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

As one of the measures that will be taken to cushion the effects of the removal of the petrol subsidy on the people, President Bola Tinubu has given his approval for the establishment of an Infrastructure Support Fund (ISF) for the 36 states that make up the federation.

The approval was announced in Abuja yesterday during the monthly meeting of the Federation Account Allocation Committee (FAAC), during which a total of N907 billion was distributed between the three levels of government in Nigeria for the month of June.

Also yesterday, the National Economic Council (NEC) came to the conclusion that the national social register should be eliminated as it was being used by the administration of Muhammadu Buhari to carry out its conditional cash transfer programme.

The decision was made at the same time that the federal government made the announcement that it would distribute 252,000 metric tonnes of grains to the states at subsidised rates. This was part of the federal government’s ongoing effort to assist the populace in the midst of the difficulties caused by the removal of the petrol subsidy.

Mr Dele Alake, a Special Adviser to the President for Special Duties, Communications and Strategy, made the following statement in order to shed more light on the establishment of the ISF for the 36 states: “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 e

“The committee also resolved to save a portion of the monthly distributable proceeds in order to minimise the impact of the increased revenues – which were caused by the removal of the subsidy and the unification of the exchange rate – on the money supply, in addition to the inflation rate, and the exchange rate,”

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

He made the following statement: “These savings will complement the efforts of the ISF and other existing and planned fiscal measures. All of these measures are aimed at ensuring that the removal of the subsidy 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,” the committee said in a statement.

In the meantime, a communiqué that was issued at the end of the FAAC meeting for July 2023 that detailed the allocations stated that a total sum of N907.054 billion was shared among the three tiers of government for the month of June.

In most cases, allocations are distributed based on the revenue from the month before; this means that allocations for June were distributed in July.

According to a statement that was issued by the Director (Press and Public Relations), Office of the Accountant General of the Federation, Bawa Mokwa, Dr. Oluwatoyin Madein presided over the FAAC meeting as the Accountant General of the Federation.

The total distributable revenue of N907.054 billion was made up of the following components: distributable statutory revenue in the amount of N301.501 billion, distributable Value-Added-Tax (VAT) revenue in the amount of N273.225 billion, distributable Electronic Money Transfer Levy (EMTL) revenue in the amount of N11.436 billion, and distributable Exchange Difference revenue in the amount of N320.892 billion.

The total amount deducted for the cost of collection during the month was 73.235 billion Nigerian naira, while the total amount deducted for savings, transfers, and refunds was 979.078 billion Nigerian naira.

The federal government received N345.564 billion, the state governments received N295.948 billion, and the local governments received N218.064 billion from the total amount of distributable revenue that was N907.054 billion.

The thirteen percent of derivation revenue was distributed to the appropriate states in the amount of N47,478 billion total.

According to the information provided in the statement, the total amount of gross statutory revenue collected during the month of June 2023 was N1,152.921 billion. The total amount received in this month was N451.134 billion more than the sum of N701.787 billion received in the previous month.

The federal government received N146.710 billion, the state governments received N74.413 billion, and the local government councils received N57.370 billion from the distributable statutory revenue totaling N301.501 billion.

As 13 percentage points of the total derivation revenue, the amount of N23.008 billion was distributed to the relevant states.

The total amount of gross revenue that was available from the VAT for the month of June 2023 was N293.411 billion. This number was N23.214 billion greater than the available total of N270.197 billion during the month of May.

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

The Electronic Money Transfer Levy (EMTL), which totaled N11.436 billion for the month, was distributed as follows: N1.715 billion to the federal government, N5.718 billion to state governments, and N4.003 billion to local governments.

The revenue from the N320.892 billion Exchange Difference was distributed as follows: N156.155 billion went to the federal government, N79.204 billion went to the state governments, and N61.063 billion went to the local government councils.

The sum of N24,470 billion was distributed as a share of the mineral revenue to the relevant states at the rate of 13%.

According to the communiqué, the amount of Companies Income Tax (CIT) collected in the month of June 2023 recorded a tremendous increase. The Petroleum Profit Tax (PPT) and the Electronic Money Transfer Levy (EMTL) both saw significant drops in their rates, while the Import and Excise Duties, Value Added Tax (VAT), and Oil and Gas Royalties all saw significant increases.

