not simply give Abia State its share of oil sales earned in USD? Abia State could sell or save its USD in her State Sovereign Wealth Fund (amen). The state can decide to sell or save her Forex as she desires on the Interbank Foreign exchange market, or sell to the CBN. Why is the CBN deciding what exchange rate to use in remitting to states and LGAs their share of Forex earned from exports? Is Nigeria not a Federation? Ultimately, the states, as part of the federation, should get to choose what to do with their Forex earnings. If the CBN wants Forex, let it also bid for it from the states.
President Muhammadu Buhari
The reality is that Nigeria is a Federation on paper, but a Unitary state in practice. The Federal Government may receive 56% of the share of fiscal revenues, but it collects above 95% of the major fiscal taxes on behalf of the states, including the Value Added Tax, and then redistributes according to the revenue distribution template. This leaves the states as mere appendages of the Federal Government, running back and forth for bailouts, unable to build railroads to export, unable to build power plants and sell power, unable to mine solid minerals in their states or even issue company business licenses without the consent of the Federal Government.
Nigeria has no business with 35 states if those states become mere spenders of FAAC allocations, unable to generate their own wealth.
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Perhaps the states should consider holding a nonpolitical summit and confronting the Federal Government, as well as passing a constitutional amendment to force fiscal devolution of powers. There are gold and iron ore sprinkled across Nigeria, yet states cannot touch them. Why? Well, the reason is that those are Federal property. If states owned those assets, it would be reasonable to assume they would protect them, but gold mining goes on illegally across the nation because the Federal Government owns the assets on the land but the states own the land without the assets—a mismatch of revenues and responsibilities.
All states, except just a few, cannot meet their obligations from Internally Generated Revenues (IGR). These include states governed by the APC, APGA, and PDP political parties. The states should be allowed devolved power; for instance, allow states to own mineral deposits on their land, thus retaining income of 65% via derivation on Company Income Tax and Mineral Tax generated. States must stop begging for bailouts.
[READ ALSO: Nigeria’s foreign debt has breached a 15-year trigger)
A quick win will be to allow states register companies via their State Corporate Affairs Commission. This will spur competition via efficiency where states compete to attract companies to list in their states.
In summary, Nigeria needs a devolution of fiscal powers to empower the states fiscally, then hold them accountable. As Nigeria seeks to diversify the FX earning sources of the federation, it’s also important that the political economy is considered.
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What does my startup portfolio look like? – by Olumide Soyombo
Olumide Soyombo discusses his flair to invest in some of the most prospective startups in Africa.
I have been privileged to invest in some of the most interesting Startups in Nigeria and other parts of Africa.
This journey started in 2014 and my approach has always been to just do my thing behind the scenes and support the companies I invest in strategically. However, following the Paystack exit, folks have been curious to see what other companies I have backed, so I have finally decided to share.
I believe we have a couple of stars in here and the next couple of years should be interesting. Please support these companies wherever you see them so that my family can eat o…
Gbedu (Gbedu.live)
Gbedu is a music discovery and streaming service built to dispense the rich sound of Africa. They have created an experience that gives young, upcoming (up and coming) artists the chance to get discovered and earn per stream of their music content.
The startup is connecting Africans to the most extensive catalog g of free localized content, leveraging the power of playlisting, offline, and radio-integration to create new interactions and vast, unique music experience per user locale.
Gbedu is freely accessible to all users and pays every content owner.
Industries: Digital Entertainment, Music Streaming.
Wesbsite: www.gbedu.live
2. PiggyVest
Piggyvest is the leading online savings & investment platform in Nigeria, helping individuals manage their finances effectively.
The platform enables users to save small amounts of money frequently with minimal effort. They automate the process of saving tiny amounts daily, weekly, or monthly; and then allow savers, withdraw for free on only set withdrawal dates, thereby practically making saving and investingpossible for users of their platform.
Industries: Financial Services, Banking, FinTech
Website: www.piggyvest.com
3. Intelligra
Intelligra is the builder of an open platform created for smartphone financing. The company’s platform offers MNO (mobile network operator) integration and lock technology, proprietary credit scoring algorithms, and device lock solution. The platform also offers an in-store seamless onboarding app and integrates device OEM (Original Equipment Manufacturer), financiers, and mobile network operators, enabling consumers to access affordable smartphones.
Industries: Financial Services, Mobile Financing.
Website: https://intelligra.io/
4. TeamApt
TeamApt is a financial technology company focused on developing Digital Banking, Business Solutions, and Payments Infrastructure. They are rethinking the needs of consumers, businesses, and the financial industry.
Industries: Fintech, Financial Services
Website: https://teamapt.com/
5. VertoFX
VERTO is a complete F.X. and payment marketplace built for business. VERTO helps business operate efficiently on the international stage. The company makes it possible to open a free U.K. business banks account in minutes with the ability to hold up to 39 different currency balances. Additionally, VERTO gives its business users the ability to make or receive payments in foreign currencies and trade those currencies at lucrative rates.
