FG creates central database to track, manage assets in MDAs.

The federal government has launched an asset tracking and management project which will make it possible to locate, identify, assess and evaluate all its moveable and immovable assets.

In a statement on Sunday, Na’inna Dambatta, director of information, ministry of finance, said to achieve an effective tracking of government assets, a central asset register has been created and domiciled in the finance ministry.

The central asset register and the ATMProject, the statement said, were designed to enhance accountability, promote transparency and deepen efficiency in line with the change agenda of the Buhari administration.

It said these initiatives would afford the government to know and monitor its assets in real time online.

“For the first time a central and Unified National Database of Assets (Asset Register) would be generated and maintained for the purpose of recording, tracking and managing the huge investments in capital assets owned by government,” the statement quoted Kemi Adeosun, minister of finance, as saying.

“The Asset Tracking exercise and Register will make planning and control easier and improve accountability for assets. With the increased allocation to capital expenditure to 30%, it is important that all assets are recorded and accounted for.

“Where disposals occur, they must be in line with the laid down procedures and must be transparent.”

The statement also said that a circular has been dispatched to all ministries, departments and agencies (MDAs) requesting their accounting officers to prepare an inventory of all fixed assets held as at December 31, 2016.

“That any assets held by current and former staff are fully accounted for. In this regard, you may find it necessary to contact any former staff and /or political office holders to avail them the opportunity to return relevant assets in their possession.

“All inventory records submitted will be cross-checked to capital releases and project account purchases to ensure completeness. Where assets have been sold or otherwise disposed of, they must be recorded with supporting authorisation for sale and evidence of payment, where applicable.

“Any asset not accessible for physical inspection and not disposed of in accordance with financial requirements will be deemed to have been illegally withheld or converted. Please record such assets so as to enable the investigative agencies to be notified.”

Accounting officers of the MDAs were instructed to submit their reports not later than three weeks from the date of receipt of the circular.


Source: The Cable

Noncompliance with disbursement rules reason why FG blocked Ekiti’s fund – Minster

Finance Minister, Mrs. Kemi Adeosun, has confirmed that the Federal Government indeed withheld allocations due to Ekiti. She cited non-conformity on the part of the state government with regulations regarding disbursement of such funds by the ministry.

A statement by the Director of Information in the Ministry of finance, Alhaji Salisu Na’Inna Dambatta, said the action was taken because it had become the habit of Ekiti State not to obey rules set for disbursement. The statement further said the claims by the Ekiti State Government were spurious.

“The Ekiti State Government failed to comply with the necessary requirements for participating in the Budget Support Facility (BSF), which is a Conditional Loan Programme to state governments introduced with the view to enhancing fiscal prudence and designed to enhance transparency, efficiency in public expenditure and payment of salaries.

It further stated that failure of Ekiti State Government to comply with the requirements and conditions for the Budget Support Facility (BSF) resulted in a letter sent to the Chief of Staff to notify him of the suspension of BSF for Ekiti State and it was conveyed to Mr. President before payment to the Ekiti State Government was reinstated.

Meanwhile, the Central Bank of Nigeria [CBN] has denied reports that its governor, Godwin Emefiele and some top management staff have been queried by the Office of the Attorney General of the Federation (AGF) over the sale of foreign exchange.

Acting Director of Corporate Communications, Mr. Isaac Okoarafor, said in a statement yesterday that the apex bank observed that while it was perfectly normal for any agency of government to seek clarifications on any matter from other agencies of government, it wishes to clarify that neither the governor of the CBN nor the Director, Legal Services Department, received any communication with regard to the issue.

The CBN said as a responsible government institution, the third currency transactions should be in line with the prevailing forex rate range in the interbank market, when properly examined.

Adeosun, Amaechi, Ogbeh on FG’s committee to force down food prices

Acting President Yemi Osinbajo has set up a task force to work out a way of reducing the prices of foodstuff.

On the task force are Kemi Adeosun, finance minister; Chibuike Amaechi, transport minister; Audu Ogbeh, agriculture minister; Chris Ngige, labour and employment minster; Okey Enelamah, trade and industry minister, and Suleiman Adamu, water resources minister.

The team was given seven days to present a plan of how to reduce the cost of food.

According to Laolu Akande, senior special assistant on media to the vice-president, Osinbajo put together the team because he was moved by the need to make food affordable to Nigerians.

“Moved by the need to enhance affordability of food prices across country, the Buhari administration has constituted a presidential task force to urgently consider measures that would ensure a steady flow of produce to the market and reverse recent price increases,” he said.

“Giving the directive today at the federal executive council meeting, Acting President Yemi Osinbajo, SAN, expressed concern at some of the inflationary rates of food prices, noting that the task force will explore options to promote availability and affordability of food items to Nigerians.

“According to him, the task force, which has seven days from today to report back to the council will consider how to remove some of the cost-raising factors that come into play between the farms and the markets and therefore bring relief to our people.

“While there have been reports of bumper harvests in parts of the country, the prices of foodstuff still end up rather high, while some of the produce even end up wasted due to a number of reasons preventing effective transportation delivery to the markets.”

Akande said one of the focus areas of the task force – as directed by Osinbajo – would be the review of the transportation and preservation processes.

“The task force, which would be meeting with the acting president in the discharge of its urgent assignment, will therefore draw out a practical plan and present same to the council next week,” he added.

“The offices of the chief of staff to the president and the senior special assistant to the president on sustainable development goals (SDGs) would also be on the task force.”

New Whistle Blowing Policy: Nigerians to Make Money when They Expose Corruption- Kemi Adeosun

The Federal Government has approved a new policy on whistle blowing that aims to encourage Nigerians to report financial and other related crimes to relevant authorities.

The highlight of the policy is that whistleblowers whose revelations lead to recovery of money will be entitled to as much as 5 per cent of the recovered sum.

The new policy was approved Wednesday at the meeting of the Federal Executive Council , chaired by President Muhammadu Buhari inside the Council Chamber of the Aso Rock Villa.

The Minister of Finance, Kemi Adeosun, who announced the new policy to State House correspondents, said it is being put in place “in conjunction with the Attorney General of the Federation and Minister of Justice”.

She said the policy is a stop gap initiative until the National Assembly formally passes a law on whistle blowing.

She said the new programme encourages Nigerians with information on financial crimes to disclose it.
She said the aim is to strengthen the fight against corruption by the Buhari administration.

She said anyone who provides information leading to the recovery of fund will be entitled to not more than five per cent of the recovered sum.
Ms. Adeosun said the government will set up a website and provide a phone number and email for people to use.

She said anonymity and protection of whistleblowers will also be guaranteed.

Asset Declaration: Fashola, Adeosun, Amaechi, 16 others yet to fully comply. – CCB

The Code of Conduct Bureau says it may be forced to arrest and possibly prosecute at least 19 ministers and heads of agencies in the President Muhammadu Buhari’s government for non-compliance with procedures of declaring their assets.

The 19 federal government appointees, according to a statement issued by the CCB Chairman, Sam Saba, have so far not honoured invitations to appear before the Bureau to clear their asset declaration claims.

The bureau however praised some top officials of the Nigerian government like the Chief of Army Staff, Tukur Buratai, and the Inspector General of Police, Ibrahim Idris, for promptly complying with the asset declaration protocol within the stipulated time.

