NATURE OF FISCAL POLICY IN NIGERIA - PDF

Abstract

This paper analyses the nature of fiscal policy in Nigeria by making a broad analysis on the measurement and techniques involved. The paper also discusses fiscal federalism as it relates to fiscal policy. 

Keywords: Fiscal Policy, Fiscal Federalism

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FINANCING GOVERNMENT EXPENDITURE IN NIGERIA PDF

Abstract

This paper assesses how public expenditure is financed in a federation such as Nigeria. The paper also ex rays other key issues relating to governmental expenditure such as public debt, public revenue, structure of public expenditure and debt as well as the budgetary process in Nigeria.

Keywords: Public Expenditure, Public Debt, Public Revenue, Budget

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Breaking News: Another Catholic Priest, Fr Gospel Inalegwu Kidnapped in Kano

Barely 24 hours in to the discovery of the lifeless body of Rev Fr Adeyi of the Otukpo Diocese who was kidnapped two months ago, another catholic priest of the Diocese of Kano Fr Julius Gospel Inalegwu has been kidnapped.

CCT Trial: Saraki May Resign Any Moment – Report

Following the commencement of his trial at the Code of Conduct Tribunal (CCT) for falsely declaring his assets when he held sway as governor of Kwara State, Vanguard is reporting that Senate President Bukola Saraki may resign any moment ahead of the delivery of the judgment.

Vanguard cited mounting pressure from some Senators including those who are loyal and has vowed to remain with him as a pointer to the likely resignation of the Senate president.

Some of the senators reportedly asked the Senate President to consider the resignation option so as to save the Senate, as an institution.

According to the report, the option of resignation was thrown to him at a special meeting held by a group of some loyal senators, who followed him to his Maitama residence, shortly after the end of yesterday’s trial at the court.

But as Saraki is considering the option, senators of the ruling All Progressives Congress, APC, appeared to be at loggerhead with their counterparts in the opposition Peoples Democratic Party, PDP, over the Senate President’s successor.

While the APC senators are insisting on producing Saraki’s successor, those of the PDP are favorably disposed to anointing one of their own, a development that has further polarized the Red Chamber.

Saraki was given the option of resigning basically to save the institution of the legislature, a PDP senator who spoke on the condition of anonymity said.

‘”I can confirm to you that at a special meeting held yesterday, we asked the Senate President to consider the option of resignation.

“We believe that doing so would preserve the institution of the Senate, “he said, refusing to speak further.

Asked whether the Senate President was considering the resignation option, the lawmaker said ‘” this was just thrown at him this evening. We believe that he would do the right thing.’”.

Meanwhile, names of senators Abdullahi Adamu, representing Nasarawa West from the APC and Suleiman Adokwe of the PDP were being touted as possible replacements of the Senate President.

Naira sells at N321 to dollar at parallel market, N197 at CBN

The Naira on Monday continued to exchange at N321 to the Dollar at the parallel market. The News Agency of Nigeria (NAN) reports that the nation’s currency has maintained this value since April 1.

The Naira, however, slide against the Pound Sterling and Euro as it traded for N445 and 355 respectively, from N457 and N357 it traded last week.

Meanwhile, the Naira also sold for N197 to the Dollar at the official inter-bank rate.

Traders at the foreign exchange market said that activities at the market had yet to rebound after the weekend break. (NAN)

CBN To Withdraw N1trn From Circulation

The Central Bank of Nigeria (CBN) has disclosed it readiness to pull out up to N1 trillion from circulation in a bid to stabilise the economy.

Already, N525 billion has been pulled out less than one week after the policy which seeks to tighten money supply, while additional N219 billion is slated to be pulled out next week

Banks’ treasury executives said they are preparing their treasury plans for more mop ups of about N300 billion.

The Central Bank Monetary Policy Rate was increased to 12 per cent from 11 per cent while Cash Reserve Requirement was hiked to 22.5 per cent from 20 per cent at its last meeting.

Meanwhile, the International Monetary Fund (IMF) said that it has again cut its growth forecast for Nigeria as the oil exporter faces substantial challenges from low crude prices.

In its annual review of Nigeria’s economic situation, the IMF said that gross domestic product growth will slow to 2.3 per cent in 2016 from an estimated 2.7 per cent in 2015.

