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Economy

CBN unveils N50b COVID-19 stimulus

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. A household can get N3m
N10b for Lagos
. Fed Govt’s N1b bailout for pharm firms
. Japan gives $18.2 million grant

A special package to cushion the effect of the COVID-19 pandemic was on Wednesday unveiled by the Federal Government.

They include: N1 billion bailout for pharmaceutical companies; release of N10 billion to the Lagos State Government to battle the virus – the state has the highest number of victims; and $18.2 million to strengthen the National Centre for Disease Control (NCDC). This cash is a grant from the Japanese government.

Finance Minister Mr. Zainab Ahmed announced the package during a meeting of members of the Executive with the National Assembly leadership.

Mrs. Ahmed solicited the support of lawmakers for the cut in the Budget 2020 expenditure to reflect the present economic downturn caused mainly by the Coronavirus pandemic.

The minister was accompanied to the meeting by Minister of State for Budget and National Planning, Prince Clem Agba, Minister of Petroleum Resources (State), Timipre Sylva, Central Bank of Nigeria (CBN) Governor Godwin Emefiele; Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, and Senior Special Assistant to the President on National Assembly Matters, Senator Babajide Omoworare.

CBN Governor Godwin Emefiele


Members of the National Assembly leadership that attended the meeting besides Senate President Ahmed Lawan and Speaker Femi Gbajabiamila, are Deputy Senate President Ovie Omo-Agege; Deputy Speaker, Idris Wase; Senate Leader Yahaya Abdullahi; Leader of the House Ado Doguwa; Deputy Senate Leader, Ajayi Boroffice; Senate Minority Leader Enyinnaya Abaribe; Minority Leader of the House Tony Elumelu; Senate Deputy Whip Aliyu Sabi Abdullahi and Senate Deputy Minority Whip, Philip Aduda.

Others are the Chairman, Senate Committee on Appropriations, Barau Jibrin and the Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Uba Sani.

Ahmed added that the Federal Government has cut its 2020 revenue projection for the Nigeria Customs Service (NCS) from N1.5 trillion to N943 billion due to the economic downturn caused by the pandemic.

She urged the National Assembly to effect a downward review of the oil benchmark in the 2020 budget from $57 to $30.

Ahmed said: “Prior to COVID-19 and oil price decline, the Nigerian economy was already fragile and vulnerable.”

According to her, due to the global economic downturn precipitated by the impact of the Coronavirus pandemic, international oil prices plunged as low as $22 per barrel on the international market.

She added that the impact of the pandemic which resulted in international crisis created a disruption in travel and trade, and put “increasing pressure on the naira and foreign reserves as the crude oil sales receipts decline and the country’s micro-economic outlook worsens.”

She also told the leadership of the National Assembly that budgeted revenues for the NCS have been reduced “due to anticipated reduction in trade volumes; and privatization proceeds to be cut by 50 per cent, based on the adverse economic outlook on sales of the Independent Power Projects (IPPs) and other assets.”

Ahmed said the Federal Government has undertaken cuts to Revenue-related expenditures for NNPC for several projects included in the 2020 Appropriation Act passed by the National Assembly in December, 2019.

“The Federal Government is working on fiscal stimulus measures to provide fiscal relief for Taxpayers and key economic sectors;

“Incentivise employers to retain and recruit staff during the economic downturn; stimulate investment in critical infrastructure;

“Review non-essential tax waivers to optimize revenues; and compliment monetary and trade interventions to respond to the crisis.”

She added that the Federal Government had made provision for health sector interventions by introducing import duty waivers for essential input for pharmaceutical firms; tax waivers on new equipment; and deferment of tax to increase production.

Emefiele said “while we would expect to see a decline in our expected growth projection for 2020 relative to 2019, the exact impact will be dependent on how well the Coronavirus is contained over the next few months, and how long low oil prices persist.”

Senate President Lawan, who presided over the meeting said: “If we have to review the budget itself, we have to consider the MTEF/FSP.

“Even in sickness, we need government to provide services.

“The impact of COVID-19 is well-known to all of us in terms of health and the economy.

“Here, we will be talking of revenues that we estimated to fund the budget 2020.

“Because the oil price has gone so low due to the impact of COVID-19, the Minister of State should be able to tell us where we will be in the next six months or so.

“We should have concepts that can deliver fast and are sustainable.

“Anything that we do that can not provide succour and relief to our people will lead to catastrophe.”

Speaker Gbajabiamila said: “Taking a cursory look at some of the papers (presentations), I think this meeting is actually very timely and very important because we live in very unusual time and it is time we start thinking outside the box to see how we can stabilise our economy and the direction it is going to take.”

