The IMF Senior Resident Representative and Mission Chief for Nigeria, Mr Amine Mati, has urged the Federal Government to increase its drive to create more jobs and revamp its fiscal consolidation.
He said this at the public presentation of the ‘Fall 2019 issue of the regional economic outlook for sub-Saharan Africa,’ in Lagos on Wednesday.
Mati also mentioned that Nigeria’s debt to gross domestic product ratio at 28 per cent has increased but is still below the average sub-Saharan Africa and Africa as a whole.
He said, “Nigeria’s debt has increased but the level is way below the average for the region. Even if we include the CBN overdraft and others, we are talking about debt to GDP ratio that does not go beyond 27 to 28 per cent to GDP and that is including AMCON overdrafts and others.”
On fiscal consolidation, he said, “For resource-intensive countries and the non-resource intensive countries, one thing that is common is that when there is trade shock, they have to react. So, you lose revenues, debt goes up.
“In most countries, you would see debt is about 50 per cent to GDP and has increased since 2016 in all cases. But what is new is that most of the countries are back on a sustainable path and have plans to reduce debt through fiscal consolidation and they seem to have stabilised.”
“The growth in per capita to the GDP since 2016 has been sustained for the 12 groups of countries and has stayed sluggish for the group of countries because they have to be dealing with trade shock and how they respond to the shock has also affected what is their path.”
In April, at the joint annual spring meetings with the World Bank in Washington DC, the IMF had expressed worry over Nigeria’s ability to repay its foreign debt, which was put at N24.387tn.
In October, the IMF at another forum called for an effective debt management strategy that would ensure that the amount borrowed posed limited risk and the funds deployed for developmental purposes.
The Managing Director, Financial Derivatives Company, Mr Bismarck Rewane, said, “We don’t have a debt crisis; we have a revenue problem but there are also other problems such as poverty, productivity. So, it is not as if we have a debt or revenue problem. Also, what we use our revenue for is also important.”
Rewane, who is also a member of the President’s Economic Advisory Council, added, “The government expenditure and the government investment multiplier is much lower than the private sector multiplier and the difference between the flow of wealth and the stock of wealth is a different story.”
Finance Act: Rich Nigerians will Pay More Taxes – FIRS
On Saturday, the Federal Inland Revenue Service announced that the implementation of the Finance Act would result in more tax burden on the elite.
In a statement, the service mentioned that Nigeria was on the threshold of a new, transparent, accountable and fair tax regime in which those making more from the system would pay a more equitable share of their income as tax.
The statement said a tax expert, Mr Taiwo Oyedele, in his presentation titled ‘Strategies for implementing the new VAT regime’ said the new 7.5 per cent VAT would not impact negatively on poor Nigerians.
He said the rich would pay more, unlike in the past.
Oyedele said the key to building a fair, equitable tax system was through transparency, accountability, integrity and objectivity.
According to him, this will help build confidence in taxpayers.
The statement said at the end of the retreat, and the FIRS 2020 Corporate Plan was unveiled.
The FIRS new organisational structure approved by the board was also unveiled.
Presenting the new structure, Executive Chairman, FIRS, Mr Muhammad Nami, said many positions in the organisation were vacant and open to the FIRS officials.
He urged them to distinguish themselves by meeting their collection targets.
2020 Finance Bill: No TIN, No Bank Account – FIRS
On Monday, Head, Communications and Servicom Department, Federal Inland Revenue Service, Mr Wahab Gbadamosi, said the night that the implementation date would be at the date the Act stipulated it commence.
He said, “The implementation date will be at the date the act stipulates it to commence.
“In any case, the provision has always been part of the FIRS Act that any person who does not have the Tax Identification Number should not be allowed to open a bank account.”
A top official of government told one of our correspondents that over the years, the rate of compliance with the no TIN no account opening provision of the law among banks had been low.
“The problem we have is that banks are not complying with that provision. We have written to them, but the rate of compliance has not been too effective,” the official who preferred not to be named said.
CBN Distributes N611.5bn to Farmers
As of the end of November 2019, a total amount of N611.5bn has been disbursed to farmers under the Commercial Agriculture Credit Scheme from inception in 2009.