Photo credit: The Herald News Nigeria
Photo credit: The Herald News Nigeria

The CCB boss said the bureau has invited some serving ministers and heads of agencies among others over “issues” pertaining to their asset declaration requirements, but most of them have failed to respond.

The asset declaration defaulters, according to CCB include Kemi Adeosun (Finance Minister), Kayode Fayemi (Mine and Solid Minerals), Adebayo Shittu (Minister of Communication), Babatunde Fashola (Minister of Power, Works and Housing), Ibe Kachikwu (Minister of State Petroleum), Ogbonnaya Onu (Minister of Science and Technology).

Other defaulters are Mike Okiro (Chairman, Police Service Commission), Godwin Emefiele (CBN Governor), Abubakar Bawa Bwari (Minister of State Solid Minerals) and Rotimi Amaechi (Minister of Transport).

Still on the list of defaulters are Aisha Alhassan (Minister Women Affairs and Social Development); Solomon Dalung (Minister of Youths & Sports Development); Udo Udoma (Minister Budget and National Planning); Dan Ali Mansur (Minister of Defence); Ibrahim Usman Jibril (Minister of State, Environment); Suleiman Adamu (Minister of Water Resources and Rural Development), Lai Muhammed (Minister of Information) and Mustapha Baba Shehuri (Minister of State Power).

The CCB said it has also invited Claudius Daramola (Minister of State Niger Delta Affairs); Hadiza Usman (MD. Nigeria Ports Authority); Ahmed Kuru (MD/CEO AMCON); Isaac Adewole (Minister of Health); Okechukwu Enelamah (Minister of Trade Investment and Industry) and Geoffrey Onyema (Minister of Foreign Affairs).


Ibe Kachikwu Minister of State for Petroleum Photo: thisdaylive.com
Ibe Kachikwu
Minister of State for Petroleum
Photo: thisdaylive.com

“Pursuant to paragraph 11 of Part 1 of the 5th Schedule to the 1999 Constitution (as amended), every public officer is required to submit to the CCB a written declaration of all his properties, assets and liabilities and those of his/her spouse (if not a public officer) and his unmarried children under the age of eighteen years,” the bureau said.

“Any statement in such declaration that is found to be false by any authority or person authorized in that behalf to verify it shall be deemed to be a breach of this Code.

“To this end, the Bureau has commenced its 2016 4th Quarter cycle of conference and Field verifications of assets of top public officers.

“Accordingly, letters of invitation have been dispatched to Ministers of the Federal Republic of Nigeria, Service Chiefs and other top Public Officers.

Minister of Transport, Rotimi Amaechi
Minister of Transport, Rotimi Amaechi

“This exercise is ongoing and is being carried out concurrently at the Federal, State and Local Government levels.

“At a satisfactory completion of the exercise, Public Officers are issued with certificate of Assets Conference Verification/Field Verification as the case maybe.”

Other top public office holders that were also praised for not delaying the declaration of their assets include the acting MD/CEO Niger Delta Development Commission, Semenitari Mary –Gab Tamunoibim; Corps Marshall, Federal Road Safety Corp, Boboye Oyeyemi ); Minister of Environment, Amina Mohammed and the Commissioner, Federal Civil Service Commission, Hope Odhuluma Ikrirko.

The CCB also hailed persons like the former SGF, Anyim Pius Anyim, Minister of Interior, Abdulrahman Dambazau, Minister Budget & National Planning, Zainab Ahmed Shamsuna, Minister Trade, Investment & Industry, Aisha Abubakar; INEC Chairman, Yakubu Mahmood; and Former Executive Secretary NUC, Julius A. Okojie; as well as the Minister of Education, Adamu Adamu.

“CCB however, commends those public officers, who honoured its invitations promptly and submitted themselves for the exercise!”

More ministers, including the Attorney General of the Federation, had been sent letter of invitation by CCB, and it has not been confirmed if they would honour the invite when it comes to their turn to appear before the Bureau.

FG appoints parties to borrow $1bn in January

Kemi Adeosun, minister of finance, on Wednesday at the Federal Executive Council (FEC) meeting presented a memorandum seeking approval for the issuance of the $1 billion Eurobond in the International Capital Market (ICM).

Adeosun also sought approval for the appointment of transaction parties responsible for the execution of the programme.

The minister noted that the $1 billion Eurobond issuance was appropriated in the 2016 Budget and the funds will support the implementation of capital projects in the 2016 budget.

The appointed transaction parties responsible for execution of the transaction include Citigroup, Standard Chartered Bank, Stanbic IBTC Holdings PLC, White & Case LLP, Banwo & Ighodalo and AfricaPractice.

She stated that the selection was based on an open and competitive bidding process in line with the Public Procurement Act, 2007 and a certificate of “No Objection” was received from the Bureau of Public Procurement (BPP) to award contracts to the recommended parties.

“We have so far received strong commitment from the international community. Investors believe in the long-term economic outlook for Nigeria as we continue with our structural reforms and increased focus on infrastructure development to diversify the economy and grow the non-oil sector,” she said.

“Stable oil prices and steadying foreign reserves will support our plans and we expect high demand for this issue to further push down yields. We are confident that this will be a successful outing in January, 2017.”

Recession: FG Plans Tax Relief for Manufacturers – Adeosun

The Federal Government, in a bid to ease the burden of the current economic recession on the manufacturing sector, is planning some form of tax relief for the sector.

The Minister of Finance, Mrs. Kemi Adeosun, dropped the hint on Wednesday in Abuja while responding to questions from journalists at the end of the Federation Account Allocation Committee meeting.

She said the tax relief was part of measures by the Federal Government to reduce the negative impact of the foreign exchange crisis on the sector.

Based on the Gross Domestic Product report for the third quarter released by the National Bureau of Statistics, the manufacturing sector’s growth rate was recorded at -2.93 per cent year-on-year.

This is lower by 1.02 percentage points than what was recorded in the second quarter of the year.

The report had blamed the decline in manufacturing activities to the continued drop in the naira to dollar exchange rate, which has made industrial inputs more expensive.

Adeosun said since the sector was one of those badly hit by the economic crisis, the Federal Government would support it with some form of incentives next year.

In addition, she said massive investments in infrastructure would be made to reduce the operating costs of the manufacturing sector.

The minister stated, “It is clear from the figures that the manufacturing sector is the one that is really challenged and the challenge in the sector is clearly that of foreign exchange availability. I think that the sector will benefit from more consistency of the foreign exchange policy.

“On the fiscal side, we are rolling out a number of measures to support the manufacturing sector in terms of tax reliefs and other measures that will allow the balance sheet of the sector to be repaired. They (manufacturers) have taken quite a hit and we will continue to try and support them through it.

“We have a fiscal road map that we will be rolling out and it includes a number of measures around revenue mobilisation, tax reliefs and the fiscal instrument, which will be issued in 2017 to get the economy back to recovery.”

Responding to a question on the position of the Central Bank of Nigeria that the Federal Government should quickly settle its indebtedness to economic agents, the minister said the issue was also affecting the fiscal stimulus objective of the government.