VERTO provides liquidity and price discovery tools for international businesses. The marketplace provides easy access to exotic and foreign currencies with seamless international online payment services. Mono
Industries: Finance, FinTech, Marketplace
Website: https://www.vertofx.com/
6. Mono
Mono is an API financial technology software designed to become the go-to financial data infrastructure API platform in Africa. The company’s software provides access to financial statements for historical and real-time transactions, balances, bank statements, credit and spending patterns. The platform also make s it possible to initiate direct debit payments and recurring debit. They are enabling users to get an accessible way to check their financial statements and transactions conveniently.
Mono is bringing access to financial accounts across Africa securely and reliably.
Industries: Big Data, Financial Services
Website: https://mono.co/
7. Spleet
Spleet is a Nigerian-based prop-tech startup that offers its users a subscription-based, living solution. Spleet provides access to Shared/entire living spaces with flexible payment options (Daily, Monthly & Quarterly Subscriptions).
They have built a platform and partner with homeowners who want to earn constant (recurring, monthly, and quarterly subscriptions) revenue and homeowners who wish to earn non-recurring income.
Industries: Real Estate, Property Management, Vacation Rental
Website: https://spleet.africa/
8. Migo (Done via a Syndicate)
Migo is a cloud-based platform that allows customers to use loans, make purchases, and withdraw cash without the need for plastic debit/credit cards.
Migo offers a digital Credit-as-a-Service platform to domestic banks, mobile operators, retailers, and payment processors. The platform includes APIs, frameworks, consumer insights tools, and expertise on best practices that enterprise partners can use to build transformative consumer credit services in emerging markets.
Industries: FinTech, Financial Services, Credit
Website: https://www.migo.ng/
9. LendMe
LendMe is an online consumer loans platform. Users can choose a loan amount in Naira(₦) and set a repayment schedule. The loan limit of the user increases if the user successfully repays loans. The app is available for the Android platform.
Industries: FinTech, Financial Services, Credit.
Website: https://www.mylendme.co/
10. Bitnob
Bitnob simplifies access to the Bitcoin Blockchain Technology for People to create wealth, grow their wealth and even build and provide support for their businesses. It is a cryptocurrency exchange that allows users in the African Region to buy or sell Bitcoins quickly. One key feature of the exchange is that it enables its users to automatically and periodically save in Bitcoins with as little as one dollar.
Industries: FinTech, Financial Services, Cryptocurrency
Website: https://bitnob.com/
11. Lemonade.Finance
Lemonade Finance is a startup that makes it easy to send money to Nigeria from Canada within seconds. Their platform, available on Google Play and App Store, offers some of the best exchange rates at any given time. What’s more, transactions on lemonade are free, safe, and secure.
Industries: FinTech, Financial Services.
Website: https://lemonade.finance/
12. Brass
Brass is a digital bank that provides small and medium businesses with a suite of products and tools to help them grow. Brass provides bank-backed, fully insured current account services to local companies in Nigeria.Brass makes it super easy for every business to get a current account from any device, cut traditional bank fees and help businesses and people save money.
Industries: FinTech, Financial Services.
Website: https://www.trybrass.com/
13. Trove
Trove Finance is a platform that allows you to invest in stock markets around the world for as low as ₦1,000. Troves allows its users to automate their investments by linking a debit card to the Trove App.
Its Investment app aims to make the process of finding and selecting investments — specifically Stocks & Bonds — accessible and approachable for beginners. With Trove, users can find stock from public companies from Nigeria, and the U.S. Users can also easily access various bonds, cryptocurrency assets, and mutual funds.
Industries: FinTech, Financial Services, Cryptocurrency
Website: https://www.troveapp.co/
14. Gradient Boost
The Gradient Boost is an end-to-end platform training, upskilling, and matching data science talent in Africa to companies. This last mile data science upskilling platform enables companies to build a reliable data science, data engineering, and data analytics talent pipeline of the top data talent in Africa.
They take on talent with strong data science fundamentals and upskill them through mentorship from experienced data scientists.
This enables the young talent to gain strong collaborative skills, soft skills and practical experience. Ultimately, these young talents can prove their abilities to companies looking to hire talent.
Industries: Data Science, Training
Website: https://www.thegradientboost.com/
15. Send.ng
SEND is a Digital freight Forwarder & Customs Broker for African Businesses. Send ships container and air cargo to Nigeria, managing the entire process — from suppliers in China, U.S. & Europe, to the customs clearance and then delivered to customers.
Send is making it easy for people and businesses to ship across Africa and to the world. Their web app, mobile app, and API are used to request their shipping services. They then pick up, package, and ship items through major couriers/carriers. Send.ng provides simple yet not-so-available value-added features like tracking and transparent pricing.
Industries: Logistics, Supply Chain Management, Freight Service
Website: https://www.send.ng/
16. Gloo
Initially, Gloo.ng, a pure-play electronic retailing service dedicated to delivering direct to their clients’ doorsteps, Gloo has now pivoted into the e-procurement space as Gloopro.
Gloopro simplifies purchasing for large enterprises with eProcurement and commerce solutions. As a one-stop platform for large enterprises to optimize the purchasing of material and service inputs not included in their core products or service, Gloopro offers its customers valuable supply-chain visibility.
