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AfCFTA: Members to complete free trade tariff by July

Members of Africa’s new free trade area will complete their tariff reduction schedules and finalise essential rules of origin by July.

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Q1 2020, AfCFTA, African Continental Free Trade Area, Africa Free Trade Agreement, Business new, Nairametrics news

Members of Africa’s new free trade area should complete their tariff reduction schedules and finalise essential rules of origin by July, according to a senior official at the bloc’s secretariat.

Following months of delays caused by the global Covid-19 pandemic, African countries began officially trading under the African Continental Free Trade Area (AfCFTA) on January 1, 2021.

READ: AfCFTA: Nigeria submits Instruments of Ratification, becoming the 34th State Party

Despite the urgency with which the tariff reduction and rules is to be finalised, experts believe full implementation of the deal may take years.

Under the agreement establishing the AfCFTA, members must:

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  • Phase out 90% of tariff lines over the next five to 10 years.
  • Another 7% considered sensitive will get more time, while 3% will be allowed to be placed on an exclusion list.

READ: ECOWAS ministers recommend gradual re-opening of borders 

As of the time of reporting, forty-one of the zone’s 54 member states have submitted tariff reduction schedules.

The members are also expected to complete and submit the rules of origin in addition to tariff reduction schedules. The rule of origin is a key factor for determining which products can be subject to tariffs and duties.

READ: AfCTA: Effective implementation to boost Africa’s export by $560 billion

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What they are saying

During a panel discussion at the Reuters Next conference on Monday, Silver Ojakol, Chief of staff at the AfCFTA Secretariat, submitted that nearly 90% of the rules of origin has been agreed on.

  • “So, the remaining 10% must be completed by July this year. By the end of June, we should have completed both the tariff scheduling and the rules of origin.”

READ: AfCFTA committee says infrastructure deficit will not inhibit Nigeria’s participation

Ojakol noted that the remaining obstacles were not simply related to tariff harmonisation, but to infrastructure deficit. To this end, He asserted that:

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  • “The biggest challenge perhaps is infrastructure interconnectivity to ease trading.”

READ: Eco currency: Collaboration is crucial for success

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Fola Fagbule, Senior Vice-President at the Africa Finance Corporation (AFC), stated during the discussion that:

  • “I do think there are a lot of green shoots, a lot of bright spots on the horizon in terms of investor appetite for infrastructure in Africa.”

READ: AfCFTA: The state of the manufacturing sector in Nigeria and its ability to capitalize on open borders

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What you should know

  • Nairametrics reported on 5 January 2021 that the AFC recently secured $250 million in financing from the U.S. Development Finance Corporation to help fund infrastructure projects on the continent.Given that physical infrastructure systems ensure that basic human needs are met, the funding, if properly utilised, is expected to go a long way in the provision of crucial infrastructure for economic and social development across Africa.
  • The African Continental Free Trade Area (AfCFTA) is a free trade area founded in 2018, with trade commencing as of 1 January 2021. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.
  • It is flagship project of the African Union’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years.
  • The AfCFTA agreement is a trade deal designed to remove barriers to intra-Africa trade among member states and seeks to connect 55 African Nations with 1.3 billion consumers by creating a single $3.4 billion market with an estimated combined gross domestic product (GDP) of more than US$2.5 trillion.
  • Nigeria signed the AfCFTA in July 2019, becoming the 53rd member state.

Adeyemi holds a PhD in Accounting Sciences. He has worked in the Educational Sector and as an Independent Consultant.

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Business

FG gives reasons for sale of government assets to fund 2021 budget

The Minister of Finance has disclosed that the FG wants to sell some of its assets to fund the 2021 Budget.

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FG seeking approval from National Assembly for $1.2 billion agric loan, Capital market to get more tax incentives - FG , FEC reviews Ajaokuta-Kaduna-Kano gas project contract, approves $2.571 billion, FG to reduce N1.5 trillion from 2020 budget due to coronavirus

The Minister of Finance, Budget and National Planning, Zainab Ahmed, has explained that the Federal Government wants to sell some of its assets to fund the 2021 Budget because they are currently moribund and provide little or no value in their current state.

This is as she also said that the plan by the government to sell public assets will be of benefit to Nigerians and help boost the economy.

Her reaction follows the public outcry against the move by the Federal Government to sell some of their dead assets to partly fund the 2021 Budget due to a revenue shortfall.