It added that Nigeria’s general government deficit will grow further after doubling to 3.7 per cent of Gross Domestic Product (GDP) last year.

The IMF executive board said Nigeria needed to urgently implement policies to safeguard fiscal sustainability, reduce external imbalances and advance structural reforms that promote more inclusive growth.

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Nigeria Police Begin Recruitment Of 10,000 Personnel

The Police Service Commission (PSC) has warned that there would be no short-cut into the Nigeria Police Force in the recruitment of 10,000 personnel.
President Muhammadu Buhari had in 2015 approved the recruitment of 10,000 policemen at the National Security Summit in Abuja.

In a statement Wednesday, Ikechukwu Ani, Head, Press and Public Relations of the commission, told journalists that Mike Okiro, Chairman of the commission, gave the warning while unveiling a portal for the exercise in Abuja.

The statement said that the portal would be opened to the public on April 1 to herald the commencement of the exercise.
“The process leading to the recruitment of 10,000 Policemen as directed by President Muhammadu Buhari at the National Security Summit in Abuja last year, has commenced,” the statement said.
It said the unveiling of the portal was in actualisation of the presidential directive on the recruitment of the 10,000 Policemen.
The statement noted that the exercise was remarkable because there had not been recruitment into the Nigeria Police Force for more than five years.

It said that thousands of policemen who died in the course of service, dismissed or retired, had not been replaced since the last five years.
The statement stressed that the recruitment would strengthen and re-energise the force to tackle more security challenges facing the country.
It explained that the exercise could not begin last year because the funding was not captured in the 2015 budget.
The statement urged interested applicants to access the portal through the commission’s website: www.psc.gov.ng or that of the Nigeria Police Force: www.npf.gov.ng.
It said that no fee would be charged for the processing of the forms which would be filled on-line.
“We are not charging money. It is free, absolutely free,” it said.

The statement said that the exercise would be in three entry points of Constable, Cadet Inspector and Cadet ASP, while there would also be recruitment into the Specialist cadre.
It said that applicants for Police Constables are expected to possess five credits including Mathematics and English Language at Senior School Certificate Examination in not more than two sittings.

It said that for Cadet Inspectors, in addition to having the requirements of Police Constables, candidates would be expected to have an Ordinary National Diploma (OND), Advanced Level (A level), National Certificate in Education (NCE) or their equivalents.

The statement said Candidates for Cadet ASP must possess a University degree or a Higher National Diploma (HND).
(NAN)

BREAKING: At last, Senate passes 'controversial' 2016 budget

The senate has passed the 2016 budget into law after weeks of delay. Presenting a report on the budget, on Wednesday, Danjuma Goje, chairman senate committee on appropriation, said that the budget was “full of controversy”, but that the senate would not want to delay its passage by adding more controversies to it.

He said that there were lapses in the budget, but that the committee had to work around them. He said that the delay in the passage of the budget had already been given a political hue, hence Nigerians would blame the legislature for any further delay.

In December, the budget proposal presented to a joint session of the national assembly by President Muhammadu Buhari was N6.08trn. A total of N351bn was for statutory transfers, N2.8trn for recurrent expenditure and N1. 8trn for capital expenditure.

The senate, based on the recommendation of the committee, adopted $38 per barrel crude oil benchmark for the budget, as proposed by the federal government. It also adopted a foreign exchange rate of N197 per dollar as proposed by the government.

The senate, however, reduced the total budget sum from N6.07trn to N6.06trn: N351bn for statutory transfers, N1.4trn for debt service, N2.6trn for recurrent expenditure, and N1.5trn as capital expenditure.

Also, the upper legislative chamber observed that the budget was not presented in time to the national assembly, which effected its passage.

It urged the federal government to submit the budget subsequently in strict compliance with the Fiscal Policy Act, and advised that there should be proper consultation between the budget office and the ministries, departments and agencies.

The senate also asked the government to diversify its revenue base, and to shore up capital expenditure and reduce recurrent expenditure.

Naira strengthens slightly against the dollar

The fluctuating rate of the naira against the dollar continued this week as the Nigerian currency began the same way it ended last week (N325/dollar). But since the real business began, there have been slight improvements on the price of the naira against the dollar on the black market as it has remained steady since Monday, March 21.

