Connect with us

News

State Governments Revenue To Be Strained over High Debt-To-Revenue Ratio

Published

on

Zainab-Ahmed

Eniola Olayemi

 
The revenue of the states in the country will be further strained in the coming months owing to their rising debt portfolio and cost of servicing those debts.

This is coming on the back of the latest report on the states’ internally generated revenue by the National Bureau of Statistics (NBS), tagged, “Internally Generated Revenue at State Level”, which showed a high debt to revenue ratio for the first half of 2018 (H1’18).

The report showed that total states’ Internally Generated Revenue, IGR, grew by 27.7 percent year-on-year (y/y) to N579.40 billion from N453.83 billion in H1’17.

Of the 36 states, 28 states grew their IGRs, while states such as Ebonyi, Anambra, Benue, Abia and Kebbi recorded declines in IGR by 21.79 percent to N2.46 billion, 21.62 percent to N7.07 billion, 18.86 percent to N6.06 billion, 12.29 percent to N6.98 billion and 10.85 percent to N2.03 trillion respectively in H1 2018.

Lagos retained its number one spot, with an IGR of N196.4 billion, up 16.9 percent y/y and Rivers State recorded N60.9 billion, the second largest state by IGR.

The report showed that not much changed in terms of revenue sources as federation account allocation inflows continued to account for more than 70 percent of the total revenue (FAAC + IGR) for most states. Net federation accounts allocation to states grew y/y by 65.14 percent to N1.23 trillion in H1 2018 from N0.74 trillion in H1 2017 amid increases in production and price of crude oil.

The states’ total debt stood at N4.78 trillion in the year under review, comprising of N1.30 trillion external debt and N3.38 trillion domestic debt.

The high debt to revenue ratio, according to economy watchers, will put more pressure on fiscal operation of the states and also make implementation of capital expenditure more difficult.

In his reaction, Mustapha Wahab, a research analyst at Cordros Capital Limited, explained that adding growing debt to servicing cost and to the already depressed state revenues will put pressure on their fiscal operation. He said: “Currently a number of states can’t cover their recurrent expenditures on the back of insufficient FAAC allocations despite gains from higher crude prices relative to last year and significantly low internally generated revenues.

“Adding growing debt service cost to the already depressed state revenues will further put pressure on fiscal operations of the federating units, the impact of which will not only make capital expenditure, CAPEX, implementation a tall order but overhead spending also.”

According to him, the situation would mean growing risk of default on interest and principle payment for the states. He urged the states to increase their IGR to reduce the impact of declining crude oil price. “With IGR to FAAC ratio remaining abysmally low, states government must ramp up internally generated revenues to reduce the impact of volatile oil earnings on fiscal performance by significantly expanding the tax base and considerably monitoring revenue generating state owned corporations to effectively block all loopholes,” he said.

Cowry Asset Management, a Lagos-based investment banking firm, said: “Given states’ IGR of N579 billion and net Federal Accounts Allocation of N1.23 trillion in H1 2018, ‘dependency multiple’, FAAC to IGR, was 2.13 times.

In spite of the y-o-y increases in IGR and net Federation Accounts Allocation to the states by 27.7 percent and 65.14 percent respectively, the states’ average total debt to gross revenue still remained high at 2.75 times in H1 2018.

“We opine that high debt to gross revenue ratios of the states would further increase their debt servicing costs which in turn would burden future generated income of the affected states going forward, given that most of the borrowed fund would have gone into recurrent expenses such as payment of salaries.”

In a report titled, “State of States IGR in H1’18: Creating more “Lagos” across Nigeria”, analysts at United Capital Plc, another investment banking firm, emphasised the need for the state to up their IGR in line with Lagos State while expressing concern at the underwhelming performance of other states.

They also pointed out the need to expand the revenue base across states, saying that it would reduce dependence on FAAC inflows, which is largely exposed to the vagaries of the oil market. Increasing the revenue base of the states, according to them, would limit future fiscal crisis. “In addition, this would boost the credit ratings of states and enhance their ability to finance developmental projects,” they said.

“Further analysis of the IGR report indicated that Pay As You Earn, PAYE, is two times the size of FAAC inflow in Lagos and 1.1 times in Ogun States, implying that both states are significantly benefiting from a dominant formal sector relative to other states. Hence, to create more “Lagos States” across the country, there is a need for a concerted effort to develop the formal sector in the rest of the country. Put differently, tax authorities in other states may need to find creative ways to boost revenue from the informal sector going forward,” they asserted.

