Nigeria Content Online

The
Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC)
yesterday said it will review the revenue sharing formula indices.

At
the first formal meeting in Abuja following its recent reconstitution,
the Commission said the review will be one of the major assignments it
will carry out in the near future as it settles down to business.

“A
standing Committee is to be established immediately on new revenue
sharing formula to come up with a recommendation to the President that
would be transmitted to the National Assembly for consideration,” said
Elias Mbam, the Commission’s chairman.

“The
one currently in use has been in place since the military regime. So,
it is time the revenue sharing formula is reviewed, because the basis
for it has already been overtaken by reality. We will ensure that we
bring in place a new formula that would be fair and equitable to all
Nigerians,” Mr Mbam.

Concerns over accruals

Similarly,
he expressed concern over the revenue accruals in the federation
account, announcing that a standing committee on diversification of
revenue sources to the federal government is to be created immediately
to help mobilise other sources of revenue.

“The
revenue into the federation account comes basically from oil, gas,
Federal Inland Revenue Services (FIRS), Nigeria Customs Service (NCS)
and Department of Petroleum Resources (DPR). We are going to expand the
sources of revenue and look at other sources. We will be concerned with
diversification of the sources of revenue,” he said.

Though
the chairman denied that the issues of jumbo pay to lawmakers was
discussed during the meeting, he however, indicated that the Commission
has already directed that a full brief on it be made available to
enable the Commission take necessary actions that would ensure that it
is resolved holistically.

The
first attempt at reviewing the country’s revenue sharing formula was
initiated by the Commission in August 2001 in line with its mandate in
the third schedule of the 1999 Constitution empowering it to review,
from time to time, the revenue allocation formula and principles in
operation to ensure conformity with changing realities; provided that
any revenue formula accepted by the Act of the National Assembly shall
remain in force for a period of not less than five years from the date
of the commencement of the Act.” The Commission, in its first revenue
allocation proposal to the National Assembly, gave the federal
government 41.3 per cent, states (31 per cent), local governments (16
per cent) and a total of 11.7 per cent for special funds, consisting
1.2 per cent allocation to the FCT; one per cent each to ecology and
national reserve fund, agriculture/solid mineral fund, and 1.5 per cent
and Basic Education and Skill Acquisition (BESA), 7 per cent.

In
January 2003, the Commission, apparently in compliance with the ruling
of the Supreme Court, drafted and submitted to the National Assembly a
new formula for ratification, which gave the Federal Government 46.63
per cent share; states, 33 per cent, and local governments, 20.37 per
cent.

But, again, Olusegun Obasanjo, in November 2003, unilaterally asked
the National Assembly to withdraw the proposed formula by the
Commission, necessitating reliance on the old formula till the end of
his administration.

Ghana’s cedi
continued to weaken against the greenback after weeks of sustained
demand for imports in the run up to Christmas, traders said on Monday.

“It (the dollar)
started at 1.4765 but it has gone up to 1.4790 this morning. There’s
not much money on the market and the demand has just overwhelmed the
supply,” said Access Bank’s Kwabenah Yeboah.

One trader said he
expected dollar-cedi to stay shy of 1.48 for the rest of the day. “It’s
a trend we have on our markets where you see a lot of pressure on our
currency in December. Nothing is being seen on the supply side this
morning,” he said.

Dollar supply remains weak as mining companies and NGOs closed their books to balance accounts for the coming year.

Kenya’s Central
Bank offered banks 10 billion shillings in sale and repurchase
agreement on Monday after a liquidity squeeze caused by end-year
payment of taxes to the government.

Banks took up 8.36
billion shillings of the cash offered at an average rate of 1.46
percent.Central Bank and traders said the government usually increases
liqidity in the banking system at this time of the year as the tax
payments fall due during this time.

The repo, which has
a tenor of eight days, is the second cash injection by the central bank
since late November when it offered 3.26 billion shillings. It has
offered 281.5 billion shillings in 2010, the bank said.