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Aviation

Re: NIGERIA DESIGNATES FIVE AIRPORTS FOR FREE TRADE ZONE

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By Nuhu Adam

The recent announcement of the designation of five international airports – Murtala Muhammed International Airport Lagos, Nnamdi Azikiwe International Airport Abuja, Aminu Kano International Airport Kano, Akanu Ibiam International Airport Enugu and Portharcourt International Airport Omagwa – by the Minister of Aviation, Senator Hadi Sirka to support the implementation of both the African Continental Free Trade Area (AfCFTA) and the Single African Air Transport Market (SAATM) agreements is not only a welcome development but a commendable bold move by the government.

Of the five airports, Port – Harcourt airport has the advantage of a complimentary existing Onne Oil and Gas Free Zone. The logistics hub of this zone should take advantage and set the ball rolling immediately to sustain the gains for Oil and Gas cargo, while building capacity at the airport for agro allied export and others using the aviation logistics hub.

Practice in developed and developing countries indicates the existence of numerous and heterogeneous free zones as well as the different role which they have in the economic development of countries that have implemented them. Different industry-specific economic zones can be created to fill certain business needs with the ultimate goal of empowering the economic potentials of the countries in which they are situated. It is along this premise that we make bold to say the free trade zone would offer a huge potential for continental aviation given the potentials of Nigeria dominant market in the West and Central Africa.

The Nigeria aviation logistics hub is about to experience a game changer if the Free Trade zone is well coordinated and implemented and private sector driven.
Aside the increase in the dynamics of economic activities, it will also encourage the advancement of Foreign Direct Investments (FDI) in aviation value chain – OEM supply chain, FBO, capacity building and generation of new entrepreneurial opportunities in e – commerce fulfilment, this is in addition to the likely changes in the real estate market in the airport and its environs among other services.

Benefits accruable by the establishment of a Free Trade Zone
There are loads of advantages available to a company operating within a Free Zone including, but not limited, to the following depending on the model approved for the airport free trade zone:
• No pre-shipment inspection and issuance of Bank Form M required prior to shipment of material from the country of origin. Customers with Bank Bonds executed with the Customs can take their goods into the Nigerian territory after examination and within a very short time.
• While importing cargo the traditional way, you’re subject to clear your material and equipment and pay Customs Duty within 30 days. In the Free zone you are enjoying unlimited time to custom clear your consignment.
• This makes for increased shipments and cargo movements.
• Better cash flow management – Customs Duty Scheduling System. With a Bank Bond/Guarantee in place, you will be able to obtain Customs release of cargo required in the Customs territory. Payment of duty/perfection of Customs entries is then scheduled to be completed within 14 days after delivery – thus deferring Customs Duty payment and obtaining a better cash flow…… Not too sure with AfCTA
• This further translates into increased revenue and earnings in the associated private sector (airlines, clearing/forwarding agencies, banking/finance, services and supplies), increased government revenue and earnings (for Nigerian Customs, Nigerian Civil Aviation Authority, Federal Airports Authority of Nigeria, Cargo Handling Companies, Federal Inland Revenue Service, among others).
• Creation of job opportunities and entrepreneurial development of budding investors.
• Technology transfer and enhancement of local content participation in the nation’s Aviation industry.
• No VAT and withholding tax chargeable on Free Zone storage facilities, services and activities.
• No corporate and personal income tax payable.
• Easy facilitation of expatriate employees working in the Free Zone. No expatriate quota and residence permit are required for the expatriate staff working and domiciled within the area delineated as the Free Zone territory.

Concluding Remarks
Airport Free Zones have proven to be success stories in some countries of the world. The Suvarnabhumi Airport, Bangkok, the Dubai Airport Free Zone, Abu Dhabi Free Zone and Sharjah International Airport Free Zone – all within the United Arab Emirates – are good examples. They have continued to support the economic development of their host nations. All considered, the socio-economic potentials derivable from this development will be felt in a long time to come, especially in Nigeria’s Aviation industry and within the precincts of the neighbouring countries.
More importantly for me, aside the cargo volumes increase is an MRO being championed within a Free Zone to turn Nigeria into the Hub for maintenance, repairs and overhaul of Aircraft in West and Central Africa, while also attracting business from the rest of the aviation and aerospace world will be a catalyst for the new phase of aviation in the region

The MROs in FTZ will result in cost savings to Airlines based in Nigeria and reduce the demand for foreign currency required for Aircraft maintenance.
Labour, which is a major cost item is available locally and at cheaper rates…. More jobs opportunities.
MROs in FTZ would also serve as a platform for capacity building and ensure the development of local labour into highly skilled, certified world-class experts in various aviation related fields.
The aviation logistics value chain will be enhanced in Nigeria and the West and Central Africa Region.