This disclosure was made by Ahmed, during an interview on a monitored Channels Television programme, Sunrise Daily, on Friday, January 22, 2021.

What the Minister of Budget and National Planning is saying

She said, “There are some government assets that are dead that can be sold to the private sector to be reactivated and put to use for the benefit of Nigerians.

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“So we are looking at different – and I am a member of the National Council on Privatisation – we are looking at different categories of government assets that government has not been able to manage, that are lying down and in some cases even completely rundown, to cede them off to the private sector.’’

Ahmed said, “The intention is not just funding the budget, it is to reactivate these assets and hand it over and have them bring contributions to the growth in the economy.”

”In the last week of December, we had a meeting of the National Council on Privatisation where we approved the annual work plan, the 2021 work plan, for that Bureau of Public Enterprises.

“And I guess it is in this first quarter that the BPE will now be engaging the Senate committee and other committees they work with to say this is our work plan for the year.

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‘’The critical issue we need to look at, is ‘What assets are we selling?’ Some assets are already liabilities, so what are we keeping them for? That is my humble opinion,” the lawmaker added. “You have to tell us which assets we are looking at, ‘’ she added

What you should know

  • There has been a lot of public outcry and criticisms against the Federal Government’s plan to sell some dead public assets to partly fund the N13.58 trillion 2021 budget.
  • In a statement on Sunday, civil society group SERAP had asked the National Assembly to stop the federal government from selling public assets to fund the 2021 budget and suggested that government should rather look to identify areas in the budget to cut, such as salaries and allowances for public officials.
  • However, on the flip side, a Federal lawmaker from Osun State, Wole Oke, who is also the Chairman, House Committee on Public Accounts, defended the federal government’s plan to sell public assets to fund the budgets.
  • He said some of those assets that are to be sold are already liabilities to the government.
  • He pointed out that the issue of the sale of assets is not new and said that even in the previous budgets, there have always been other sources of revenue and the sales of assets is one of such. He, however, stressed that the government must be transparent throughout the process.

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Court suspends Mareva injunction, orders opening of Seplat’s corporate offices

The Court of Appeal has suspended the interim order issued by a Federal High Court sealing the corporate Offices of Seplat Petroleum Development Company.

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A Lagos Court of Appeal has ordered the suspension of an interim order issued by a Federal High Court sealing the corporate offices of Seplat Petroleum Development Company.

The closure of Seplat’s office was ordered over loan facilities Cardinal Drilling Services Limited allegedly owes Access Bank Plc.

The court lifts the interim order on the stance that Access Bank had nothing to lose if Seplat continued to discharge its obligation to its numerous customers.

While delivering a ruling on an application by the petroleum company for an order of the Court suspending the interim order pending the determination of the appeal filed by Seplat, Justice Joseph Ikyegh held that the balance of convenience favoured the petroleum company.

Justice Ikyegh, however, ordered the company to issue a bond of $20 million in the name of the Court’s Chief Registrar, an order the company’s counsel Etigwe Uwa, SAN said had been complied with.

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The Court rejected Access Bank’s argument that suspending the interim order would amount to dabbling into the substantive issues that ought to be determined while hearing the main appeal. The Court noted that Seplat supplied gas to three power plants that generate almost 40 per cent of power supply in Nigeria and that it would not be able to deliver this service if the order was not suspended.

What they are saying

Justice Joseph Ikyegh said:

“The fear and anxiety expressed by the 1st Respondent (Access Bank) appeared unfounded. It would also not amount to hearing the substantive suit.

“The Supreme Court has held that where machines and workers would be rendered useless, the court would intervene.

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“Disruption of business should be considered in the issue of balance of convenience. The court will exercise its discretion in suspending the injunction.

“Practical approach should be adopted and not do injustice to any of the parties.

“Where considerable hardship will be done to a party, the court will intervene by suspending the injunction or stay it.

“I found substance in the argument. The injunction restraining the appellant from operating is hereby suspended.

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“Order on its accounts are also lifted pending the determination of the appeal.”