NAIJ.com’s findings from the Bureau De Change (BDC) operators revealed that although the exchange rate has not improved so much from what was obtainable before now, their customers have not stopped patronizing them for foreign exchange purposes. 

The operator who pleaded anonymity, informed that although the pace of the patronage has reduced, “they still come here to exchange money and for two days now, it has been N324 to one dollar.” Speaking also on the state of the economy, the operator stated that they are not sure of any improvement, but remain optimistic with the recent trends of currency fluctuation.

“We just hope for the best in the coming days since the naira has gathered a little momentum against the dollar in the past two-three days,” he noted.

Mrs Giwa, who made the call at an international conference where she was spotted by journalists, said: “It is believed that an increased collaboration between the various diaspora organizations and the formal sectors of government (especially the financial sector) will result in increased foreign exchange inflow from Nigerian diaspora into the country.”

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Naira depreciates as dollar appreciates by 2 at parallel market

The Naira on Monday depreciated by 2 per cent against the dollar at the parallel market. The naira shed N5 to exchange at N280 to the dollar, as against N275 it traded on Saturday.

The Naira firmed against the dollar on Saturday by 1.1 per cent when it exchanged for N275 to the dollar, in contrast to N277 it traded on Friday. It, however, closed at N197 to the dollar at the official interbank window.

Traders at the Foreign Exchange market said that in spite of the sale of foreign exchange to about 1,650 operators of Bureau de Change last week, the value of the naira continued to fall.

Prof. Sharafadeen Tella of the Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, urged the apex bank to continue to tighten its foreign exchange policy. Tella said this was necessary in view of a call by the International Monetary Fund (IMF) for a flexible policy.

IMF visit: CBN may devalue Naira to N250 to a Dollar – Economist

Financial authorities are facing growing pressure to devalue the naira as the price of oil, its biggest source of foreign exchange, trades at the lowest level since 2004.

The Central Bank of Nigeria (CBN) may revise its target for the naira by about 20 per cent to N240 to N250 per dollar as oil continues its decline, Alan Cameron, London-based economist at Exotix Partners LLP, said in a research note.

The currency was little changed at N199.29 per dollar yesterday in Lagos, the commercial capital.

“Cumbersome foreign-exchange restrictions are strangling economic growth,’’ John Ashbourne, London-based Africa economist at Capital Economics, said in note to clients on Wednesday.

“The authorities will be forced to devalue the naira in the first half of 2016.”

Africa’s biggest economy needs more flexibility in setting monetary policy so it can use its foreign-currency reserves to support the poor population, International Monetary Fund managing director Christine Lagarde told Nigerian President Muhammadu Buhari on Tuesday.

The central bank has held the naira at N197 to N199 per dollar since March as Governor Godwin Emefiele introduced trading curbs to conserve reserves and stem a rout after it fell to a record N206.32 in February.

Nigeria, with more than 170 million people, is struggling to cope with crude prices that have fallen almost 70 per cent since their peak in June last year to below $40 a barrel.

Brent crude for February delivery tumbled 3.4 per cent to $33.07 by 7:15 a.m. in London.

“The need for a devaluation of the naira has been obvious for some time, all the more so after the latest drop in oil prices,” Cameron said.

Oil accounts for two-thirds of government revenue and almost all exports. The slump is weighing on growth, which is forecast to slow to 3.2 per cent this year, the slowest pace this century, according to a Bloomberg survey of economists.

Oshodi demolition: Igbo traders demand N20bn compensation - today.ng

Igbo Traders in the demolished Owonifari market, Oshodi yesterday demanded for 20 billion naira from the Lagos State government for properties and goods lost to the demolition. The traders under the Igbo Traders Congress while protesting the demolition at the market denied allegations that Biafra agitators were holding meetings inside the market.

Speaking on behalf of the traders, Chibuzor Onugha said the demolition was targeted at Igbo traders in the state.

“We are being punished because PDP won in this area, they alleged that the we are holding Biafra meeting its all false, they just want to punish the Igbo’s for political reasons,” Onugha said.

The traders said the state government breached the court Injunction against demolition, saying its heading to court to seek compensation against the 20 billion goods lost to the demolition.

He said the markets accommodated about 5000 traders while the government only provided slots for 600 traders at the new Isopakodowo market.