Rising food and
education costs pushed Morocco’s year-on-year inflation to 2.6 percent
in November from 1.8 percent the previous month, the state’s High
Planning Commission (HCP) said. Month-to-month, prices fell 0.7 percent
from their level in October after a 1.6 percent drop in prices of food
and beverages, HCP, Morocco’s economic planning and statistics
authority, said in a statement.

Food and beverage prices, which account for more than 40 percent of
the North African country’s consumer price index, rose 5.2 percent in
the 12 months to end-November, while education costs rose 4.6 percent
over the same period, HCP said.

U.S. energy firm
Chevron said on Monday that it has suspended production from an oil
pipeline in Nigeria’s Delta state, which was breached on Friday.

Chevron said it was
investigating the damage to its Dibi-Abiteye pipeline but it did not
say how much production would be lost from shutting down the stream.

“We have suspended
production to minimise environmental impact and have informed relevant
government agencies and other stakeholders,” Chevron said in a
statement.

“The breach is
being investigated and we are reviewing our operations.” A militant
faction in Nigeria’s oil-producing Niger Delta said on Saturday it was
behind the attacks on oil facilities operated by U.S. energy firm
Chevron and Italian oil company Agip.

The Federal
Government has released N1 billion as arrears for the implementation of
the National Programme for Food Security (NPFS), an official of the
Ministry has said.

Bukar Tijani, the
NPFS National Coordinator, told the News Agency of Nigeria (NAN) on
Monday in Lagos, that the 2007/2008 NPFS arrears were appropriated in
the 2010 budget of the Ministry of Agriculture and Rural Development.

Tijani said that
the money had been transferred to all the states that had complied with
the directive to open domiciliary accounts for the programme.

He said that more
than 70,000 beneficiaries were being targeted directly and 765,000
beneficiaries through the outreach programme. He further said that the
programme was being implemented in 327 local governments in the country.

According to the
coordinator, the programme has recorded success in production
enhancement and diversification as well as encouraging emphasis towards
supporting small producers.

To
ensure effective delivery internet services, management of congestion
on its network and exploit the potentials of ‘connected government’,
the federal government has entered into a broadband access partnership
with the first submarine cable company in West Africa, Main One Cable
Limited. Oladapo Afolabi, head of the Civil Service of the federation
at the launch of the partnership last week in Abuja said the civil
service would utilize the opportunity in addressing the myriad of
challenges, which he said had continued to plague and hamper its
abilities to deliver on government programmes. He noted that an
evolutionary aspect of e-government is the concept of the ‘connected
government which he said “ is driven by the realization that the
increased connecting power of ICT had enabled a shift in orientation
from the vertical to the horizontal, from predominantly intra-agency
interactions to increasingly inter-agency, cross-government
interactions.”

Connecting power

The
head of service stressed that the horizontal connecting power of ICT is
emerging as a driver of fundamental changes in the way the business of
government operates and the way governments provide services to and
interact with their citizens.

“Connected
government is now the dominant theme in e-government, according to a
recent United Nations e-government survey. Connected government
emphasizes the benefits of seeking to make the whole more than the sum
of the parts by creating connected governance mechanisms aimed at
orchestrated otherwise disjointed e-government themes.”

Mr.
Afolabi explained that “Galaxy Backbone was established in 2006 as a
government owned company and charged to deliver connectivity and other
information and communications technology infrastructure to ministries,
departments and agencies (MDAs) of government and currently has up to
300 MDAs connected to its ONEGOV.net network in over 3000 office
locations in the public service.”

Main
One Optic Fibre cable system is capable of transmitting and enabling
access to broadband internet at a speed of almost 5 terabytes per
second-which is much faster than what is currently available in Europe
and will deliver up to 10 times more capacity than what is currently
available here in Nigeria. The partnership would save over 65 per cent
of previous charges spent by government to expand its networks in over
3,000 offices located in the public service.

Broadband internet

“On
the other hand, Main One Optic Fibre cable system is capable of
transmitting and enabling access to broadband internet at a speed of
almost 5 terabytes per second-which is much faster than what is
currently available in Europe and will deliver up to 10 times more
capacity than what is currently available here in Nigeria.”

