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Business

Nigeria to spend $3 trillion in over 30 years to bridge infrastructural gap – Moody’s Report

Moody’s has revealed that Nigeria needs to spend about $3 trillion in over 30 years to bridge the infrastructural gap experienced in the country.

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Moody’s explains why Nigeria has low growth rate

Nigeria needs to spend about $3 trillion over the space of 30 years in order to bridge the country’s infrastructural gap. This is according to a recent report released by Moody’s Investors Services, a leading global risk assessment firm.

According to the report titled; Significant financing from private sector and multilateral needed to address Nigeria’s infrastructure deficit, Nigeria is behind other emerging market peers and will require significant investments to bridge its infrastructural gap.

Also, the report outlined that Nigeria faces many budgetary and financing challenges, some of which include, weak institutions and governance frameworks along with a low tax base, which is hindering infrastructural investments.

What you should know

  • Nairametrics had earlier reported the approval by the Federal Government of Nigeria to establish infrastructure companies to address this gap. This indicates that the present government is not oblivious of this fact and is making efforts to address the challenges.
  • However, a sum of N4.37 trillion was allocated for capital expenditure in the 2021 appropriation bill, which accounts for 32.2% of the total proposed budget leaving the bulk of the budget to recurrent expenditure.
  • The Moody’s report noted that the focus of infrastructure development has been within power, railways, roads, ports, and pipelines, and this trend is expected to continue with the particular investment needed to address Nigeria’s electricity shortages.
  • To this effect, Nigeria’s power sector is expected to benefit from renewable energy like solar and wind, with financing also possible from green bonds.

Meanwhile, according to data from the National Bureau of Statistics (NBS), Nigeria received foreign direct investments worth $414.8 million in Q3 2020, representing a 179.2% increase compared to $148.59 million recorded in Q2 2020.

What they are saying

Commenting on the causes and nature of the infrastructural gap in the country, the Vice-President, Senior Analyst at Moody’s Investor Service, Kunal Govinda said,

“Nigeria currently has a significant infrastructure deficit and faces additional pressures from a rapidly growing population. Its low government funding capacity and customer affordability have been weakened further by the coronavirus pandemic and low oil prices.”

Why this matters:

No country develops without solid infrastructures, which will be needed to transit to the frontiers phase. In lieu of this, the importance of well-developed infrastructural facilities to national development cannot be overemphasized.

  • Given the huge financial outlay required to address the lacuna in infrastructural development in the country, it is pertinent to note that the government alone cannot fix this gap. There is a need for a public-private partnership.
  • Hence, Nigeria requires significant infrastructural investment to navigate the economy to the levels of other emerging market peers.

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Business

Concessionaire moves to stop handover of National Arts Theatre to CBN

FG has been asked to stop the handover of the National Arts Theatre to the CBN pending the determination of a suit in court.

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Topwide Consortium, a concessionaire, has asked the Federal Government to stop the handover of the National Arts Theatre to the Bankers’ Committee, led by the Central Bank of Nigeria (CBN) pending the determination of the suit in court.

This follows the disruption of its rights as the concessionaire to the National Arts Theatre after the firm had mobilized direct local and foreign investments in excess of $2 billion under the concession agreement.

According to a report from the News Agency of Nigeria (NAN), the call is contained in a statement issued by Topwide Consortium Project Director, Mr Chris Ogan, on Saturday, March 6, 2021, in Awka.

READ: FG hands National Theatre over to CBN, Bankers Committee

What the Topwide Consortium Project Director is saying

Chris Ogan who initiated the suit said, “We are using this opportunity to reiterate our answer that the suit is very much pending and for which we have retained two commercial law Senior Advocates of Nigeria.’’

He said a motion for an interlocutory injunction to restrain any interference with the subject of the suit filed by their lawyers was also pending before the courts.

He also said the suit was filed in December 2019, with CBN, the Minister for Information, Tourism and Culture and Access Bank Plc. as some of the defendants.

READ: CBN to prevent exporters with unrepatriated export proceeds from banking services

Other defendants are Herbert Wigwe representing the Bankers Committee, the Board of the National Theatre, Infrastructure Concession Regulatory Commission (ICRC) and Attorney-General of the Federation.

“The case was to come up on Dec. 15, 2020, but the Federal High Court, Lagos, which is hearing the case did not sit and it later adjourned the case to March 18, 2021.

We were also contracted to develop a high rise car park and provide appropriate connections to the Lagos light rail Metro Blue Line station planned for the National Theatre Complex.

“The agreement is that upon completion of the rehabilitation, the upgraded National Theatre would be handed over to the Federal Government for the continued management by the Board of the Complex,” he said.