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What you should know

  • Recall that Nairametrics reported some months ago that Access Bank obtained an Ex-Parte Order dated November 13th, 2020, to seal the assets of Seplat.
  • The bank also obtained a Mareva injunction freezing the accounts of Seplat in Nigeria and abroad.
  • Seplat had appealed the December 24, 2020 decision of the Federal High Court granting injunctions that, among others, resulted in the sealing of its corporate offices in Lagos.
  • The Federal High Court had earlier turned down an application by Seplat to access its accounts and offices which were earlier shut down by a Mareva injunction obtained by Access Bank against it.
  • Access Bank is understood to be grappling with a string of bad loans issued under the defunct Diamond Bank, and is now stepping up efforts to go after some of the debtors by obtaining several court orders to seize properties.

Seplat has continued to maintain that the loan agreements evidenced by letters of offer of credit facility were all between Diamond Bank Plc. (now Access Bank Plc.) and Cardinal Drilling Services Limited, while the three Deeds of Debenture to the loan were over specific and fixed assets of Cardinal Drilling viz four Drilling Rigs set out in the schedules of the three Deeds of Debenture.

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Buhari directs FIRS, others to ensure strict compliance of tax payment by foreign firms

President Buhari has directed the FIRS and other related government agencies to ensure strict compliance of tax payments by foreign companies.

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NASENI, Public holidays, President Buhari to scrap NNPC, PPPRA as he submits new PIB to National Assembly, Buhari says there is no provision for fuel subsidy in revised 2020 budget, President Muhammadu Buhari to address Nigerians on Monday, receives update and recommendations from PTF, President Buhari earmarks N420 billion for N-Power, GEEP and others under NSIP in 2021

President Muhammadu Buhari has directed the Federal Inland Revenue Services (FIRS) and other related government agencies to ensure strict compliance of tax payments by foreign companies operating in Nigeria by plugging all revenue leakages.

This is as the president has ordered all government agencies to automate their operations and ensure more synergy in advancing the interest of the country in revenue generation.

According to a report from the News Agency of Nigeria (NAN), this directive was given by the president at the virtual First National Tax Dialogue held at the Conference Hall of the State House, Abuja, where he also stressed the need for deployment of more digital platforms and seamless connections.

What President Buhari is saying

President Buhari in his statement said, “It is not enough that our citizens and local businesses pay their fair share of taxes. Equally, foreign businesses must also not be allowed to continue to exploit our markets and economy without paying appropriate taxes.

” Accordingly, the FIRS has my mandate to speedily put all measures in place to fully implement programmes to stamp out Base Erosion and Profit Shifting in all their ramifications and generally automate its tax processes.

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“In line with this, I have directed all government agencies and business enterprises to grant FIRS access to their systems for seamless connection.

”FIRS must ensure that its deployment of technology for automation is done in line with international best practices.  In particular, FIRS can borrow a leaf from other countries which have successfully automated their tax processes,’’ Buhari said.

President Buhari said that Nigeria will continue to work with the Inclusive Framework (on equal footing) to develop internationally acceptable rules for taxation of the digital economy, which he is optimistic would have evolved into an acceptable multilateral solution that will comprehensively address the tax challenges of the digitalised economy by the middle of 2021.

He said his administration was strategically restructuring the tax revenue mix in favour of indirect taxes in accordance with the national tax policy document.

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The president said, ”To this end, FIRS is mandated to do all that is required in order to efficiently collect tax revenue due from transactions carried out using local and foreign online platforms. The government has made relevant statutory amendment to tax laws in the Finance Act 2020.’’

”The administration is, however, not seeking to increase the tax burden upon the citizens but to plug the existing tax loopholes or leakages and to ensure even and equitable application of the tax laws.”

”This was clearly demonstrated by the provisions in the Finance Act 2019, whereby government exempted small companies from tax and reduced the income tax rate for medium companies from 30% to 20%.

”In the Finance Act 2020, which I signed into law at the tail end of 2020, we went further to cushion the burden of tax on the low-wage workers by exempting minimum wage from personal income tax,” he added.

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What you should know

  • It can be recalled that in the new Finance Act 2020 which was signed into law by President Buhari and took effect from January 1, 2021, necessary amendments were made to the FIRS Establishment Act to provide the legislative framework for the adoption of technology in tax administration.
  • The Federal Government has devised several strategies and policies to boost tax collections in the face of dwindling revenue due to the outbreak of the coronavirus pandemic.
  • The new Finance Act also includes provision for the exemption of low-income earners on N30,000 and below per month from income tax payment.

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