The Central Bank of Nigeria disclosed this in its November 2019 economic report
Part of the report read, “In November 2019, the sum of N1.07bn was disbursed to three projects under the Commercial Agriculture Credit Scheme. Thus, the total amount released to the economy, under the scheme from inception in 2009 to date, stood at N611.50bn in respect of 596 projects.
“In November 2019, 62 projects repaid the sum of N8.15bn, of which payment by 59 projects were steady repayments, while three projects were full repayments.
“The repayments brought the cumulative repayment under CACS from inception in 2009 to N384.41bn.”
An analysis of the number of projects financed under the CACS by value chain indicated that of the 596 CACS sponsored projects, production accounted for 61.6 per cent and dominated the activities funded, while processing accounted for 27.7 per cent.
These were followed by storage, input supplies and marketing, which accounted for 4.7 per cent, 3.3 per cent and 2.7 per cent, respectively.
The CBN said the Agricultural Credit Guarantee Scheme guaranteed a total of N388.22m to 2,125 farmers in November 2019.
The amount represented a decrease of 0.5 per cent and 5.3 per cent below the levels in the preceding month and the corresponding period of 2018, respectively.
The sub-sectoral analysis showed that food crops obtained the largest share of N182.55m (47.0 per cent) guaranteed to 1,127 beneficiaries, followed by livestock sub-sector at N84.36m (21.7 per cent) guaranteed to 351 beneficiaries; and cash crops at N36.07m (9.3 per cent) guaranteed to 177 recipients.
Fisheries, mixed crops, and ‘others’ obtained N34.39m (8.9 per cent), N31.91m (8.2 per cent) and N18.95m (4.9 per cent) guaranteed to 103, 279 and 88 beneficiaries, respectively.
Analyses by states showed that 28 states, including the FCT, benefited from the scheme in November 2019, with the highest and lowest sums of N67.49m (17.4 per cent) and N1.24m (0.3 per cent) guaranteed to Ogun and Jigawa states, respectively.
“The predominant agricultural activities in November 2019 were harvesting of grains, legumes, and tubers across the country. In the livestock sub-sector, farmers intensified their activities in preparation for the expected end of year bumper sales. The end period headline inflation, on year-on-year and twelve-month moving average bases was 11.85 per cent and 11.35 per cent, respectively, in November 2019,” the bank stated.
Pension Funds Value Reducing Per Increase in Inflation – Ex PenCom DG
Operators have been urged to introduce measures to reduce the effect of inflation on workers’ pension contributions by the Director-General, National Pension Commission, Mr Muhammad Ahmad.
He said this while making a presentation on ‘The pension industry – the way forward’.
Ahmad said, “There is a need to ensure that contributors and retirees do not suffer unduly for the depreciation of the naira over the years.
“For instance, in 2012, one dollar exchanged for an average of N170. Today, one dollar exchanges for an average of N360. What this means is that the pension contributors have had the value of their contributions eroded by over 100 per cent in that period of no fault of yours or the fund managers.”
Ahmad, who is also the chairman of Polaris Bank, said the Federal Government needed to prioritise the payment of accrued rights of retirees.
Although the government had been religiously paying the monthly pension contributions based on the old rates, he said it had not been able to meet up with the adequate and regular payment of accrued pension rights.
He observed that this was causing untold hardship and pain to many who had been waiting for years for their Retirement Savings Accounts to be funded appropriately.
“This is non-negotiable, and we should constantly bring this up at every opportunity until the government funds these accrued rights,” Ahmad said.
Although the National Pension Commission had been statutorily empowered by the Pension Reform Act 2014 to direct the Accountant General of the Federation to deduct at source unpaid accrued pension rights, he said that the power had never been exercised because of political constraints.
The continued success of the pension industry would largely be hinged on the ability of the employers to honour their obligations as and when due, he said.
Ahmad said that in the recent past, members of the National Assembly had assisted in getting the government to accelerate the payment of arrears of accrued pension rights.
He mentioned that it would appear another tier of unpaid obligations had been built, and the industry would once again require the collective efforts of all stakeholders for timely payment of the accrued rights.
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