News

Sanwo-Olu, Mustapha for GOCOP 5th Annual Conference

Published

on

Gocop

Sanwo-Olu, Mustapha for GOCOP 5th Annual Conference

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

Gocop

Gocop

The Guild of Corporate Online Publishers (GOCOP) has confirmed Governor Babajide Sanwo-Olu of Lagos State and Secretary to the Government of the Federation (SGF), Boss Mustapha, as chairman and keynote speaker, respectively. at its fifth annual conference August24news.vom has learnt.

A statement signed by GOCOP Publicity Secretary, Olumide Iyanda, said Mr. Mustapha will speak on the conference theme COVID-19 Pandemic: Recovery and Reconstruction in Nigeria.”

Panelists at the conference, which holds on October 7, 2021, at the Sheraton Hotel, Lagos, starting at 10am, are the Lagos State Commissioner for Health, Professor Akin Abayomi, and Director, Nigeria Centre for Disease Control (NCDC), Dr. Yahaya Disu.

Mr. Sanwo-Olu, the Chief Incident Commander for the prevention and control of COVID in Lagos, will preside over the conference.

The choice of topic for the conference is informed by contemporary political, economic, security, socio-cultural challenges facing Nigeria occasioned by the coronavirus pandemic, which has crippled socio-cultural and economic activities not only in Nigeria but around the world and the concerted efforts made nationally and globally to tame the scourge, GOCOP said.

Continue Reading

News

ESG and the Oil & Gas sector: ABSA Advocates a Balanced View

Published

on

Camillo Atampugre

Camillo Atampugre

ESG and the Oil & Gas sector: ABSA Advocates a Balanced View

 AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

Developing a social investment plan that utilizes proceeds from the oil and gas sector is critical to stimulating impactful growth across the African continent.

This view was shared recently by Camillo Atampugre, the Director of Resources and Energy, Absa Securities, United Kingdom, while laying bare Absa Investment’s focus which aims to drive sustainability and advocate for a wider pivot to the Environmental, Social and Governance (ESG) initiatives across the oil and gas sector.

According to Camillo, the oil and gas sector remains a key channel of revenue for most African countries.

He mentioned that the sector accounts for an estimated 20% of the continent’s Gross Domestic Product (GDP). And in places like Nigeria and Angola, the sector contributes 70% of the overall forex inflow and 60% of government tax revenues while driving growth impacts that reverberate across the labour market, the security and exchange system and other downstream segments.

He advised that considering the overt contribution of the oil and gas sector to the African economy, a strategic approach to the adoption of cleaner energy is advisable.

This is to forestall a sudden snap that could hamper the attainment of the shorter to medium terms growth projection on the continent.

He further pointed out the various responsible steps being taken across the continent to ensure compliance with the various ESG requirements as regard achieving a gradual transition into cleaner energy and repositioning the oil and gas sector to sustain a balanced socioeconomic impact along the trajectory.

“Recognising the strategic role of the sector in their economies, places like Angola and Nigeria have taken steps to improve Governance elements. In Angola, the President has put significant focus on cleaning up the image of the sector and courting foreign investors while the Nigerian national assembly recently passed the Petroleum Industry Bill which is aimed at making it easier for investment into Nigerian oil and gas operations”, Atampugre explained.

Citing the social investment roles being played by the major operators in the oil and gas sector Atampugre revealed: “For instance, oil major Shell has played a pivotal role in investing in healthcare infrastructure to help in the fight against the likes of Ebola and HIV as well as being a major party in the first community-based health insurance program in the country. Similarly, dual-listed oil and gas player Oando has trained over 2800 teachers and financially supported 88 schools via its Oando Foundation”.

He referred to the framework for achieving a faster transition to cleaner energy. Amongst them is the renewed emphasis placed by government and operators in the energy sector in Africa to implement regulatory and social investment strategies that are aimed at alleviating poverty and providing access to affordable energy.

He concluded that Absa, a specialist investment bank, is committed to helping the continent achieve its socioeconomic growth agenda as well as provide guidance that ensures compliance with various ESG goals.

He said: “As an investment bank that specialises in funding oil and gas projects in Africa and has a deep understanding of the continent, we look forward to working on projects which tick all three of the ESG elements in a socially conscious manner”.

