Economy & Politics
Lagos 2021 Appropriation Bill scales through second reading
The Lagos N1.16 trillion 2021 Appropriation Bill has scaled through a second reading at the Lagos State House of Assembly.
The Lagos 2021 Appropriation Bill of N1.16 trillion successfully scaled through the second reading on the floor of the Lagos State House of Assembly after the Acting Clerk of the House, Mr. Olalekan Onafeko, read it at the plenary session.
According to the Chairman, House Committee on Budget and Economic Planning, Mr. Gbolahan Yishawu, his committee would thoroughly review the budget before it can be considered and eventually passed.
He further noted that the current counterpart funding arrangement was not satisfactory, as it could inhibit the state from accessing the requisite grants.
Also, on the sectoral allotments, he is worried over a number of issues including the vote heads allotted to a number of sectors vis-a-vis the external and internal loans of the state, considering the state debt burden is in trillions of naira.
(READ MORE: Lagos Government shuts Maryland-Ojota service lane for 6 weeks)
What they are saying
Mr. Yishawu said, “All seems not to be right with the projection of the 2021 estimate, as the expected revenues is most likely unattainable. This is because of the recent developments of COVID-19 pandemic and the EndSARS protest which have left behind sad tales of economic woes for the state and the country at large.
“The revenue-generating agencies needed more vote heads and the House needed to look at the budget critically to ensure revenues were used conscientiously, as well as looking at outsourcing our collections and increase coverage.”
Mr Rotimi Olowo, Chairman House Committee on Finance, was full of praise for Gov. Babajide Sanwo-Olu for the focus of the budget on empowering the youths through several schemes but cautioned the house to always use empirical facts and data to validate all the budget provisions, adding that the state needs a budget size that is easily and seamlessly implementable.
Commenting as well, Mr. Tobun Abiodun, Chairman House Committee on Works and Infrastructure, noted that since revenue drives the budget, there is a strong imperative for adequate provisions to be made regarding revenue projections.
Also, Oluyinka Ogundimu, the Chairman House Committee on Education, is worried over obvious gaps in finance as well as the revenue expectations and carefully noted that as the effects of COVID-19 are still evident in the state, it would be quite difficult for any breakeven projections to be achieved, given the wanton destruction of private and public assets in the state during the #EndSARS protests.
The Speaker, Mudashiru Obasa, however, advised, “I want to caution the committee not to jump to conclusions on the revenue projection until their engagement with the MDAs. The state recently grapples with attendant effects of inflation, unemployment caused by the COVID-19 pandemic, and the EndSARS protest. Therefore, the budget must have a human face to put smiles on the faces of victims, whose means of livelihood were grossly affected.”
(READ MORE: Nigerian Railway Corporation announces revenue of N1.4 billion in 2020)
Mr. Speaker, Mudashiru Obasa, requested the committee look into all grey areas highlighted and also committed the 2021 budget to the Joint Committees of the House on Appropriation and Finance for a thorough review and to report back to the general assembly in six weeks.
What you should know
- The second reading of a bill is the first opportunity for the members of the house to review and debate the main principles of the Bill.
- To pass a bill on the floor of the house, it takes several steps including first reading, second reading, committee stage, report stage, third reading, then assent/approval.
Economy & Politics
Emefiele tells economists to stop “overdramatizing” analysis that can create Panic
CBN has assured that the nation’s economy will emerge out of recession in the first quarter of 2021.
The Central Bank of Nigeria (CBN) has assured that the nation’s economy will grow by 2% in 2021. The apex bank is optimistic that its various intervention will make Nigeria emerge out of recession in the first quarter of 2021.
This was disclosed by the Governor, CBN, Godwin Emefiele while delivering his keynote address at the 55th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos on Friday.
READ: Total credit to the economy rose to N19.54trillion – CBN Governor
What he is saying
He said, “We expect that growth in 2021 would attain 2.0 percent. It is important to insulate the economy from shocks that may undermine the attainment of the projected 2.0 percent economic growth.
“However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a COVID vaccine is produced and made available to millions of people across the world.
READ: Dark Clouds loom for investors as stocks fall 8% in first half of 2020
“Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.”
He emphasized on the need to find ways to insulate the economy from the impact of these shocks through diversification efforts, while also working to ensure that the nation adheres to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.
READ: CBN discloses how much has been disbursed from N50 billion COVID-19 intervention fund
Stop overdramatizing analysis
Emefiele appealed to economic analysts to stay clear from analysis that can create panic and thus hamper the economic recovery process. “When you overdramatized you create panic in the system and that slows down the process of recovery.
“Our actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of November 23 & 24, 2020, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices,” he added.
Mr. Emefiele has often accused “armchair” economists of making exaggerated comments when expressing their views on the economy.