However the Lagos State Government defended the relocation of traders plying their trade in Owonifari market to the newly built ultra-modern Isopakodowo market in Bolade-Oshodi, saying the action was taken in the overall interest of public good, safety and security.

Speaking during a joint press briefing addressed by the State’s Ministries of Information and Strategy, The Environment, Physical Planning and Urban Development, Local Government and Chieftaincy Affairs, and the Office of Civic Engagement, the government said it constructed an alternative market stall for the traders which can conveniently accommodate over 600 shops and hundreds of kee clamps, and agreed to subsidize payment by giving shops at the new market at a monthly give away price of N5, 000.

Commissioner for Information and Strategy, Mr. Steve Ayorinde said the traders were adequately notified before the exercise took place as required by law, and that government engaged with the leadership of the market severally before carrying out the demolition exercise on Owonifari Market.

While clarifying issues on the demolition which took place on January 5, 2016, Ayorinde said it was important for people to note that the issue of the market had been on for nothing less than ten years, adding that government had been engaging the leadership of the market to make them realize that it could no longer continue in the manner in which the market was being used.

He said unfortunately, the leadership of the market, in the last three years, refused to move despite the fact that the new market has over 600 shops apart from the kee clamps which takes the number of people that the market could conveniently accommodate to over a thousand all together.

FOREX RESTRICTION: 99% businesses may die by March, if

Chairman of Zinox Group of companies, Mr Leo-Stan Ekeh, yesterday advised President Muhammadu Buhari to urgently engage the private sector to ease the stifling economic situation in the country.

Ekeh while addressing a cross section of newsmen in Lagos yesterday said that Nigerian businessmen are going through harrowing times to sustain their businesses now due to the forex restrictions imposed by the present administration, adding that perhaps less than one per cent of Nigerian businessmen will still be standing if current realities remain till March this year.

He lamented that not being able to source adequate foreign exchange to transact business has made a lot of businesses lose credibility in international market and if that continues the entire economy may shut down.

However, he also expressed optimism that the Nigerian economy can never shut down totally but warned that “the shocks and gaps in the economy at the moment represent our current realities and we must find creative ways to navigate this harsh economic climate. The unprecedented fall in the price of crude oil is a global phenomenon which even the smartest economist couldn’t have predicted. The only regret is that successive governments failed to save for the present rainy day we are experiencing when prices were at their peak.

“Having said that, we must always look forward. I sincerely believe that the current administration has the requisite political will and capacity to see the country through this storm and the new mindset of Nigerians to get things done properly also helps.

“I also believe that the organized private sector holds the key to a way out of the present quagmire. As a matter of urgency, President Buhari should engage the private sector to save Nigeria. The three levels of the sector drives over 80 per cent of Nigeria’s economy and certainly, we can only move forward when the government carries them along.

“Recall that in the run-up to last year’s elections, President Buhari met with representatives of the private sector in Lagos to present his party’s economic plans. This and other engagements certainly went a long way in contributing to his victory at the polls.It is my considered opinion that the time is right for the President to enlist the support of the sector in finding a way out of the current economic challenges,” he added.

Credit: Vangurd

MTN Nigeria acquires Visafone, promises boost in broadband quality

MTN Nigeria on Thursday said that it had completed the acquisition of Visafone, the only surviving Code Division Multiple Access (CDMA) network in Nigeria’s telecommunications industry.

MTN Executive, Amina Oyagbola, made this known in a statement in Lagos.

Ms. Oyagbola said the acquisition of Visafone was in line with a continued commitment by MTN to improve the quality of broadband services for its subscribers.

She said the acquisition, which sought to leverage resources for service enhancement, was also reflective of the company’s concerted efforts to deepen the growth and roll out of broadband services across the country.

According to her, the acquisition of the CDMA network was in support of the National Broadband Plan, for the benefit of Nigerians.

”We are committed to exploring avenues for meeting our customers’ increasing data needs in line with our vision ‘to lead the delivery of a bold new digital world to our customers’.

”As we work to maximise our data capabilities towards achieving broadband of international quality, our objective is to ensure that Nigerians experience a boost in the quality of broadband internet services.

”This will translate to the much needed enhanced data speeds and value to enhance personal and business productivity.

”The acquisition of Visafone highlights MTN’s commitment to Nigeria. More capacity will facilitate enhanced product/service offerings and experience in the data space to the delight of our valued customers.