She said with huge debts owed local contractors, money released to the contractors through the banks for projects was not being felt.

Adeosun explained that since the contractors were also indebted to the banks, they were usually denied access to those funds released by the government.

She said while the debts had risen owing to the fact that the government changed its accounting system from cash-based to accrual-based, the ministry would work with the CBN to address the liabilities.

“We are working on a solution with the CBN that will enable us actually reflect these obligations and begin to pay them off because, indeed, they are affecting a number of sectors in the economy and the ability to get the economy growing,” Adeosun stated.

Meanwhile, the Federation Account Allocation Committee distributed a sum of N420bn among the three tiers of government for the month of October.

The minister put the gross revenue received for the month at N238.7bn, adding that this was lower by N41.03bn than the N279.74bn allocated in September.

She attributed the decrease in revenue to challenges in the oil sector caused by the activities of militants in the Niger Delta, as oil production dropped by about 950,000 barrels per day in August.

Reps Want Adeosun, Emefiele To Resign

A House of Representatives panel yesterday called on Nigerians to demand for the resignation of the minister of finance, Kemi Adeosun, and Central Bank of Nigeria (CBN) governor, Godwin Emefiele, for mismanaging the country’s economy.
Chairman of the ad-hoc committee set up to investigate the N700 billion bail-out funds given to some state governments by the federal government, Rep Sadiq Ibrahim (APC, Adamawa) made the call yesterday following failure of the duo to personally appear at the committee’s session.

The committee also called for the resignation of the Director General of the Debt Management Office (DMO), Abraham Nwankwo.
Adeosun did not send any representative, but Emefiele delegated an executive director in the apex bank, Umar Abubakar, to represent him, while the DG of DMO was represented by Oladele Afolabi. But the lawmakers rejected the representatives.
“The attitudes of these top government officials show who is mismanaging the economy of the country. Nigerians should rise up and call for their resignation immediately,” the lawmaker said.
The lawmaker added that “If it is to bring virement, they would rush down, but now that they are to come and explain to Nigerians how the bail-out fund running into over N700bn was disbursed, they are sending representatives; they are only interested in borrowing. This has to stop.”
Other members of the committee who spoke at the session lamented the absence of the trio, describing it as unacceptable in view of the quantum of money given out to states as bail-out.
The committee therefore directed the three officials to physically appear before it and provide all relevant documents on the bailout funds.

Credit: dailytrust

Economic Recovery Plan Ready by December – FG

The Minister of State for Budget and National Planning, Mrs Zainab Ahmed, has said that the national economic recovery plan for the next three years will be ready next.

She explained at an economics communications workshop in Abuja on Thursday that the plan would serve as a guide for the preparation of annual budgets and would be a continuation of the initiatives contained in the Strategic Implementation Plan for the 2016 budget.

According to her, the plan will clearly state the economic policies of the government that will guide the investment decisions by domestic and foreign investors.

Ahmed said, “The plan is expected to build on the policies, initiatives, programmes and projects contained in the Strategic Implementation Plan for the 2016 budget. The economic recovery plan is expected to guide the economic management and budgeting process over the short to medium-term.

“Government will continue to put in place policies to expand the revenue base, plug leakages in the system, ensure greater transparency and accountability in the use of public funds, pursue job creation and support businesses and investments, especially local investments to grow.

“Approach adopted for the preparation of the plan is highly participatory and all-inclusive, with the private sector being actively involved in the process.”

In his keynote address, the Chief Executive Officer, Economic Associates, Dr Ayo Teriba, proposed a holistic approach to economic reform to encourage the inflow of foreign direct investment rather than demand restriction or price adjustment.

He identified the Diaspora funds as an immediate and steady source of foreign currencies and extensive infrastructural development as sources of the FDI in the long term.

Teriba explained that the impressive foreign investment and growth experienced in the telecommunications sector since 2001 could be allowed in other critical sectors.

He called for the liberalisation of the power sector, rail transport, gas pipelines, power transmission and housing, among others.

The economist suggested an integrated infrastructural development in which pipelines could be constructed underneath the rail tracks and power transmission network above the rail tracks.

The policy directive needed, according to him, is to break government’s monopoly across all infrastructure and allow foreign investors to play more role.

He said, “The experience of the telecoms companies that arrived in Nigeria in 2001 when the government liberalised the sector that had been a government monopoly since independence is a testament to the huge growth and investment opportunities that Nigeria presents.

“Nigeria had only 300,000 telephone lines in 2001, but these companies have raised that number to more than 160 million today.”

Budget: How We Shared N753.663bn To Ministries- Adeosun

Finance Minister, Mrs. Kemi Adeosun, yesterday gave details on how the 2016 budget was being implemented, revealing that N753,663,667,464 has so far been shared to various ministries being capital allocation as at October 31.
A tabulated presentation to journalists showed that the Power Ministry got the lion’s share of the allocation with N209,246,760,165, while the Petroleum Ministry received the least allocation of N2,413,847,044, even as Nigerians continue to lament the poor power supply over the last 15 months.
This was as the Defence Ministry was allocated N69,512,363,730 while Transport Ministry has so far received N30,540,042,428. According to the breakdown of expenditures, Agriculture got N29,578,929,050, Water Resources Ministry got N25,201,857,951 and the Interior Ministry has so far received N21,210,059,596. Health Ministry got N18,472,539,524 and N16,743,672,981 went to the Education Ministry while Niger Delta Ministry got a slice of N8,161,196,486.
Science and Technology Ministry has so far received N6,681,349,721 and Mines and Steel got N3,360,000,000. Petroleum Ministry got N2,413,847,044, while others cumulatively received N312,511,048,789.
Recall that the Appropriation Bill 2016 seeks to authorise the issue from the Consolidated Revenue Fund of the Federation the total sum of N6,077,680,000,000.
Of the figure, N351,370,000,000 is for Statutory Transfers, N1,475,320,000,000 is for Debt Service while N2,648,600,000,000 is for Recurrent (Non-Debt) Expenditure.
The sum of N1,845,540,000,000 inclusive of N157,150,000,000 Capital Expenditure in Statutory Transfers and N86,000,000,000 as Interest on Capitalised Loans, is for contribution to the Development Fund for Capital Expenditure for the year ending on December 31, 2016.



Why recovered loot can’t be spent yet – FG

The Minister of Finance, Mrs Kemi Adeosun, has revealed that the federal government has, aside cash, recovered landed properties, high valued automobiles and jewelries from looters, pointing out that most of the monies recovered from treasury looters could not be used because they are bug down with litigations.

Adeosun spoke yesterday at the National Assembly during an interactive meeting on the performance of the 2016 Budget with the Senate Committee on Appropriation.

She explained that some of the buildings recovered had been converted into office spaces for government agencies that had no permanent offices, while the high valued cars could be used for the conveyance of foreign dignitaries on a visit to the country.

The minister further let the Senate Committee in on the obstacles being experienced by the Nigerian government on the recovery of stashed loots in Switzerland and United States.

“The process of recovering looted fund is an ongoing process. Indeed, money comes almost on daily basis into those accounts. We have not recovered much from foreign money. It is a little more difficult,” she noted.

