Tinubu Approves Infrastructure Support Fund for 36 States to Cushion Effect of Subsidy Removal 

·      FAAC shares N907bn among FG, states, LGs for June

·      N1.9tn generated, N790bn to be saved, balance for statutory deductions 

·       NEC rejects Buhari’s national social register over integrity concerns

·      Endorses deployment of CNG vehicles for public transportation

·      FG to distribute 252,000 tonnes of grains to states

·      FIRS to increase annual revenue generation from N10tn in 2022 to N25tn in 2024

Deji Elumoye, Ndubuisi Francis and James Emejo in Abuja 

President Bola Tinubu has approved the establishment of Infrastructure Support Fund (ISF) for the 36 states of the federation as part of measures to cushion the effects of the petrol subsidy removal on the people. 

The approval was disclosed yesterday in Abuja at the monthly meeting of the Federation Account Allocation Committee (FAAC), where N907 billion was shared among the three tiers of government for the month of June.

The National Economic Council (NEC), also yesterday, resolved to do away with the national social register used by the Muhammadu Buhari administration to implement its conditional cash transfer. 

The decision came as the federal government announced that it would distribute 252,000 metric tons of grains to states at subsidised rates in a continued effort to assist the citizenry amid hardship occasioned by removal of petrol subsidy.

Shedding more light on the establishment of the ISF for the 36 states, Special Adviser to the President, Special Duties, Communications and Strategy, Mr. Dele Alake, said, in a statement, “The new infrastructure fund will enable the states to intervene and invest in the critical areas of transportation, including farm to market road improvements; agriculture, encompassing livestock and ranching solutions; health, with a focus on basic healthcare; education, especially basic education; power and water resources, that will improve economic competitiveness, create jobs and deliver economic prosperity for Nigerians.

“The committee also resolved to save a portion of the monthly distributable proceeds to minimise the impact of the increased revenues – occasioned by the subsidy removal and exchange rate unification – on money supply, as well as inflation and the exchange rate.”

Alake disclosed that out of the June 2023 distributable revenue of N1.9 trillion, only N907 billion was distributed among the three tiers of government, while N790 billion will be saved, and the rest will be used for statutory deductions.

He stated, “These savings will complement the efforts of the ISF and other existing and planned fiscal measures, all aimed at ensuring that the subsidy removal translates into tangible improvements in the lives and living standards of Nigerians.

“The committee commends President Tinubu for the bold decision to remove the petrol subsidy, and even more importantly, for providing necessary support to the states to cushion the effects of the subsidy removal on Nigerians,”

Meanwhile, a communiqué issued at the end of the FAAC meeting for July 2023, which detailed the allocations, said a total sum of N907.054 billion Federation Account revenue was shared among the three tiers of government for June.

Allocations are usually shared from the preceding month’s revenue — meaning June allocations were shared in July.

The FAAC meeting was chaired by Accountant General of the Federation, Dr. Oluwatoyin Madein, according to a statement issued by Director (Press and Public Relations), Office of the Accountant General of the Federation, Bawa Mokwa.

The N907.054 billion total distributable revenue comprised distributable statutory revenue of N301.501 billion, distributable Value Added Tax (VAT) revenue of N273.225 billion, Electronic Money Transfer Levy (EMTL) revenue of N11.436 billion, and Exchange Difference revenue of N320.892 billion.   

The total deductions for cost of collection for the month was N73.235 billion, while total deductions for savings, transfers and refunds stood at N979.078 billion.

From the total distributable revenue of N907.054 billion, the federal government received N345.564 billion, states got N295.948 billion, and the local governments received N218.064 billion. 

A total sum of N47.478 billion was shared to the relevant states as 13 per cent derivation revenue. 

The statement disclosed that a gross statutory revenue of N1,152.921 billion was received for the month of June 2023. This was higher than the sum of N701.787 billion received in the previous month by N451.134 billion.  

From the N301.501 billion distributable statutory revenue, the federal government received N146.710 billion, the state governments received N74.413 billion while the local government councils received N57.370 billion. 

The sum of N23.008 billion was shared to the relevant states as 13 per cent derivation revenue.  

For the month of June 2023, the gross revenue available from the VAT was N293.411 billion.  This was higher than the N270.197 billion available in the month of May by N23.214 billion.   

The federal government received N40.984 billion, states received N136.613 billion and the local government councils received N95.629 billion from the N273.225 billion distributable VAT revenue.

 The federal, state and local governments also received N1.715 billion, N5.718 billion and N4.003 billion, respectively, from the N11.436 billion Electronic Money Transfer Levy (EMTL) for the month

From the N320.892 billion Exchange Difference revenue, the federal government received N156.155 billion, states received N79.204 billion, and the local government councils received N61.063 billion.

The sum of N24.470 billion was shared to the relevant states as 13 per cent mineral revenue. 

According to the communiqué, in the month of June 2023, Companies Income Tax (CIT) recorded tremendous increase. Import and Excise Duties, Value Added Tax (VAT), Oil and Gas Royalties increased significantly, while Petroleum Profit Tax (PPT) and Electronic Money Transfer Levy (EMTL) decreased considerably. 