Additionally, they enable large enterprises to standardize and automate their entire procurement lifecycle across multiple locations with stock reorder level parameterization and budgeting caps.
Industries: Retail, E-Procurement
Website: https://www.gloopro.com/
17. PushCV
PushCV is the largest pool of pre-screened candidates in Africa. PushCV aims to help tackle the unemployment epidemic by providing a platform on which only the best talents are connected to top employers and recruiters.
Push CV is focused on the features that matter most to an employer and hence, the job seeker. Through continued iteration on complex employment problems, they seek to provide continuous improvements to the service that already makes thousands of people find their dream jobs a lot faster, safer, and more seamless.
Industries: Recruiting
Website: https://www.pushcv.com/
18. Bento
Previously verifi.ng, Bento has metamorphosized into more than just a payroll and H.R. platform to help companies in Nigeria manage their employees’ salaries. Today, Bento has expanded beyond pension, healthcare, and taxes to provide a platform for salary earners to manage what they consume and how they consume.
Bento has provided healthcare and salary advance services by partnering with a healthcare provider, Hygeia, and money-lender, Zedvance. Moreover, it aims to do much more, for instance, helping parents pay their children’s tuition monthly and pay rent monthly.
Industries: Financial Services, Employee services
Website: https://bento.africa
19. Leadspace
Leadspace is an alternative commercial real estate startup aiming to create shared infrastructure for entrepreneurs and founders of small & medium-size businesses.
They provide co-working spaces for entrepreneurs/founders of small and medium businesses, mid-level corporate executives, Independent freelancers, remote workers, and creative artists.
Industries: Co-working
Website: https://theleadspace.co/
20. PowerCube
Powercube builds clean energy systems that can provide homes with more than 16 hours of power a day with subscriptions as low as N7,000 ($20) monthly. User can control each system with a mobile application that allows them to determine how much power they want to use.
Powercube was started to relieve small homes and businesses from using generators while providing the highest degree of certainty on bills due.
Industries: Clean Energy
Website: http://www.powercube.ng/
21. Accounteer
Accounteer is a cloud accounting platform for small businesses. A business owner can create invoices, track expenses and follow up on their finances with ease. Accounteer integrates with external services like banks, e-invoicing platforms and e-commerce.
Industries: Financial Services, MSME
Website: https://accounteer.com/
22. Blackbet
Blackbet is a product-driven Africa sportsbook operator. The company has ambitions to expand and delight the global gaming community by bringing safe, imaginative and innovative sports play to a new generation by simplifying the platform and delighting new customers play-by-play.
Industries: Gambling & Casinos
Website: https://www.blackbet.ng/en/
23. Fantastic.ng
Fantastic.ng is a free-to-play gaming platform focused on sports fans (hence the name Fantastic). Their platform offers its users an experience similar to sports betting and rewards without requiring any payment.
The sports gaming platform runs on a freemium model that allows users to play for free or buy ₦100 token to access premium games with higher rewards.
All rewards are paid in a digital currency called Fan Coins (F.C.s). These F.C.s are then used in the Fan Shop to purchase various items, including airtime, food, phones, laptops, and get cash back.
Currently, the gaming platform offers a Football Manager, Predict & Win and Sports Quizzes.
Industries: Gaming
Location: Lagos, Nigeria
Website: https://www.fantastic.ng/
24. Engage
Engage is a customer messaging platform that helps businesses grow and improve customer retention. It is messaging based on the end user’s journey, preferences, and actions through your business application.
Engage is able to achieve this by segmenting your customers based on their attributes (e.g., gender, location, plan, age) and their actions (e.g., used up data bandwidth, canceled subscription, scheduled an appointment, submitted feedback), and allowing you directly “message” these segments or create automation.
Industries: Artificial Intelligence, Business Development, Messaging
Website: http://engage.so/
25. Koa
Koa is an app-based platform that helps its users save and grow their money at the tap of a button, making it easier for them to reach their financial goals, starting out from Kenya.
With Koa, users can save for what truly matters to them. Their application helps users break down their goals and save towards them daily, weekly or monthly. Additionally, users with a Koa grow the account, gain interest on the amount they have saved over a set period.
Industries: Finance, Savings, and Mutual Funds
Website: https://withkoa.com/
26. Paystack (Exit)
Paystack is a payment platform that enables businesses in Africa to accept payments by anyone, anywhere in the world, from multiple local and global payment channels, including credit cards, debit cards, money transfers, and mobile money.
Additionally, Paystack provides tools to help its business users retain existing customers and acquire new ones.
Industries: Financial Services and Payments
Website: https://paystack.com/
Article culled from Medium
Olanrewaju Joel
April 14, 2020 at 2:11 pm
This is what I have been preaching. But some states believe they cannot survive without oil money.
The states should sponsor a bill for the amendment of the constitution so that they can own the land and what is on and under the land, have power to register companies to a certain level of investment, pay salaries according to ability, generate or license company to generate electricity for their state, collect VAT, do foreign trade and earn income. Then on these pay royalties or federal contributions of a fixed equal amount from each state of the federation of Nigeria.