The Attorney-General of the Federation, Mr. Abubakar Malami SAN had stated that the Federal Government has no exact figure of Nigeria’s looted funds abroad ; stating that Nigeria would continue to liaise with other countries on the repatriation of looted funds.

Why we’re taking a huge N9.61 trillion loan – FG

The federal government has explained why it wants to take a $30.54 billion (about N9.61 trillion) loan, which is believed to be the biggest single external loan request by any government in recent history.

President Muhammadu Buhari, who on Tuesday requested the National Assembly’s accelerated approval of the borrowing plan, said it would include a $575 million World Bank loan.

The total loan will fund a number of key projects in the country, he said.

The projects cut across key sectors of the economy, with special emphasis on infrastructure development, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programmes and governance and financial management reforms.

Mr. Buhari said the proposed programmes would receive about $11.274 billion of the total loan, while special infrastructure projects would take $10.69 billion. Euro bonds will take $4.4 billion and federal budget support, $3.5 billion, he said.

Details of the projects to be executed with the World Bank loan include polio eradication support and routine immunization project ($125 million); community and social development project ($75 million), and Nigerian states health programme investment project ($125 million).

Others include State education programme investment project ($100 million), Nigerian youth employment and social support project ($100 million), and Fadama 11 project ($50 million).

The huge loan is the highest single borrowing by the Nigerian government in history.

Consolidated public debt stock in the Central Bank of Nigeria (CBN) annual report 2014 showed that between 2010 and 2014 the highest external loan by government was N1.65 trillion in 2014.

External debt for preceding years were N689.8 billion in 2010; N896.8 billion in 2011; N1.03 trillion in 2012 and N1.39 trillion in 2013.

The loan is expected to help reflate the nation’s economy has been in recession for months.

The government had earlier announced a $15 billion (N4.72 trillion) fiscal stimulus plan for the troubled economy.

The Minister of Budget and National Planning, Udoma Udoma, said the plan would be funded majorly through a number of sources, namely sale of some national assets and advance payment by joint venture operators for license renewals.

Other sources included infrastructure concessions, use of recovered funds as well as long term, low interest loans to bridge funding gap.

The Minister of Finance, Kemi Adeosun, had also said as part of an external borrowing plan approved by the Executive Council of the Federation, the government would borrow cheapest available monies to fund key ongoing projects.

The huge borrowing is seen as an indication that the government might have quietly shelved the idea of selling asset, amidst stiff opposition from Nigerians.

The Director-General, Debt Management Office (DMO), Abraham Nwankwo, said on Tuesday that for Nigeria to pull the economy out of recession, government must seriously embrace “conventional public borrowing” to fund critical projects.

Mr. Nwankwo said long before the drop in global crude oil prices in mid-2014, it was clear Nigeria needed to invest about $25 billion per annum for 7 to 10 years to cover its huge infrastructure deficit.

With the drastic drop in oil revenues, he said the country faced additional challenge in financing gap in public revenues estimated at about $20 billion per annum.

“This means Nigeria’s total investment deficit is not $25 billion per annum, but $45 billion per annum,” Mr. Nwankwo said.

With the huge “structural financing gap (SFG),” he said the country needed to tap capital from all available sources, including short, term and long-term borrowing with tenors of 15 years and above, to survive.

With average cost of domestic debt higher than average cost of external debt by more than seven percent, the DMO boss said significant domestic borrowing would worsen existing high debt service-to-revenue ratio.

Prime lending rate range between 15.88 and 16.95 per cent, while maximum lending rate range from 25.07 to 26.07 per cent.

The decision to go for the huge external borrowing, he explained, was to avoid crowding out the private sector, to allow them enough borrowing space to play their role in growing the economy, in response to
the infrastructure environment by government.

“The essence of the massive investment plan is that within 5 to 7 years, the country should be moving on a trajectory of sustainable and continuously strengthening economic recovery.

But the borrowing plan has been criticised by some Nigerians.

The lead director, Centre for Social Justice (CENSOJ), Eze Onyekpere, described government decision to take more loan as “fiscal irresponsibility”.

“We are paying about $61 billion in external debt already. If we add another $29.96 billion to be borrowed, we will be talking about $90.96 billion. What kind of projects are they going to use the loan on?
Mr. Onyekpere admitted he was yet to get the details of the loans proposal.

“Unless, they are projects that can regenerate themselves for government to repay the loans. otherwise, we see it as high fiscal irresponsibility and recklessness,” he said.

The Nation: Treasury Single Account: Pains, gains.

For years, the Treasury Single Account (TSA) existed only in the history books. But in September, last year, the Federal Government mustered the political will to fully implements the controversial policy. The TSA has made many banks to cry; Ministries, Departments and Agencies (MDAs) to groan and government’s coffer to burst. COLLINS NWEZE unveils the TSA and what its full implementation means for businesses and control of government’s cash resources.

It’s nearly a year of pains for the Federal University of Agriculture, Abeokuta (FUNAAB) since its $2 million grant from the Bill and Melinda Gates Funded Cassava Adding Value Project (CAVA) was trapped in theTreasury Single Account (TSA), the pool account for all government’s revenues.

The institution has been haggling with the Office of the Accountant-General of the Federation (OAGF) on how to resolve the quagmire while the projects the funds were meant to be channelled are suffering.

The FUNAAB Vice-Chancellor, Prof. Olusola Oyewole admitted that the TSA is impeding research in universities as institutions cannot access their grants on time, while several funds from donor agencies were diverted to countries with less transactions difficulties.

“You can imagine the shock that our universities have, waking up one day to find out that our funds have been moved away from the commercial banks to an account that we can’t even identify,” he lamented.

But the OAGF seems helpless with the situation, insisting that the policy must take its course despite the implications on the institution.

The CAVA funds, The Nation further leant, had finally been lodged at the Standard Chartered Bank in London, by the Central Bank of Nigeria (CBN) on behalf of FUNAAB, while the institution said it was still trying to access the fund, as at press time.

Welcome to TSA, Nigeria’s new accountability and most feared sheriff in town.

For decades, many emerging markets and low-income countries have fragmented systems for handling government’s receipts and payments. In these countries, the ministries of finance/treasury lack a unified view and centralised control over government’s cash resources. The cash lies idle for months in different bank accounts held by spending agencies while the government continues to borrow to execute its budget.

That was the case with Nigeria until September 2015 when the Federal Government began the full implementation of TSA. And since then, the policy has come with pains, gains and controversies depending on which side of the divide it was viewed.

The TSA is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

But for commercial banks which had for years relied on cheap government deposits to post huge profits, universities that secure foreign grants for research, and Ministries, Departments and Agencies (MDAs) which have to suffer delays in getting transactions, the TSA remains a nightmare.

The lenders have since the full implementation of the policy began, lost huge revenues and deposits that threatened the continued existence of many mid-tier banks.

Confirming the pains of TSA on banks, CBN Director, Banking Supervision, Mrs. Tokunbo Martins, agreed that the TSA regime precipitated some unintended consequences, affecting the operations of banks, especially regarding deposit depletion, asset quality, decrease in revenues and liquidity stress.

She said the aggregate deposit transferred to the CBN from the inception of the TSA regime to March 2016, was N2.67 trillion. This sum, which represents 15.14 per cent of the total deposits of commercial banks of N17.63 trillion as at April 30, constitutes the volume of deposits “lost” by banks as a fallout of the implementation of the TSA regime.