Continue Reading

News

Ooni Calls for Promotion of Yoruba Language and Culture

Published

on

IMG-20210916-WA0037

Ooni Calls for Promotion of Yoruba Language and CultureIMG-20210916-WA0037 IMG-20210916-WA0039 IMG-20210916-WA0040 IMG-20210916-WA0041

AJAGBE ADEYEMI TESLIM

SPONSORED BY: H&H

His Imperial Majesty, Oba Adeyeye Ogunwusi,  Ojaja II, the Ooni of Ife, has called for the promotion of Yoruba language and culture which he said must not be allowed to go into  extinction.

The monarch who was represented by Oba Dr. Adebisi Segun Layade JP, the Alara Odaaye of Ara Land Ife, Osun State made this call at the public presentation and launch of a book about the life and times of late sage, chief Jeremiah Obafemi Awolowo.

He tasked traditional rulers to champion the promotion of Yoruba language as it is the only way their culture could also be preserved.

“Most of our people when they go outside the shores of our country they choose to speak English language above the Yoruba language.

” It is a misnomer, whenever I travel to the northern part of the country, I speak Yoruba and when they notify me that they don’t understand I ask them to get an interpreter.

“I deliberately won’t speak in English language as they would have preferred, we ought to promote our own language because in other climes they use the mother tongues to teach their wards.

“Yoruba language is easy to translate and good for transmission of knowledge to the children.

Also supporting the stance, His Royal Highness Oba Oladipo Olaitan, The Alaago of Kajola Alaago, Osun State and Deputy Leader Pan Yoruba Socio-Cultural Organisation, Afenifere maintained that Yoruba language must be preserved at all cost.

He appraised the qualities of the late sage, lamenting the turn of events now a clear cut departure from what he stands for, as all seem to be without a defined purpose and void of direction.

The monarch said, “I am particularly impressed with our Yoruba language that is being purposefully energised here, we are losing it a typical Yoruba man cannot speak English, what is the purpose?

“You price yourself high because you can speak English, French and German but your own language you can’t speak it.

“The German man will always speak his language any where even at the United Nations same for the French man but we will go there and speak English, what sense does that make?

“It is easier for you to learn and comprehend in your own language and when you lose your culture, you lose everything.

“The way they took us into slavery and they are still taking us into slavery is because we’ve refused to follow our culture, when you don’t know who you are, how will you become anything in life?

“We’ve lost our roots, we’ve lost everything that is why we are where we are, you first of all have to know where you are coming from to get anywhere.

Hon. Setonji David, the Lagos State House of Assembly committee Chairman of Information, Strategy and Security who represented the Speaker Rt. Hon. (Dr.) Mudashiru Obasa also corroborated the need for Yoruba Language preservation.

“Everything that has to do with our language is so important to me as far as I’m concerned total freedom is guaranteed when you speak your language, any nation that is going to develop must revert back to its original language, it is easier for the Asian countries to communicate because of this.We need to get back the potency of Yoruba language.

He also eulogize late Chief Obafemi Awolowo noting that he was a  beneficiary of his free education scheme at all levels in Lagos State.

The Author of the book titled ‘Awolowo Akikanju Asiwaju (AAA)’, Mr. Lagada- Abayomi Olanrewaju, while speaking with newsmen after the event, revealed what spurred him to write the book, citing instances of many collections of  prose works written by authors in other parts of the world, to celebrate unique personalities who have paid their dues and impacted their nation and the world positively.

He added that the disconnect he sighted in the generation of people in the world today is basically due to the absence of good write ups, that can immortalise the good virtues portrayed by the characters for upcoming young ones to learn about heroes with whom they one way or the other have a bond.

“I feel the dearth of information about the great feats of our heroes in this part of the world and the void it is causing in our children’s social development, this drove me to write this book so as to engrave the memories of our forebear, late Chief Obafemi Awolowo in gold for yet to come generation.

“This is what obtains in other climes and I think it is high time we started doing same here, that gave birth to this piece targeted at re enacting the life and times of the late sage”. Lagada said.

Mr.Obadiah Sunday Akindele Deputy Director Curriculum development and evaluation  Ministry of Education  Science and Technology, Ogun State who represented the state Commissioner for Education Hon.Arigbabu .A. Abayomi while launching the book hinted that the state is poised to enlist the book in their curriculum come January 2022 .

Continue Reading

Trending

Copyright © 2021 All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from August24news.
This Website is designed and Managed by: August 24 Communications Nigerian Limited (RC: 798585)