Mahmud Yayale Ahmed, Secretary to the Government of the Federation
who spoke at the occasion said the partnership would have positive
economic impact on the economy. While commending Galaxy for achieving
cost reduction in the execution of the exercise, Mr. Ahmed said the
agency has been diligent in utilizing cost saving mechanisms inherent
in the procurement processes. He expressed hope that the significant
price reduction will contribute to bringing the digital divide to the
benefit of dwellers in the rural areas and improve access in the
educational sector.

The details are yet
to be filled in, but Presidency documents on the outlines of the
federal government’s budget for next year suggest that the output
growth number is the most realistic of the estimates on which the
budget is based. At 7%, the assumption for GDP growth is
uncontroversial. The economy has grown at this pace for like three
years now, it’s almost become the trend growth rate. Moreover, against
the general performance of most other economies, it is an impressive
rate. The only problem is that output growth in the country no longer
has a relationship with any other sector of the economy. Imagine that
only six years has passed since the government designed its flagship
poverty reduction strategy – the National Economic Empowerment and
Development Strategy (NEEDS) – where it described an annual growth rate
of 7% – 8% as a “poverty reducing growth rate”.

Anecdotal evidence
suggests that in the last four years, the incidence of poverty has
worsened, despite our having held growth at close to the NEEDS target
for like three years. Why is this so? Because the annual investment
rate in the country (a little over 16%) is still way below the minimum
“of about 30 percent of GDP”, required to bring about the needed
change? Or because of the continued absence of linkages between GDP
growth and fiscal revenues? Whatever the answer to this question, the
latter possibility in particular forces us to confront existing worries
about what exactly official bean counters count when they do their
output numbers.

Unfortunately, the
lack of faith over domestic official statistics does not end there. The
fundamentals of the proposed appropriations for 2011 repeat a number of
them. Take the main source of official revenue for instance. The new
appropriations assume an oil output target of 2.3mbd, and an oil price
benchmark of US$65 per barrel. Within the current dynamics of the oil
industry, this is understandable: oil prices on the international
markets are pushing hard against the US$100 per barrel mark; and
domestic oil production (excluding condensates) is currently above the
2.2mbd mark. However, if we have learnt anything at all from our almost
forty years of dependence on oil sales as the major component of the
revenue side of our fiscal operations, it is that the market is too
volatile to usefully anchor anything but near-term projections on.

Until recently for
instance, a supply shock was the most likely explanation for movements
in international oil prices. And because OPEC controlled a major part
of global reserves and production capacity, the cartel’s price fixing
did matter. All that has changed however. Suddenly, there’s China.
Today, oil prices are driven more by demand from emerging economies
than by the old supply considerations. Increased demand has meant
higher prices, the new price levels have attracted marginal oil fields;
and OPEC’s ability to affect prices by tinkering with production has
diminished considerably. Then there is the weather. How much of changed
weather conditions is the result of global warming? What are the
implications of a warmer climate on the demand for heating, and hence
for oil? All told, the oil price model has too many exogenous variables
to be useful for serious planning.

Responding to this
reality, in 2004, the Obasanjo administration set about trying to
constrain spending by moving revenue from crude oil sales onto the
budget in accordance with a reference price. Tied to a cap on the
non-oil deficit, that administration’s fiscal policy was able to rack
up savings in what was christened the excess crude account. When three
years later, the Umaru Yar’Adua administration enshrined the oil
price-based fiscal rule into the Fiscal Responsibility Act, there was a
sense of government trying to immure itself against the volatility of
oil prices.

So much has changed
since then, though. Government has cleaned out the excess crude
account. The budget deficit as a share of domestic output is running
riot. The rise in domestic spending that has fuelled the deficit is not
creating a sustainable basis for public expenditure (too much of the
spending is on salaries and overheads).

Add in possible adverse shocks to the economy’s outlook from the
general elections scheduled for next year, and it made sense to have
wished for a budget based on more conservative assumptions, especially
one that sought to consolidate government’s fiscal position.