Explore Data on the Nairametrics Research Website
55th Annual Bankers Dinner https://t.co/WROvaYq8Cg
— Central Bank of Nigeria (@cenbank) November 27, 2020
READ: Finance Minister gives reason FG approached China for $17 billion loan
What you need to know
On November 23, 2020, Nairametrics reported that the Minister for Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the country will exit recession by the first quarter of 2021 as the government is working towards reversing the declining economic trend in the country.
- The Finance Minister said the COVID-19-induced recession followed the pattern across the world, where many countries had entered an economic recession.
READ: Nigerian economy going into recession, might contract by -8.9% – Finance Minister
Economy & Politics
Nigeria edges closer to getting World Bank loan, in the final stages of talk
The Finance Minister has disclosed that Nigeria has fulfilled the conditions and is in the last stages of securing a World Bank loan.
Nigeria is set to achieve its plans of getting the $1.5 billion World Bank loan package as it is in the closing stages of the deal following its fulfilment of the conditions set by the international multilateral organization.
This disclosure was made by the Minister for Finance, Budget and National Planning, Zainab Ahmed, during an interview on Friday, November 27, 2020, with Bloomberg Television.
While pointing out that Nigeria’s senate approved the borrowing plan from the World Bank in June, Ahmed said the board of the multilateral institution will discuss the loan package at their next meeting.
What you should know
It can be recalled that the World Bank loan which had been sought by Nigeria in the wake of the devastating impact of the coronavirus pandemic, was being delayed by the Brettonwood institution due to concerns over reforms as it feels that Nigeria has not shown enough commitment towards achieving them.
Some of the reforms include the unification and flexibility of the exchange rate, removal of fuel subsidy, increase in electricity tariffs amongst others.
However, it seems that with the recent deregulation of the downstream sector of the oil industry with the attendant removal of fuel subsidy and increase in electricity tariff, some of those concerns of the World Bank are gradually being sorted out.
Ahmed also said that Nigeria is considering joining the G-20 debt-relief initiative and is talking to commercial lenders to secure their backing.
She said, “We will consider joining as long as it is safe for us to do so. Nigeria couldn’t participate initially because some of the conditions were unfavourable for existing loan commitments with bilateral lenders and other international borrowings.”
On the increased gap between the official rate and parallel market rate, the minister said the government is concerned about the widening gap in the naira’s exchange rate on the official and parallel markets.
She said, “We have been taking measures to close the gap. We hope to get to an even level very soon so the impact of the exchange rate will become moderated.”
Economy & Politics
Nigeria generates N416.01 billion from Company Income Tax in Q3 2020
Total company income tax generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in Q2 2020.
Nigeria generated the sum of N416.01 billion from Company Income Tax (CIT) in the third quarter of 2020. This was revealed in the Company Income Tax by Sectors report, recently released by the National Bureau of Statistics (NBS).
According to the report, the total CIT generated increased by 3.48% in Q3 2020, compared to N402.03 billion recorded in the previous quarter (Q2 2020). It reduced by 20.13% compared to N520.89 billion recorded in the corresponding quarter (Q3) of 2019.
READ: Nigeria’s Value Added Tax collection dips slightly in Q1 2019
READ: VAT revenue may have hit 4 year high in 2018
Highlights
- Company income tax generated year-to-date sums up to N1.11 trillion as against N1.26 trillion in the comparable period of 2019.
- Professional Services including Telecoms generated the highest amount of CIT with N55.52 billion generated, closely followed by Other Manufacturing with N42.03 billion.
- Banks & Financial Institutions generated a sum of N24.05 billion.
- Mining generated the least, closely followed by Textile and Garment Industry and Local Government Councils with N120.93 million, N167.51 million, and N321.72 million generated respectively.
READ: FBN Holdings Plc posts Profit of N21.9 billion in Q3 2020
Out of the total amount generated in Q3 2020, N244.70 billion was generated as CIT locally, while N70.34 billion was generated as foreign CIT payment. The balance of N100.97 billion was generated as income taxes from other payments.
Automobiles and Assemblies grows CIT by 994%
In terms of sectors with the highest increase in company income tax remittances, the Automobiles and Assemblies sector grew its CIT by 994%, from N81.6 million in Q2 2020 to N892.7 million. It was closely followed by the Gas sector, which grew its CIT by 626% to stand at N4.76 billion from N655.5 million.
READ: FG rejects calls for tax reduction, offers tax relief for donors to intervention funds
On the flip side, transport and haulage services recorded the highest decline in company income tax, as it reduced by 76% to stand at N7.35 billion from N31.1 billion. This is closely followed by Banks and financial institutions, which declined by 51% to stand at N24.1 billion.
READ: Unity Bank Plc posts gross earnings of N11.04 billion in Q3 2020
Bottom line
The rise in company income tax is an indication of the Nigerian government’s move to improve the generation of revenue from the fiscal side as against oil exportation. However, the halt in economic activities due to the COVID-19 pandemic contributed to the year-on-year decline in company income tax.
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