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Coronanomics: Nigeria Needs Economic Pragmatism and Robust Institutions – Dr. Temitope Oshikoya

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Temitope Oshikoya

Nigeria needs to achieve economic pragmatism with the support robust institutions to achieve economic stability amidst the COVID-19 pandemic that has recorded over 230 cases in the country.

Dr. Temitope Oshikoya an economist and CEO of Nextnomics Advisory disclosed this on the WebTV Coronanomics Watch program.

He described the recent N500bn intervention plan of the Federal Government as a good step; a critical one at a time of a viral pandemic, even as Nigeria has also engaged Multilateral Development Banks (MDBs) like the World Bank, International Monetary Fund and the Islamic Development Bank amongst other.

According to him it was important to strengthen Nigeria’s healthcare infrastructure and delivery systems, because good health leads to economic wealth.

Oshikoya emphasized the need for effective governance measures through institutions and pragmatism from policy makers, to navigate the challenges arising from the coronavirus disease.

According to him sustainable economic development depends on productivity and productivity depends on incentives, robust institutions and innovation.

Speaking further, he said that Nigeria needs ‘Economic Pluralism’ which will adopt a combination of financial market roles and efficiency of government institutions.

On the fiscal support from the Federal Government for states, the economist said, “We need an efficient information system to monitor distribution and disbursement which means we need an efficientdatabase”.

“We need to work with the NBS, ICT digital economy information ministry in order to build our infrastructural data base and reach out to the poor and most vulnerable. We need stabilizers from social security arrangements, the insurance sector, and pension administration which the USA is building upon. The local government apparatus is equally very important”.

Taking on the issues further in the area of state intervention, he stressed that the issue of decentralization from each state was important, and equipping the healthcare sector should start from the local government  level.

He noted that, “the local government apparatus is very important and strengthens the state’s capacity to handle healthcare, insurance  and educational matters competently and efficiently. The focus should be at the local government not federal level”.

He cited Germany as an example of a country that is effectively driving the state decentralization process through strategic interventions at the Federal, State and Local Government levels which is evident in the reduced cases of COVID-19.

The economist acknowledged Nigeria’s high debt and low revenue base with a low tax base characterized by tax revenues constituting only 7% of GDP, compared to Africa’s average of 15%  and a tax to GDP ratio of 25% in OECD countries.

“In the short term, we need to support the government in the fiscal space but over the long term we need to build public institutions to enable the government to widen the base for tax revenue”, he said.

In terms of key areas for the Nigerian government to  focus on Oshikoya highlighted the following areas:

We need to manage our debt very carefully over the medium term

.we need to mobilise more revenue by improving efficiency in the collection of taxes and reduce corruption

.In  terms of public expenditure, we need to focus on more things that government would imply a greater impact of fiscal spending per capita and improved growth of the productive real sector of the economy

(TEMITOPE WAHEED OSHIKOYA is an Assistant Professor of Economics at the University of New Brunswick, Canada, and a former Economics Consultant to the World Bank)

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Economy

FIRS To Continue VAT Collection Until…says Malami

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The federal government has said that the Federal Inland Revenue Service (FIRS) will continue to collect Value Added Tax (VAT) following the ruling of the Court of Appeal on the matter.

The attorney general of the federation and minister of justice, Mr. Abubakar Malami, stated this in New York, United States while speaking on the disagreement over the collection of VAT between FIRS and the government of Rivers State.

Malami, according to NAN explained that the ruling of the Court of Appeal that FIRS and the Rivers State government maintain status quo, favoured FIRS.

He said it was FIRS that had been collecting the VAT before the dispute arose, over which the Rivers government approached the High Court.

“The position of not only the Federal Government but indeed the judiciary is the fact that status quo associated with the collecting of VAT should be maintained.

“And as far as the judicial system is concerned, the status quo as at the time the parties approached the court, it was the Federal Inland Revenue Service that was indeed collecting the value-added tax.

“So with that in mind, the Federal Government has succeeded in obtaining an order that establishes the sustenance of the status quo, which status quo is that the Federal Inland Revenue Service should continue collection.

“This is pending the determination of the cases that were instituted by states, particularly the Rivers State Government and the Lagos State government. The cases are being determined by the court.”

Recall that the government of Rivers State had urged the Supreme Court to set aside the September 10 ruling of the Court of Appeal ordering it and FIRS to maintain status quo on the issue of VAT collection.

A three-member panel of the Court of Appeal headed by Haruna Tsammani, issued the order being challenged at the Supreme Court by the Rivers government.

The state also urged the apex court to disband the panel of the appellate court, which gave the interim order and ordered another one to be constituted to hear the case.

“But one thing of interest is the fact that the federal government had indeed taken cognisance of the fact that where there exist a dispute between a state and federal government it is the Supreme Court that should naturally have the jurisdiction to determine the dispute between the state and the federation.

“And we are taking steps to consider the possibility of instituting an action before the Supreme Court for the purpose of having this matter determined once and for all,”  Malami said.

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Economy

FG to spend $4.9bn fresh loans on Kano-Niger Republic rail line, others

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President Muhammadu Buhari
President Muhammadu Buhari

A standard gauge rail being planned from Kano State in Nigeria to Maradi in Niger Republic is one of the projects the President Muhammadu Buhari plans to fund with the fresh external loans he is asking the National Assembly to approve for his regime, The PUNCH reports.

Buhari had asked the National Assembly to approve fresh external loans of $4.054bn and €710m ($839m) for his regime.

He also sought the  legislature’s approval for grant components of $125m in the 2018-2020 external rolling borrowing plan.

These were contained in a letter addressed to both chambers of the National Assembly and read on the floor at the resumption of plenary by the presiding officers Messrs Ahmad Lawan and Femi Gbajabiamila (Senate President and Speaker of House of Representatives respectively) on Tuesday.