“This loss impacted banks differently in line with the proportion of their balance sheet that was sustained with Federal Government of Nigeria (FGN) deposits. Due to its large size and low cost, Federal Government of Nigeria deposits were a huge source of revenue for banks. Although specific data on revenue attributable to FGN deposits is not available, a good proxy is the yield on Treasury Bills, which is currently around 14 per cent,” she disclosed at the CBN-Financial Institutions Training Centre (FITC) continuous education programme for Directors of Banks and Other Financial Institutions, held in Lagos at the weekend.

Mrs Martins said assuming the entire government deposits were invested by the banks in Treasury Bills, at the current yield of 14 per cent, it would generate interest income of about N374 billion for the banks. This figure, she said, provides an indication of revenue that is no longer available to commercial banks due to introduction of TSA.

She explained that based on the large quantum of revenue earned from government deposits, majority of commercial banks had created teams with responsibility for mobilising public sector funds.

“These teams, which were large and significant, were in some cases directly supervised by top management staff. The introduction of the TSA regime and resultant depletion in government deposits and related revenue has made these teams unprofitable and their existence untenable. Therefore, most banks had scaled back or disbanded the teams and, in extreme cases, released staff deployed to the teams,” she said.

The CBN director said the TSA regime impacted the liquidity level in the banking system due to the attendant remittance of cash, which constitutes a major portion of banks’ liquid assets to the apex bank. “Furthermore, as part of risk management, banks with large government deposits mitigated their positions by investing the liability in T-bills and FGN bonds. These banks had to liquidate these investments in order to comply with the TSA regime, thereby further reducing their stock of liquid assets,” she said.

Mrs Martins explained that with the introduction of the TSA regime, easy and risk-free revenue that was hitherto available to banks via investment of FGN deposits in Treasury Bills and Government Bonds had been restricted.

“Therefore, banks must become innovative in generating revenue to support their operations and provide returns to their shareholders. This development also presents an opportunity for banks to return to their traditional role of savings aggregation and financial inter-mediation. Banks should thus strive to increase the size of their loan books in order to increase their interest and fees income,” Mrs Martins said.

Managing Director, Wema Bank Plc, Segun Oloketuyi also recounted the impact of TSA on banks’ profitability and deposits. “I think over N2 trillion left the banking system for CBN. Without doubt, TSA has impacted the volume of deposit in the banking system. As you know, deposits are our raw material. Certainly, if the sector lost N2.1 or N2.2 trillion, it will definitely impact on the sector; you will see the impact of the liquidity on every institution. It is going to impact us differently. Wema Bank lost almost N50 billion to TSA, but if you look at our annual report in 2015, we grew deposit despite the loss.

‘’We recorded between 10 and 15 per cent growth in our deposit compared to 2014. TSA started in September 2015, but we were still able to grow; so, what that means is that we would have grown higher,” he said at a meeting with financial journalists in Lagos.

“Our deposit still grows, if I have the N50 billion or thereabout in the system it would have helped my growth better than it was, but the impacts were not such that we were not able to meet our deposit obligation, neither were we short on the liquidity ratio required of the bank. Certainly, we lost some money to TSA that would have otherwise helped the performance of the bank better than we recorded in 2015,” he added.

CBN’s fines hit banks

Aside the loss of deposits, many commercial banks had been sanctioned for breaching TSA rules. FirstBank, United Bank for Africa, Skye Bank had all been fined by the CBN for non-compliance with the TSA rule.

The CBN had fined FirstBank and UBA the sum of N4.819 billion. The CBN imposed a penalty of N1.87 billion on FirstBank, UBA was fined N2.94 billion. FirstBank allegedly concealed N37.5 billion belonging to the Nigerian National Petroleum Corporation’s (NNPC) while UBA concealed N58.8 billion instead of remitting it to the TSA as directed.

The CBN has also imposed a fine of N4 billion on Skye Bank for concealing funds belonging to Ministries, Departments and Agencies (MDAs). Skye Bank allegedly failed to report MDAs’ balances amounting to N40 billion as at October 23, last year, more than a month after the TSA deadline had expired on September 15.

The CBN defended N8.819 billion fines slammed collectively on three lenders.

CBN Director, Corporate Services, Adebayo Adelabu who made the apex bank’s position known during the Bank Directors’ Association of Nigeria (BDAN) stakeholders’ forum held in Lagos, said some penalties for regulatory breaches are at the discretion of the CBN, saying the regulator acted based on the gravity of the offence committed by the lenders.

Speaking on the theme: Oversight functions of the board: Effectively managing key external relations, he explained that although the Bank and Other Financial Institutions Act (BOFIA) stipulates specific penalties for offences, the law also makes room for open-ended penalties, where the CBN is allowed to act based on what it thinks is the right punishment for offenders.

“Some of the offences are open-ended depending on gravity of offences but it is left at the discretion of the regulator. But the CBN has been considerate in fining the banks,” he said.

There were also controversies concerning fees charged by stakeholders implementing the TSA project. SystemSpecs, the owner company of Remita, the e-payment and e-collection software deployed by the Federal Government to drive the TSA said only N7.62 billion was taken as fees by the three implementers of the project against N25 billion claimed by some legislators.

In a document obtained by The Nation, the firm also described the N2.5 trillion transaction volume as false, saying only N1.36 trillion passed through 20 participating banks from inception of the project to date.

The top executive said that at the commencement of the project in May 2012, it was agreed that one per cent of the sums collected from MDAs would be deducted and shared between SystemSpecs, the affected banks and the CBN in ratios of .5 per cent, .4 per cent and .1 per cent respectively.

A copy of the service agreement between SystemSpecs Limited and CBN dated December 2013, read in part: “SystemSpecs and CBN are entering into a mutually beneficial relationship for the purpose of deploying and integrating Remita e-Payment platform and T24 Banking application to facilitate and support electronic payments and revenue collection of Federal Government Ministries, Departments and Agencies (MDAs) through seamless interface with Government Integrated Financial Management Information System application in accordance with the terms and conditions set out in this agreement”.

System Specs was engaged to provide the Payment Gateway for TSA in 2011. While the payment leg of TSA began in January 2012, the collection component did not start as scheduled due to the resistance from a number of quarters and the absence of the political will to push this through.

Besides the issue of fees on transactions, there were also complaints that the Remita platform delays  the payment plans of MDAs and other government agencies that rely on it to initiate and approve payment transactions.

“Once the transactions are finalised, MDA funds at CBN are accessed and the transfer of funds to beneficiary accounts in various financial institutions begins.  Unfortunately, the RTGS server at CBN has experienced some issues recently, which has substantially impaired the settlement of transactions across multiple payment platforms (as all banks are aware), one of which is Remita. CBN has been managing the situation and providing updates on service status to stakeholders. The delay in consummating transactions at CBN has inadvertently increased transaction time on the platform, causing interference to efficient service that Remita users have become accustomed to,” an industry source who understands the workings of the platform, but not in a position to speak on the matter, told The Nation in confidence. “Remita continues to deliver on its mandate and objective of ensuring convenient, secure and efficient payment transactions (Inflows and Outflows). However, Remita is part of a financial ecosystem, and like other service providers, relies on collaboration with other partners (CBN, Commercial Banks, Card Scheme issuers/operators, Payment Services Providers among others,” the source said.