As of the 20th of July in the year 2023, the remaining balance in the Excess Crude Account (ECA) was $473,754.57.

Concerns about the National Social Register’s Integrity Lead to the NEC’s Rejection of Buhari’s Proposal

The National Economic Council (NEC) made the decision yesterday to do away with the national social register that the government of Muhammadu Buhari has been using to carry out its conditional cash transfer programme.

At a meeting of the National Economic Council (NEC) held in the Council Chamber of the State House in Abuja and presided over by Vice President Kashim Shettima, it was determined that the register utilised by the administration that immediately preceded the current one had integrity issues due to the ambiguity of the criteria used in its compilation.

At the conclusion of the meeting, Governor Chukwuma Soludo of Anambra State gave a briefing to members of the press. He stated that contrary to what the previous administration had projected, it was not possible to digitally transfer money to the poorest of the poor, the majority of whom were unbanked. This was his response to a question about why this was the case.

Soludo reported that it was decided that states should create registers that were exhaustive and make certain that they were reserved exclusively for people who were vulnerable.

Soludo, who was speaking in the company of his counterparts from the states of Bauchi and Ogun, Bala Mohammed and Dapo Abiodun, respectively, made the observation that the beneficiaries of the supposedly transferred cash could not be identified in the villages where they were located.

He made the following statement: “I’d like to respond to the social register that has been mentioned. It seems that almost all of the members of the council agreed, or at least came very close to agreeing, that there is a significant amount of doubt regarding the reliability 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, etc. etc. etc. “We have questions about how those names were brought about in the register.

Let’s have a conversation about the social register. And then distributing things through the social register by means of digital distribution, which presupposes that these individuals already have account numbers and they have phone numbers. It’s possible that we’re not talking about Nigerians here, but rather some other group of people. The least fortunate 25 percent of Nigerians almost certainly do not have access to a bank account and do not have a telephone in their homes.

“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.” “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 sending it to you.” This is a test under pressure. And with that in mind, we believe that it is time for us to return 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. This is required if you are delivering the programme from Abuja.”

“That satisfies a set of criteria that can be put to the test, and you can call out the people in the village, and everyone will confirm that these are the vulnerable people, if you are, in a sense, targeting vulnerable people.

“So it appears that what is lacking with that register is the integrity test. Many people have just described what is being counted as the National Register as being bogus, while others have described it as being phantom, and others have used a variety of other terms. Therefore, we are going to have to face the problem, which is the fact that we do not have a credible register, and get back to work on fixing this.

According to Soludo, the NEC made the resolution that the states should come up with their own registers and develop them using formal and informal means. He gave his word that it would not be difficult to get in touch with any of the subnational beneficiaries using that method.

Soludo confirmed that the NEC met to discuss ways to mitigate the impact of the recently implemented removal of the petrol tax subsidy, including a reduction in the cost of governance.

He said. “In regard to the cost of governance, this is the first question that was posed. I believe that it is an all-encompassing concept, and it is not something that can be legislated for each and every state by simply sitting down in a room and discussing it.

“However, the fact that the council acknowledges that this is a problem that all levels of government should now concentrate on as a matter of concern is very encouraging.”

He drew attention to the growing concerns regarding “the cost of running the state, and even the way that we live.” Consequently, some people provided the illustration of a state governor who travelled in a convoy consisting of more than 20 vehicles, all of which needed to be refuelled, and so on and so forth.

Soludo made the following statement: “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 we need to knockoff the waste and the irrelevance, so to speak.”

“I would like to illustrate my point with a straightforward illustration. When I took office, it cost approximately N137 million every month to clean up public offices, and so on. To give you an idea, in Anambra, we went from doing 137 million Naira per month in business to only 11 million Naira per month today. And it’s something that we’re trying to convince each and every one of us to look into, check into our books, and look at ourselves in the mirror so that we can get with the times.

“By the way, there’s something that I think my colleagues missed out as part of those recommendations over the medium to longer term, and that is the possibility of negotiating a new minimum wage. I’m talking about the possibility of lowering the current minimum wage. That is without a doubt going to be an option. However, this must be negotiated through the appropriate structures that are designed for doing so over time.

Soludo explained that the packages that would serve as palliatives were clarified so that the different levels of government would be encouraged to implement them in accordance with their own individual fiscal spaces and capacities.