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Economy

FG MAY SLASH CIVIL SERVANTS’ SALARIES, MERGE AGENCIES, OTHERS TO CUT COST- ZAINAB AHMED

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The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said that President Muhammadu Buhari has directed the salaries committee to review payroll and also review the number of agencies.

The government will also remove some redundant items from the budget as a move to cut the cost of governance in the country.

Ahmed disclosed this at the ongoing ‘National Policy Dialogue on Corruption and Cost of Governance in Nigeria’ held in Abuja on Tuesday.

The programme was organised by the Independent Corrupt Practice Commission.

Zainab Ahmed Minister Of Finance Budget And-National-Planning

The government had approved a N13.88trn budget with a deficit of over N5.6trn.

The government projected a revenue of N7.98trn to fund part of the 2021 budget.

“We still see government expenditure increase to a terrain twice higher than our revenue,” Ahmed said.

The Finance boss said all agencies must come together to trim its cost amid the country’s dwindling revenue.

She said, “We need to work together, all agencies of the government to cut down our cost. We need to cut down unnecessary expenditures. Expenditures that we can do without.

“Our budgets are filled year in year out with projects that we see over and over again and also projects that are not necessary.

“Mr President has directed that the salaries committee that I chair, work together with the head of service and other members of the committee to review the government pay rolls in terms of stepping down on cost.”

She revealed that the FG will also review the number of government agencies in terms of their mandates.

Ahmed disclosed that for agencies with the same mandate the government will look at “how to merge the two.”

The Chairman of the ICPC, Bolaji Owasanoye, noted during the stakeholders meeting that the cost of governance is the “driver of corruption in Nigeria.”

He said the government has committed to improving the country’s revenue from new and existing sources.

Owasanoye said the government’s commitment to streamline payroll, removal of subsidies and reduction of the cost of contracts and procurement are all for the benefits of the “poor and vulnerable.”

He said a critical area of concern was “payroll padding” and the “phenomenon of ghost workers.”

He also lamented the duplication of projects such as the constituency projects of lawmakers.

The ICPC boss said funding for such projects are usually released without any mechanism for monitoring and evaluation and reconciliation of the funding.

He cited a project executed by the Redeemed Christian Church of God which was inadvertently diverted as an executive project.

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Economy

Another Increase In Electricity Tariff Imminent, as NERC Considers Appraisals For DisCos

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The stage appears set for an upward review of electricity tariff following the release Monday of indications by the Nigerian Electricity Regulatory Commission (NERC) that it is concluding the Extraordinary Tariff Review process for the 11 Electricity Distribution Companies (DisCos).

With the parameters released by NERC for the review, it is obvious that there will be an upward rather than a downward review.

The reviews, it said, would put into consideration changes in inflation, foreign exchange, gas prices and available generation capacity. Most of these have been on an upward climb, while generation capacity is not known to have improved substantially.

The regulatory body said it would also consider Capital Expenditure (CAPEX) required to evacuate and distribute the said available generation capacity in accordance with EPSRA and other extant industry rules.

In a notice to the general public and industry stakeholders posted on its website, the commission said the review was pursuant to the provisions of the Electric Power Sector Reform Act (EPSRA).

Extraordinary tariff reviews are carried out in instances where industry parameters have changed from those used in the operating tariffs to such an extent that a review is urgently required to maintain the viability of the industry, NERC said.

To worsen matters, the commission has also indicated its plans to commence the processes for the July 2021 Minor Review of the Multi-Year Tariff Order (MYTO-2020), which is done every six months.

“Further to the above, the commission held series of public hearings and stakeholder consultations in the first quarter of 2020 on the Extraordinary Tariff Review Applications of the 11 DisCos to consider their respective five-year Performance Improvement Plans (PIPs).

“However, the evaluation of the DisCos’ requests for review of the CAPEX proposed in their PIPs could not be concluded for the consideration of the commission during the Minor Reviews undertaken in 2020.

“Specifically, Section 21 of the MYTO – 2020 Order provides for consideration of DisCos’ CAPEX application upon further scrutiny and evaluation of the investment proposals,” it said.

NERC said the notice was being issued in compliance with the provisions of EPSRA, the Business Rules of the commission and the Regulations on Procedures for Electricity Tariff Reviews in the Nigerian Electricity Supply Industry.

The commission said it was aimed at soliciting for comments from the general public and stakeholders on the proposed reviews and advised them to send their comments to NERC’s headquarters in Abuja within the next 21 days.

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