CBN Director, Banking and Payments, ‘Dipo Fatokun, said there are no exemptions given to any MDA on TSA implementation. “On the issue of whether there are exceptions on the TSA or not, for the Federal Government, there are no exemptions.  All MDAs are expected to be part of the TSA but we need to clarify something. Even under TSA,  banks customers are not expected to walk up to the CBN to make deposits. So even under TSA, the deposit money banks still have a role to play, the only thing is that they are not expected to keep those balances, they still have those accounts,” he explained during a conference on e-payment in Lagos.

He said that cash deposits, or transfers can be made by companies or individuals into an MDA account in a commercial bank and the fund is subsequently swept to a designated account of the Federal Government in the CBN. The commercial bank is expected to transfer that money to the account in the CBN, having deducted its charges which have not been agreed on.

He disclosed that the Federal Inland Revenue Service and Customs had their accounts with the CBN, long even before the commencement of TSA. “So, if you go to a bank and make payment to for Customs duties, the money does not sit in the bank, it actually flows into the CBN, same with the FIRS and that is why even when the TSA was deployed, there was little or no noise about these organisations because all their revenues have actually been coming to the CBN,” he disclosed.

The CBN, he said, was also monitoring the banks to ensure full compliance with the TSA rule. “We are checking the banks. We have about four departments checking on the banks. For TSA specifically, we have the Other Financial Institutions (OFIS) and Banking Supervision, Financial Policy and Regulation, Consumer Protection departments monitoring the banks. They monitor various assets and operations because these are related and management is informed. And I know that with the penalties and sanctions that the banks have suffered for breaching the TSA, I do not think any of them would want to dare us,” he asserted.

Other stakeholders speak

TSA gains

By March 2016, President Muhammadu Buhari said the Federal Government had mopped up over N3 trillion as revenue accruals since the TSA policy began. Other stakeholders have also listed the gains of the policy since inception.

Confirming the development, SystemSpecs CEO, John Obaro, said the funds came from 17,000 MDAs’ accounts under the TSA project. He said the funds came from deployment of Remita, the software powering the TSA to which has reduced the government’s debt servicing costs, lowered liquidity reserve needs and boosted effective use of surplus cash.

Obaro said his firm would continue to deliver on the TSA service terms of contract with the CBN despite being owed all of its earned fees on e-collections since March 2015.

He disclosed that some bank branches have started to turn down collection of government deposits due to the non-payment of these agreed fees. “From our end, we have continued to provide and support the Remita platform, 24 hours a day and  seven days a week, for use by citizens for all their payments to the Federal Government. Our continued support for the TSA is fueled by our belief in the enormous benefits the Remita software brings to the implementation of TSA to the average citizen,” he said.

“We must admit though that we are excited and further driven by the fact that our indigenous Remita software has succeeded in powering the technological backbone for such a successful and strategic national initiative, along with other well meaning Nigerians, we do not want this to fail”.

In a report obtained by The Nation titled: Treasury Single Account: A Catalyst for Public Financial Management in Nigeria presented by Prof. Stephen Ocheni of Public Sector Accounting, Kogi State University, Anyigba, at a workshop organised by the OAGF and the World Bank in Abuja, he said a great challenge facing most parts of the world and particularly the developing countries like Nigeria is how to achieve efficient allocation of resources as well as stabilisation of the business cycles.

“An important factor for efficient management and control of government’s cash resources is a unified structure of government banking. Such unified banking arrangements should be designed to minimise the cost of government borrowing and maximise the opportunity cost of cash resources. This requires cash received is available for carrying out government’s expenditure programmes and making payments in a timely manner,” he said.

Nigeria initiated and implemented the TSA and other series of economic policies to assist in the better management of national resources and help fight corruption.  Besides the TSA, government also instituted the Government Integrated Financial Management Information System (GIFMIS), Automated Accounting Transaction Recording and Reporting System (ATRRS), Integrated Payroll and Personnel Information System (IPPIS), International Public Sector Accounting Standard (IPSAS) among others to promote public financial management systems.

The Federal Government of Nigeria commenced the implementation of TSA with the e-Payment component in April 2012 while the e-collections components of TSA began in January, 2015. The government also set September 15, 2015 deadline for full compliance.

Ocheni said the TSA facilitates better fiscal and monetary policy coordination as well as better reconciliation of fiscal and banking data, which in turn improves the quality of fiscal information. The TSA also cuts the debt servicing costs and eradicates financial misappropriation in the public sector.

“The full implementation of the TSA will not be hurting banks. It will only hurt establishments that purport and pretend to be banks but have failed to understand banking and do what bankers do elsewhere. It is an opportunity for banks to refocus on the original purposes for which they were set up to collect depositors’ funds, keep them safe; engage in intermediation to create wealth and jobs for the economy and in the process earn profit for themselves,” he said.

Beyond transparency and accountability, the TSA introduces economy and efficiency into overall management of public finances and this will in the long run lead to effectiveness of government spending since it places government in a better position to realise overall policy goals.

He believes that for TSA policy to be maximised, it needs  to be accompanied with the Fiscal Sunshine Bill, which if enacted will open up the financial activities of government in a way that there will be no more hiding place for those who divert or loot government money.

For instance, with Fiscal Sunshine Act in place, budgeting process and implementation, including contract awards, should be in the open for Nigerians to see both how revenues are generated and how public money is being spent by those in government, and why.

“The TSA enhances the transparency of the government’s banking arrangements by ensuring that all end-of-the-day balances are electronically swept into the TSA. Establishing a TSA may require hard decisions, such as closing the existing bank accounts of spending units, therefore for a successful TSA implementation, explicit and strong support for reform of government banking arrangements by the Federal Government is recommended,” he added.

Tertiary institutions

confronts TSA

Tertiary institutions are already feeling the pangs of TSA. The policy stipulates that all the money they get must be centrally collected and withdrawals approved by the CBN. Under the TSA regime, institutions no longer have direct access to their funds, including research grants from international donor agencies.

At a press briefing in Lagos last month, ASUU President Prof Biodun Ogunyemi, complained that the TSA was retarding the progress of universities and promised to fight the government on the matter.

“As we have consistently argued, the implementation of the TSA is inimical to the well-being of universities. The policy has made it impossible for universities to draw research grants, run programmes based on endowment and transfer funds earmarked for staff development in universities locally and overseas.

“All our appeals to government to exempt universities from the TSA regime have fallen  on deaf ears. Because of our abiding commitment to defending and protecting the university system, ASUU will go to any length to resist the continued implementation of TSA in our universities,” he said.

In response to enquiries, the Office of the Accountant General of the Federation, clarified the Outstanding issue of Federal University of Abeokuta’s grant for the Bill and Melinda Gates Funded Cassava Adding Value Project (CAVA) in which the institutions grant was delayed and moved to a foreign account due to TSA.

It explained that in line with the operational guidelines of the implementation of the TSA as approved by the Federal Government, the CBN opens a domiciliary account in favour of an MDA upon receipt of mandate from OAGF.