The balance in the Excess Crude Account (ECA) stood at $473,754.57 as of July 20, 2023

NEC Rejects Buhari’s National Social Register over Integrity Concerns

The NEC, yesterday, resolved to do away with the national social register used by the Muhammadu Buhari government to implement its conditional cash transfer. 

The NEC meeting presided by Vice President Kashim Shettima, at the Council Chamber of State House, Abuja, said the register used by the immediate past administration had integrity issues, as the criteria for its compilation was unclear.

Briefing newsmen at the end of the meeting, Governor Chukwuma Soludo of Anambra State said contrary to what the previous administration projected, it was not possible to digitally transfer money to the poorest of the poor, majority of whom were unbanked.

Soludo said it was agreed that states should generate registers that were comprehensive and ensured that they were for the vulnerable people only.

Soludo, who spoke in the company of his Bauchi and Ogun states counterparts, Bala Mohammed and Dapo Abiodun, respectively, noted that beneficiaries of the supposedly transferred cash could not be identified in the villages.

He stated, “I’d like to respond to the social register that has been mentioned. I think at the council today, there was almost near unanimity among members that there’s a big question mark about the integrity of the so-called National Social Register. 

“We have questions about how those names in the register were brought about and I’m sure one question I hear asked is where it is for the most vulnerable group, and so on and so forth.

“Let’s talk about a social register. And then distributing things through the social register by digital means, implying that these people already have account numbers and they have phone numbers. Maybe we are talking about some other people and not Nigerians. The poorest 25 per cent of Nigerians are likely, if not totally unbanked, and don’t have access to telephone.

“Now in thinking through that, we felt that sitting in Abuja and calling on somebody in Anambra to compile a list and send it to you and then the person depends on who he brings, and the registers are generated and people go to those villages and ask where are those people and they don’t show up. This is stress testing. And we think that we need to go down back to the drawing board.

“If you are delivering any such national or federal programme from Abuja, it needs to be delivered via the governments that are there using their own format and mechanisms to generate the register that is comprehensive. 

“That meets certain criteria that you can stress test and you can call out the people in the village and everyone will confirm that these are the vulnerable people, if you are targeting vulnerable people, as it were.

“So the integrity test is what is missing with that register. Many have just described what is being counted as National Register as bogus, some describe it as phantom, some in all manner of terms. So, we need to face the problem, the fact that we don’t have a credible register and get back to work on this.”

Soludo said NEC resolved that the states should come up with their own registers using formal and informal means to develop them. He assured that all beneficiaries at the subnational level could easily be accessed that way.

Soludo affirmed that NEC deliberated on ways to cushion the effect of the recent petrol subsidy removal, including reduction in cost of governance. 

He said. “The first question that was raised is in relation to cost of governance. I think it’s an omnibus concept, and it’s not something you sit down in a meeting to legislate for each and every state. 

“But the fact that the council recognises that this is an issue that each tier of government should now focus on as an area of concern.”

He pointed to mounting concerns about “the cost of running the state, the way we even live. So, some gave an example of a state governor going with more than 20 vehicles in a convoy and all these have to be fuelled, and so on and so forth”.

Soludo stated, “We need to be sensitive to the times, we need to live within the average of the people that we’re governing and so on and so forth and knockoff the waste and the irrelevance, so to speak.

“I will like to give you a simple example, When I assumed office, it cost about N137 million every month to clean up public offices, and so on. Today, in Anambra, we’re doing N11 million a month from N137 million on a monthly basis, just an illustration. And it’s a thing that we’re persuading each and every one of us to look into, check into our books and look ourselves in the mirror and move with the times.

“And by the way, there’s something that I think my colleagues missed out as part of those recommendations over the medium, longer term, and that is the possibility of negotiating a new minimum wage. That obviously will be on the table. But that has to be negotiated through the appropriate structures for doing that over time.”

Soludo explained that packages to serve as palliatives were clarified to encourage the tiers of government to implement in accordance with their respective fiscal spaces and fiscal capacities. 

He said, “The federal, state and local governments. I want to highlight as well, but that is quite some fiscal surplus that will be coming to the states and local governments and the federal government and we suggested that it will be nice that you can implement cash transfers, subject to your financial capacity based on peculiarities.

“Some might be able to do one, some might be able to do 10. Some might be able to do 20 as the case may be. It depends on their own capacity. Maybe a state, maybe some that are not even in a position to do that now.

“For example, if you have a state that has been owing salary arrears, workers have been owed for three years, or for four years. The priority now is to even start paying some of the salary arrears, or where pensioners have been owed their pension and gratuity for seven years, for example, the priority now might be to use part of the surplus to pay them. 

“Then, there are also states that are with bumper harvests and that will say you know what, I want to deploy a chunk of this to implementing cash transfer and several of the other immediate programmes and that’s why we couched this point, that this is ultimately still a federation. And the various states and local governments and federal government are at different levels in terms of their fiscal space and fiscal capacity.

“So states, local governments, the federal government, depending on the resources. If the federal government decides to do the same cash transfers, for example, we are recommending that they should do so using the framework of the states and local governments that are nearer to the people, so to speak. That’s basically that.