”Voice is still King. However, data is becoming increasingly important in our everyday lives and our energies are focused on enhancing data and internet services to the benefit of our customers and the country at large,” she said.

Visafone is one of the leading CDMA/ICT companies in Nigeria, offering a number of services, which include voice, high speed data (3G), internet and other Value Added Services (VAS).

Visafone also provides business solutions to small and medium sized companies and corporate organisations in Nigeria.

The News Agency of Nigeria reports that over 2,000 employees of Visafone were disengaged with effect from January 5 and were paid three months salaries as severance package.

The only employees said to been left are those in the personnel and transmission departments. (NAN)

Bad Times! OPEC oil now $27…$18 may be sooner than later

The Organisation of Petroleum Exporting Countries (OPEC) basket price for oil may be closer to the predicted $18 than thought, with the oil currently trading at $27.85 per barrel. 

According to OPEC secretariat calculations released on Friday, “the price of OPEC basket of thirteen crudes stood at 27.85 dollars a barrel on Thursday, compared with $29.71 the previous day”. 

Brent crude was 45 cents lower at $33.78 a barrel after sliding during European trading to a low of $32.16, a level last seen in April 2004. US West Texas Intermediate (WTI) was initially down by 3.9% to $32.40, its lowest since the 2008 global economic crisis WTI but eventually settled down at $33.27 a barrel. 

The global oversupply has continued to pull oil prices to new lows, leading to approximately 70 percent reduction in value than when the downturn began in June 2014. John Kilduff, founding partner at Again Capital, told CNBC on Monday that oil prices could go as low as $18 per barrel, following the Saudi-Iran tensions which fuelled soaring prices on Monday. “I think you’re going to get as low as $18 and maybe get as high as $48. … It’s going to get really ugly,” he told CNBC. 

“The Iranians doubled down again, if that’s even possible, by saying that they could put 500,000 more barrels on the market within weeks after the sanctions get lifted.” 

With current rate of decline, oil prices may sink to $18 earlier than expected. Global oversupply is currently within 500,000 to 2 million barrels per day, and could reach 3 million if Iran lives up to its word to add up to one million bpd as soon as possible. 

In all of these, Nigeria’s budgetary benchmark for 2016 fiscal year, still stands at overly optimistic $38 per barrel. The new OPEC reference basket of crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

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CBN may devalue Naira next year

There are indications that the Central Bank of Nigeria (CBN) may devalue the naira next year after President Muhammadu Buhari hinted for the first time that he would accept a devaluation of the naira, spurring speculation it may take place early next year when the local market reopens for trading.

The Central Bank of Nigeria(CBN) is fine-tuning the management of foreign exchange and would introduce some flexibility that would encourage additional inflows, Buhari told lawmakers in Abuja, on Tuesday as he presented the country’s 2016 budget.

“I am aware of the problems many Nigerians currently have in accessing foreign exchange for their various purposes,” the president said.

“These are clearly due to the current inadequacies in the supply of foreign exchange. We are carefully assessing our exchange-rate regime, keeping in mind our willingness to attract foreign investors, but at the same time managing and controlling inflation to a level that won’t harm average Nigerians.

“To the investors, business owners and industrialists, we are aware of your pain,” Buhari said. “To the farmers, traders and entrepreneurs, we also hear you. The status quo cannot continue.”

The currency of Africa’s biggest oil producer and economy has been all but fixed at N197-N199 per dollar since early March, with the central bank governor, Godwin Emefiele, curbing foreign-exchange trading and introducing import controls after the naira fell to a record low as crude prices plunged.

That’s caused investors including Aberdeen Asset Management Plc and Morgan Stanley to sell naira bonds and stocks in anticipation of a devaluation, which would cause losses on their holdings, and hindered the country’s growth.

The president’s change of tone means a devaluation and loosening of currency-trading restrictions may take place about January 4, when the central bank reopens the interbank market, which has been shut since Dec. 18 for the Christmas holidays, according to Razia Khan, the London-based head of Africa research at Standard Chartered Plc, which predicts the naira will weaken to N220 per dollar in the first quarter and N228 by the end of 2016.

“There’s recognition that the current system isn’t working and they need to move to something better,” Khan said by phone.