It is the CBN’s decision to choose in which bank to open the account based on agreed criteria and list of foreign correspondence banks. “Such funds that are domiciliary in nature are only kept by the foreign banks on behalf of the concerned MDAs. The process for opening foreign bank accounts may take up to four weeks in line with the terms and conditions of the foreign bank including and the banks Know-Your-Customer (KYC) requirements,” it said.

It said the OAGF and CBN are in the process of automating the payment and receipt processes of foreign components of TSA. “The new process shall empower each MDA to be able to access its domiciliary account through electronic channels as is currently done for all local payments. The new process shall be communicated to all MDAs as soon as it is finalised and the systems have been put in place.”

“It should be noted that the OAGF had since processed the Federal University of Abeokuta’s grant from Bill and Melinda Gates Funded Cassava Adding Value project (CAVA). The institution should accordingly follow the approved process to access the funds,” it said.

Adeosun: Development Bank of Nigeria must be ready by January

Kemi Adeosun, Nigeria’s minister of finance, says the Development Bank of Nigeria (DBN) of Nigeria must be ready by January 2017.

While stating that she and her team hd given themselves very tight timelines, Adeosun said there had to be some urgency in getting the economy back to growth.

She spoke about Nigeria’s history of stalling development projects, saying it needed to change to deliver much needed growth.

Speaking to NTA on Monday, Adeosun said her team was removing development bottlenecks and already working on the proceeds of the World Bank/IMF meetings in Washington DC.

“DBN was conceived about three years ago but hadn’t gone anywhere; this is 2016. We announced it and when we got there, we said, what are the problems?

“There were some bottlenecks, and fortunately we’ve been able to solve them, and on Saturday, we were on a panel interviewing an MD and CFO for the DBN, this thing must take off by January. Let’s have some urgency.

“DBN is very important because it is going to provide money for MSMEs; and for Nigeria, that is really important, because 50 percent of our GDP is from small, medium-sized companies, petty traders, so finding a way to get money towards them is a really important part of getting out of the challenges that we currently face.

“Getting Nigeria’s development bank off the ground is a big priority for us, and we have set for ourselves very tight deadlines.”

Adeosun said one of the successes recorded at the meetings was the progress of a $500m irrigation project, that was held up “because counterpart funding, just $4m hadn’t been paid”.

“So whilst we were there, we called the minister of water resources who said he just released the money,” she said.

“The world bank people were every excited, because it means that $500m irrigation project is going to improve our agriculture, is going to create jobs, and there are quite a few takeaways that are positive.”

Adeosun charges accounting officers on prudent spending

Finance Minister, Mrs. Kemi Adeosun, has advised accounting officers of Federal Government establishments to be circumspect in spending funds allocated to them.

She said to avoid sanctions for financial recklessness in spending recurrent votes, accounting officers should become their own auditors.

The minister said the advice was necessary because a new spending template for recurrent expenditure was being worked out and would be released soon to check waste in government spending.

“I want to remind you that being accounting officers is not just a promotion or a title. It is actually a huge responsibility and we are going to be taking it seriously. You are accountable where public funds are spent and we are building systems to ensure that everybody that is in charge of public budget is held accountable.

“Eliminating waste is a national duty for every public officer and as the president has told us, change begins with me. Every amount that we save by controlling overheads is being redirected to investment in power, in roads, in rail and in housing and those investments will revive our economy, create jobs and reduce the cost of living for Nigerians.

“I want to urge you, please don’t just sign. When it comes to public money, yes is an answer. No, is an answer. Why is an answer. Convince me is also a valid answer. I urge you to be your own auditor. Be circumspect, be curious. In fact, be suspicious because we will hold you accountable for whatever happens while you are doing your work,” the minister warned.

She stated this while addressing permanent secretaries, chief executive officers of departments and agencies at a workshop on Cost Management on Overhead Expenditure organised by the Efficiency Unit of the Ministry of Finance in Abuja.

Jibrin Advises Adeosun To To Halt The Payment Of Reps’ Running Cost

The former Chairman, House of Representatives Committee on Appropriation, Mr. Abdulmumin Jibrin, on Thursday, advised the Minister of Finance, Kemi Adeosun, to halt the payment of running costs to members of the House.

Jibrin claimed that the money was not used for the services of the House but “diverted into private pockets.”

The federal lawmaker from Kano State, who was suspended last week by the House, also called on Ministries, Departments and Agencies of government to shun further invitations by the House to appear for investigative hearings and other activities of the House.

But the House dismissed Jibrin’s call again.

The Chief Whip of the House, Mr. Alhassan Ado-Doguwa, said the suspended legislator was speaking “rubbish.”

Jibrin stated, “I am also demanding that the Minister of Finance, the Accountant General of the Federation, the Attorney General of the Federation and the Clerk to the National Assembly, in exercising my right as a citizen of Nigeria, should stop with immediate effect, further payments of running cost allowances to members of the House of Representatives.

“As an insider, I know that most of such monies have been and are diverted into private pockets.

“There is no law in our country that is intended to protect corruption. So, the continuous payment of such money negates the spirit and genuine intention of establishing such laws in the first place.

“I am also calling on Nigerians, companies, ministries, departments and agencies to shun invitations from the House of Representatives until the House allows for a transparent investigation of individual and systemic corruption allegations in collaboration with ongoing external investigations by the police and anti-graft agencies.”

Jibrin alleged that the reason the attempt by the House to probe a former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, failed was because a senior member of the House frustrated the investigation.

In keeping with his promise, Jibrin said he had begun to forward the names of members in batches to anti-graft agencies on how they allegedly misused the running costs.

The lawmaker said he was prepared to serve the “harshest punishment” if his allegations were proven to be wrong.

In his reaction, Ado-Doguwa, who argued that Jibrin’s suspension was in order, told The PUNCH that members expected that Jibrin would keep reeling out more allegations, in spite of being on suspension.

He stated, “Let him say whatever rubbish he wants to say.

“I am sure Nigerians are now realising the truth in Jibrin’s stupidity.

“His suspension serves him right. We could not have done anything less.”

CBN Rejects Finance Minister’s Call For Interest Rate Cut

The Monetary Policy Committee of the Central Bank of Nigeria on Tuesday retained the Monetary Policy Rate, which is the benchmark lending rate, at the current 14 per cent.

The decision to leave the rate unchanged was contrary to expectations of economic analysts, manufacturers and some government officials.

Indeed, the Minister of Finance, Mrs. Kemi Adeosun, had on Monday said there was a need for the apex bank to lower interest rates so that the government could borrow domestically to boost the economy without increasing debt servicing costs.

But addressing journalists at the end of the two-day MPC meeting, which was held at the central bank headquarters in Abuja, the CBN Governor, Godwin Emefiele, said the apex bank decided to hold the lending rate in order to maintain its primary objective of price stability.

He also said the decision was unanimously agreed on by all the 10 members of the committee who attended the meeting.

Apart from the MPR, he said members of the committee also left the Cash Reserve Ratio and the Liquidity Ratio unchanged at 22.5 per cent and 30 per cent, respectively.

The MPC also called on the Federal Government to introduce tax incentives to stimulate activities and return the economy to the path of growth.