“We didn’t sit down there to begin to say, oh, okay, this one your transfer will be like what is being bandied around in the media, whether it’s 8,000 or 10,000, or 1,000, or whatever. It will depend on what the state… if the state can afford it, and what they can afford. And I guess it’s very important that we communicate this clearly.”

On his part, Governor Bala Mohammed of Bauchi State said the federal government would distribute 252, 000 metric tons of grains to states at a subsidised rate to cushion the effect of subsidy removal.

Mohammed said the National Emergency Management Agency will also make available to the people its package.

Speaking, also, Governor Dapo Abiodun of Ogun State said though the hardship the masses were facing as a result of the removal of fuel subsidy was not the making of the government, as market forces determined the prices, efforts were being made to cushion the effect.

Some of the packages, he stated, included cash transfer to the poorest of the poor by the states, cash award policy for all public servants, which should be implemented for six months, in first instance, payment to public servants on outstanding liabilities, such as pension, allowances, among others.

Abiodun said government was looking at the possibility of funding micro, small and medium scale enterprises (MSME), which he said were the engine of growth for the economy.

He further said government was planning immediate implementation of energy transition plants, converting mass transit buses to Compressed Natural Gas (CNG), adding that the long term vision was to establish electric automobile plants.

According to him, “As a responsible government, we extensively deliberated on immediate steps in appreciation of the fact that our people are already feeling the pains of these very laudable and noble steps and have been very patient with this administration. 

“To that extent a sub-committee of the NEC was set up and that sub-committee reported some of the things that the governor of Anambra has shared with us and their report is now the proposal of the NEC and amongst what the governor of Anambra has shared with us. 

“We also proposed accordingly that each state should begin to plan towards implementing a cash transfer programme that will be based on the social registers of the states because it is the states that are better positioned to do that enumeration so you can ensure the integrity of the social register.

“Again, it was also proposed by the council that we should implement a Cash Award Policy for all public servants. What’s a Cash Award Policy? That would be a policy that allows each sub-national to actually pay the public servants a certain prescribed amount of cash on a monthly basis and was prescribed that that should be implemented for six months, in the first instance.

“You’ll be wondering why six months. The idea is that as much as we’re also particular about ameliorating the pains of our people immediately, a lot of sustainable measures are being put in place and it’s our hope that within now and the next six months, those sustainable measures would have begun to be visible and then we can begin to taper down these cash awards. These cash awards, by the way, would be funds that will be placed in the hands of civil servants that will be tax-exempt.”

Contributing, also, the acting Governor of Central Bank of Nigeria (CBN), Mr. Folashodun Shonubi, said the Federal Inland Revenue Service (FIRS) briefed the council and announced that it was ahead of its half-year target.

According to him, “Chairman of the Federal Inland Revenue making a presentation on what they have done so far, the level of collections. It was nice to know that they are ahead of their target for half year. And we expect that before or by the time the year ends they would exceed. 

“They also gave us some idea of what next year should be like from them. And from this year, we hope to make some N10 trillion. The plan is that next year, they should be able, working with all the agencies, to provide N25 trillion as their contribution to the national coffers.”

Meanwhile, FIRS yesterday announced that it generated a total of N5.79 trillion in tax revenues for the half-year period of the year. This was disclosed by Executive Chairman, FIRS, Mr. Muhammad Nami, who stated that the figure represented the highest tax revenue collection ever recorded by the service in the first six months of a fiscal year.

The service had set a self-target of at least N12 trillion in tax revenue for 2023 after surpassing the N10 trillion target for 2022 by N100 billion.

According to a statement, Nami, who spoke while presenting the 2023-2024 tax revenue outlook to NEC, noted that the performance surpassed the N5.3 trillion mid-year target.

The report indicated that tax revenue from the oil sector between January and June 2023 stood at N2.03 trillion, as against a target of N2.3 trillion while non-oil tax collection stood at N3.76 trillion compared to its N2.98 trillion target.

Nami, in his presentation to NEC, further stated that the service collected a total of N1.65 trillion in tax revenues in June – the highest collection by the service in a single month.

He attributed the impressive performance to improved voluntary tax compliance enabled by the automation of FIRS’ tax administrative processes.

He said, “This is a good head start as we work towards meeting our target for the year. And it was achieved despite stubborn headwinds, such as the impact of the currency redesign and 2023 general elections on the economy in the first and second quarters of 2023.

“This half-year performance was achieved as a result of improved voluntary tax compliance by taxpayers, the continued improvement of automation of our tax administration processes, including the updated VAT filing processes, as well as our dogged engagement with stakeholders in both the formal and informal sectors of the economy.”

On the outlook for the remaining half of the year, the FIRS chairman gave assurances that the country should expect “better days ahead” in terms of tax revenue collection.

 In the statement issued by his Special Assistant on Media and Communication, Mr. Johannes Oluwatobi Wojuola, Nami was quoted to have added, “We believe that the performance in the second half of the year would be better considering the continuing improvement to our tax administration processes and positive impact of current government’s policies on the economy.”