Lagos-Ibadan-rail

Buhari,  in the letter, dated August 24, 2021, explained that the projects listed in the 2018-2021 Federal Government Borrowing Plan would be financed through sovereign loans from the World Bank, French Development Agency, EXIM Bank International Fund for Agricultural Development, Credit Suisse Group and Standard Chattered/China Export and Credit in the total sum of $4,054,476,863 and €710m (839m) and grant components of $125m

According to the President, summary of some key projects in each of the six geopolitical zones that will be funded by the loans and a summary on the expected impacts on the socioeconomic development of each of the six geopolitical zones were attached to the letter.

According to the breakdown obtained exclusively by one of our correspondents from the Ministry of Finance, Budget and National Planning, five international bodies will jointly provide the $4,054,476,863 component of the loan.

They include the World Bank -$3,250,000,000; China Exim Bank -$225,120,000; IFAD- $50,000,000; European ECA/KfW/IPEX/APC -$190,255,276; Bank of China -$276,981,587; and Standard Chartered Bank/China Export and Credit (SINOSURE) -$62,120,000.

The Euro component of €710m will be provided by AFD -€210,000,00 and Credit Sussie Group €500,000,000 while the World Bank will provide the grant components of $125m.

According to the document, the $190,255,276 to be provided by European ECA/KfW/IPEX/APC will be spent on the Nigeria to Niger Republic rail line.

The document gave the project title as “Kano-Maradi SGR with branch to Dutse” and identified the implementing MDA as the Federal Ministry of Transportation.

“Financing cost which the lender requested to be capitalised” was written under the column for multilateral institution.

On the expected impact of the project on the geo-political development, the Federal Government wrote, “The project is to link Nigeria with Niger Republic from Kano-Katsina-Daura-Jibiya-Maradi with branch to Dutse.

“It is part of the Trans-Africa Railway System and it is expected to improve the international trade between Nigeria, Niger and other North-Africa countries.”

Also, the $225,120,000 to be provided by China Exim Bank is expected to be spent on the Lagos-Ibadan Railway Modernisation Project.

It is meant to cater for the construction of the branch line (Apapa-Tin Can Island Port) project.

On the impact of the project, the Federal Government said, “The project is to provide an alignment of routes from the Apapa Port Terminal to Tin Can Island Port and to enhance the economic activities at the Apapa and tin Can Island Ports.”

The $50,000,000 to be provided by IFAD will be spent on what the government called Value Chain Development Programme -Additional Financing II.

It identified the implementing states as Anambra, Benue, Ebonyi, Niger, Ogun, Taraba, Nasarawa, Enugu and Kogi while the geo-political zones were listed as North Central, North East, South West and South East.

The expected impact, according to the government, is “to support a measurable increase in the programme’s outreach to 100,000 farmers, including over 6,000 and 3,000 processors and traders respectively.

“It will also support the mainstreaming of issues that were not considered at the stage of programme design.”

The €210,000,000 to be provided by AFD will be spent on two projects -National Digital Identity Management Project (co-financed with the World Bank, AFD and EIB) -€100,000,000; and the Kaduna Bus Rapid Transport Project –€110,000,000.

The Bank of China’s $276,981,587 will be spent on the establishment of three power renewable energy projects; Credit Sussie Group’s €500,000,000 will be spent on sovereign guarantee for the issuance of Euro bond as collateral to enable Bank of Industry fund its projects; while the -$62,120,000 to be provided by Standard Chartered Bank/China Export and Credit (SINOSURE) will be used to provide 17MW hybrid solar power infrastructure for the National Assembly complex.

World Bank’s $3,250,000,000 will be spent on seven projects.

Part of Buhari’s letter to the National Assembly had read, “I write on the above subject and submit the attached addendum to the proposed 2018-2020 external rolling borrowing plan for the consideration and concurrent approval of the senate for the same to become effective.

“The distinguished Senate President may recall that I submitted a request on 2018-2020 borrowing plan for the approval of the senate in May 2021.

“However, in view of other emerging needs and to ensure that all critical projects approved by Federal Executive Council as of June 2021 are incorporated, I hereby forward an addendum to the proposed borrowing plan.

“The projects listed in the external borrowing plan are to be financed through sovereign loans from the World Bank, French Development Agency, EXIM Bank and IFAD in the total sum of $4,054,476,863 and €710m and grant components of $125m.

“A summary of some key projects in each of the six geopolitical zones and a summary on the expected impacts on the socioeconomic development of each of the six geopolitical zones are attached herewith as Annex II and III.”

 

Source The PUNCH via The Advocate

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Economy

Breaking: Appeal Court Stops Rivers, Lagos From collecting VAT…For Now

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The Court of Appeal in Abuja has halted the Rivers State government from collecting Value Added Taxes (VAT) until all legal disputes relating to the matter are resolved.

The court ordered that the judgment of the Federal High Court from which the State drew its power to collect the tax must not be implemented.

Justice Haruna Simon Tsanami who issued the order in Abuja on Friday also directed that the law passed by Rivers State House of Assembly and assented to by governor Nyesom Ezenwo Wike must not be implemented.

The appellate court held that since parties have submitted themselves to the authorities of the court for adjudication of the matter, they must not do anything that will affect the subject matter of the appeal

In specific term, Justice Tsanami granted status quo ante below in favour of the Federal Inland Revenue Services FIRS and against the respondents.

The matter has been slated for September 16 for hearing of motion for joinder by Lagos State.

FIRS, in an appeal marked CA/PH/282/2021, is praying the court to set aside the judgment of a Federal High Court in Port Harcourt which granted power to the state to collect VAT.

The tax collection agency is also asking the appellate court to stay the execution of judgment.

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