READ: Stamp Duty Probe: Reps act tough, reveal 14 banks are owing N1.5bn

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He also said that they were surprised at the news of the planned takeover of the complex by the Bankers’ Committee, after the Attorney-General of the Federation signed-off finally on the concession agreement on May 3, 2017, and Road Shows were organised in Lagos, Abuja, Johannesburg, Dubai, London and New York to woo investors.

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He said, “Our lawyers, on our instructions, wrote letters-dated Oct. 24, 2019, to all the concerned Federal Government agencies/agents to desist from tampering with our concession contract.’

None of the officers/agencies ever replied the letters and shunned our entreaties for meetings to clear whatever misunderstanding that informed their actions.’’

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READ: CBN, Bankers committee back N3.5 trillion stimulus package for Nigeria

Ogan, therefore, called for strict compliance with due process and rule of law, over the handling of the matter.

He said forging ahead with the handover would not only result in contempt of the courts but also an embarrassment of Nigeria, before international investors.

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What you should know

  • It could be recalled that the Federal Executive Council (FEC) had on February 10, 2021, approved an agreement that will lead to the renovation of the National Theater, Iganmu, Lagos for N21 billion.
  • Subsequently, on February 15, 2021, the Bankers’ Committee, led by Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), signed a Memorandum of Understanding (MoU) with the Federal Government with Cappa & D’Alberto Limited as the main contractors, Nairda Limited as the electrical sub-contractor and VACC Limited as the mechanical sub-contractor for the project
  • The Federal Government said the renovation will create thousands of jobs among other benefits.

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Business

FG proposes new taxes on petroleum products, beverages, telecommunications

The FG is moving to increase its revenue-generating capacity to fund the 2021 Appropriation Act.

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Customs revenue rises by N200 billion to hit N1.5 trillion in 2020, Nigeria losses billions over importation of iron and steel

The Federal Government is proposing the imposition of new taxes on petroleum products, non-alcoholic beverages and telecommunications service providers as it moves to increase its revenue-generating capacity to fund the 2021 Appropriation Act.

They want the return of a N1.50 levy on each litre of petroleum product brought into the country and the taxing of non-alcoholic beverages like alcoholic drinks and tobacco.

This disclosure was made by the Controller General of the Nigerian Customs Service (NCS), Col. Hameed Ali (Rtd.), while appearing before the House of Representatives Committee on Customs to defend its 2020 Budgetary performance and 2021 proposal.

According to a report from Punch, Ali, who led top officials of the Customs before the committee, made written and oral submissions with the lawmakers also grilling him for about 3 hours.

READ: LNG boss tasks FG to begin the monetization of Nigeria’s gas

What the Controller-General of the Nigerian Customs Service is saying

The Customs boss told the lawmakers that as part of strategies to improve revenue generation in 2021 based on the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper, the service introduced the e-Customs, which will make its operations electronic and automated.

He said, “Proportionally, it is the service’s expectation that, as a result of this reform, we will increase the revenue base of the government.’’

The Customs boss also said that the service recommended and the government approved downward tariff review of the current 35% levy on new and luxury imported vehicles to 5%, in addition to the downward review of commercial vehicles from 35% to 10%.

READ: CBN Governor says Dangote refinery will sell refined products to FG in Naira

He said, “This is to encourage massive importation of vehicles into Nigeria and further increase the revenue base of the government; also, and most importantly, to reduce smuggling of vehicles through our borders. The complaint has always been that the tariff is too high and, therefore, people are forced to go through the borders to smuggle their vehicles.

“Based on that and now that we have succeeded in reducing these duties, it is our belief that most of the vehicles coming into Nigeria will come through the ports and by so doing, it will create jobs, increase earnings for not only the Customs but also other operatives in the marine sector. So, it is a win-win situation as far as we are concerned.”

READ: Dangote tells FG to allow only refinery license holders to import petrol

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Ali stated that a levy would now be reintroduced on petroleum products, in addition to the recommendation to the introduction of taxes on telecommunications service providers on the recharge cards they produce, while carbonated drinks would also become taxable soon.

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He said, “One of the reasons for us to tax carbonated drinks is that, if we tax alcoholic beverages and tobacco because they are injurious to our health, carbonated drinks, with the content of sugar, are equally injurious to our health.

“Most of the diabetes cases we see today are as a result of consumption of these drinks. So, it is deadly; as deadly as tobacco. Alcohol is less deadly than them. But we are still running a zero excise duty on these companies.

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READ: Customs revenue rises by N200 billion to hit N1.5 trillion in 2020

Why this means

  • The proposal of the Nigerian Customs Service of the introduction of new taxes is coming at a time the Federal Government had declared tax reliefs for businesses and individuals due to the devastating impact of the coronavirus pandemic.
  • However, the government is looking for ways to improve its revenue-generating capacity to be able to fund the 2021 Budget.
  • This will ultimately increase the burden for Nigerians as these businesses are expected to pass the cost of their services and products on to them.

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