Emefiele said the Federal Government should toe the line of other developed countries such as the United States that adjusted its tax policy during the period of economic recession to stimulate consumer demand.

For instance, he said the government should consider reducing the tax burden on the low and middle-income earners, while increasing the rates payable by the rich.

He said, “In the United States and other economies, when you have situations like this, there are those who are naturally vulnerable – the weak, the low and middle-income people. What the government can do is to reduce their tax rates; and for the rich, increase their tax rates so that they can pay more, and this balances out.

“In fact, you can increase more for the high-income earners so that the disposable income for the poor and vulnerable, and middle-income earners can increase so that they can pump liquidity and use it to boost consumption spending.”

Emefiele said the MPC considered the numerous calls for rate reduction but came to the conclusion that the greatest challenge to the economy at the moment remained incomplete fiscal reforms, which raise costs, risks and uncertainty.

The CBN governor said the committee was of the view that in the past when the rates were reduced to achieve these objectives, it was later discovered that rather than deploy the available liquidity to provide credit to agriculture and manufacturing sectors, it provided opportunities for lending to traders who deployed the same liquidity in putting pressure on the foreign exchange market.

This, he lamented, resulted into limited supply of foreign exchange, thus pushing up the exchange rate.

He, however, lamented that the purpose for which the funds were deployed by the banks was not in line with the objective of the CBN.

He said, “Both the monetary and fiscal authorities all have the intention to achieve growth, but the direction through which we want to achieve it may differ for as long as you still achieve the growth.

“The issues here are that when you say reduce interest rates, there are two possibilities here. Firstly, you are saying that because you want it to spur credit to the private sector at lower rate. Secondly, which I have heard the fiscal authority talk about, is that they need to be able to borrow at lower rates to spend.

“Our own view at the MPC, which was exhaustively discussed, is that in the past, there was a time when the MPC took the decision to reduce the policy rate and the cash reserves. These were intended to lower rate and encourage spending to the private sector. After we did that, the following meeting we said because we did not see the impact of credit to the private sector that we needed to further reduce the CRR.”

Responding to a question that the decision to hold the benchmark interest rate was against the call by Adeosun to reduce it, the governor said that borrowing at lower rates to spend on consumption in an economy not backed by industrial capacity would further fuel inflation.

He said while the committee agreed that it was expected to stimulate growth through aggressive spending, doing so without corresponding efforts to boost industrial output by taking actions to deepen foreign exchange supply for raw materials would not help reduce unemployment.

Emefiele said, “The second part of it is that when you lower the interest rate, it will make it possible for the fiscal authorities to borrow at lower rates.

“But we are saying fine. If you borrow at lower rates to stimulate spending, what that does is that it simulate demand for goods, but when you stimulate demand for goods by providing cash or money to be spent without taking action to boost industrial capacity, manufacturing capacity and output, what happens is that you will see a situation where too much money will be chasing too few goods, which will worsen the inflationary conditions that we have now.

“And that is why we are saying that the option that we would like to adopt is while the fiscal authority is going ahead to spend, what we want to do is to retain the rates where they are so that that will again encourage the inflow of capital, because between July and now, we have seen the inflow of above $1bn.”

The governor also said that the CBN would continue to monitor the sale of forex to the BDCs, adding that any bank undermining the integrity of the foreign exchange market would be sanctioned in line with current guidelines.

LCCI DG reacts

While reacting to the outcome of the MPC meeting, the Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said it underlined the imperative of proper coordination between the monetary and fiscal authorities in the economy.

He said, “What is desirable at this time is to stimulate growth and create jobs. My view is that lower interest rates will benefit the economy more than it will hurt it. The truth is that the economy is afflicted by challenges of a multidimensional nature, rooted in structural weaknesses, tight monetary conditions, forex policy shortcomings, weak institutions and floundering investors’ confidence.

“Fixing the problems requires proper strategic responses from the fiscal, monetary and political governance fronts. And these response actions are not necessarily mutually exclusive. Indeed, they should be taken together. The economy surely has profound issues with infrastructure; but high cost of funds is also one of the major problems, which investors are worried about.

“There is a need at this point to agree on what the national economic objective should be. This is why I will agree with the proposition to have a retreat among the key actors in the fiscal, monetary and political governance space to agree on a common direction and strategy to rescue the economy.”

FG plans new initiative, targets 300,000 new homes

The Minister of Finance, Kemi Adeosun, has announced plans by the Buhari administration to launch a new housing finance initiative.

Under the proposed scheme, the Federal Government is planning a mortgage system that will catalyse the development of the mortgage market in Nigeria with the provision of single digit interest rate mortgages and longer repayment periods such as 20 years.

The proposed scheme also aims to provide 300,000 affordable homes supported by mortgages and creates 700,000 new jobs across a range of disciplines and professions.

The minister who made this known at the Annual Conference and General Meeting of the African Union for Housing Finance (AUHF) noted that with housing deficit at over 17 million, Nigeria was ripe for radical intervention in the provision of housing.

She said: “We are committed to fundamentally addressing historical challenges to housing. This requires innovative financial solutions that will stimulate housing development, related industries, create jobs across the nation and satisfy yearning for security through home ownership.”

The minister, represented by Mr. Seye Senfuye said: “Nigeria deserve to acquire affordable homes, built to a standard of good quality, located in well serviced estates that will create ideal environments in which they can raise their families, instead of being saddled with the challenges and risks of trying to build their homes organically.

“Due to the current high rates of interest, we believe that government intervention to bring down rates and enhance affordability is needed and we are committed to doing this.”

The Central Bank’s Director of Other Financial Institutions, Ahmed Abdullahi, noted that the housing market in Africa and in Nigeria is underdeveloped, and that the contribution of the market to the GDP in the country is less than one per cent, compared to the United States, which is about 80 per cent.

Abdullahi stressed the need to address absence of long-term capital that could be used to create mortgages, high cost of building materials, and problems of registering and enforcing property rights.

His words: “Mortgages are not short-term but the deposits we have in the banks are short-term liabilities, and you cannot easily use them to create mortgage. So, we need to address these challenges before we can improve the contribution of the market to the GDP.”

FG Deploys BVN To Track Ghost Workers- Adeosun

Federal Government yesterday said it had successfully completed a pilot programme which uses Bank Verification Number, BVN, details to check for ghost workers and identify duplicate and other irregular entries on the payroll.

A statement issued by the Director of Press, Federal Ministry of Finance, Marshall Gundu, indicated that the pilot project was initiated as a solution to the slow pace of progress being encountered in the enrollment of employees on the Integrated Payroll and Personnel Information System (IPPIS

The statement stated that the strategy of using BVN rather than requiring the physical presence of each member of staff had significantly simplified and accelerated the progress of the project and at a lower cost than previously incurred.

“The use of BVN rather than requiring physical presentation as a first line check on the integrity of our payroll is a cost effective and efficient measure.

“This will accelerate the pace of enrollment on IPPIS as well as identify anomalies which can be flagged for further investigation and review,” Minister of Finance, Mrs. Kemi Adeosun, was quoted as saying in the statement.

According to the minister, since it was started five years ago, only 20 per cent of public employees had actually been enrolled onto IPPIS ?to date, due to various reasons.

Credit: NationalMirror