He stated, “The governments of the federal, state, and local levels. I also want to bring attention to the fact that there is going to be a sizeable surplus of funds going to the various state and local governments, as well as the federal government, and we have suggested that it will be nice if you can implement cash transfers, provided that you have the financial capacity to do so based on the specifics of your situation.

“Some may be able to do one, while others may be able to do ten,” she said. It’s possible that some people can even do 20, depending on the situation. Their own capabilities will determine the outcome. Perhaps a state, or perhaps several states that are not even capable of doing that right now.

“For instance, if you have a state that has been in arrears with worker salaries for three or four years, the workers have been owed money for that amount of time. If, for example, retirees have been owed their pension and gratuity for seven years, the priority at this point may be to use some of the surplus to pay them the money they are owed out of the surplus. However, the priority at this point is to even begin paying some of the salary arrears.

“Then, there are also states that are experiencing bumper harvests, and those states 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 is why we couched this point, that this is ultimately still a federation.'” And the various state and local governments, in addition to the federal government, are all at different levels in terms of the amount of financial space available to them and the amount of money they can spend.

“Therefore, depending on the resources, the federal government, state governments, and local governments. If the federal government decides to do the same cash transfers, for example, we are recommending that they do so utilising the framework of the states and local governments that are, so to speak, nearer to the people. This would be our recommendation in the event that the federal government decides to do the same cash transfers. That sums up the situation pretty well.

“We did not 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. We didn’t even begin to say that.” It will depend on what the state can afford, both generally and specifically, as well as whether or not the state can afford it. And I suppose it’s very important that we convey this information in an understandable manner.”

As for the governor of Bauchi State, Bala Mohammed, he stated that the federal government would distribute 252,000 metric tonnes of grains to the states at a subsidised rate in order to cushion the effect of the subsidy removal.

Mohammed has stated that the National Emergency Management Agency will also make its package accessible to the general public.

Also speaking, Governor Dapo Abiodun of Ogun State said that despite the fact that the government was not responsible for the hardships that the general populace was experiencing as a result of the removal of the fuel subsidy because prices were determined by market forces, efforts were being made to cushion the effect of the change.

According to him, some of the packages included a cash transfer to the poorest of the poor by the states, a cash award policy for all public servants, which should be implemented for six months, in the first instance, payment to public servants on outstanding liabilities, such as pension, allowances, and other things, and payment to public servants on outstanding liabilities.

According to Abiodun, the government is considering the prospect of providing financial assistance to micro, small, and medium-sized businesses (MSME), which he characterised as the “engine of growth” for the economy.

He went on to say that the government was planning the immediate implementation of energy transition plants, converting mass transit buses to Compressed Natural Gas (CNG), and adding that the long term vision was to establish electric automobile plants. Moreover, he said that the government was planning the immediate implementation of energy transition 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.” He went on to say that this was done because “our people are already feeling the pains of these very laudable and noble steps and have been very patient with this administration.”

“In light of this, a sub-committee of the NEC was established, and the members of that sub-committee reported on some of the things that the governor of Anambra had discussed with us. Their report is now the proposal of the NEC, and it is among the things that the governor of Anambra had discussed with us.

“We also proposed as a result that each state should begin to plan towards the implementation of a cash transfer programme that will be based on the social registers of the states because it is the states that are in a better position to do that enumeration so that you can ensure the integrity of the social register. This was in accordance with the previous proposal.

“Once more, it was also suggested that we should implement a Cash Award Policy for all public servants, and this was discussed by the council. What exactly is a Cash Award Policy, though? It was prescribed that this policy should be implemented for a period of six months in the beginning, and it would be a policy that enables each sub-national to actually pay the public servants a certain prescribed amount of cash on a monthly basis.

You are going to be perplexed as to why six months. It is our hope that within the next six months, those sustainable measures will have begun to become visible, at which point we will be able to start reducing the amount of cash awards that are being given out. This is in spite of the fact that we are also very particular about easing the suffering of our people as soon as possible. By the way, these cash awards would be funds that will be placed in the hands of civil servants and will be exempt from taxation.

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

“Chairman of the Federal Inland Revenue making a presentation on what they have done so far, the level of collections,” he claimed to have heard. It was encouraging to learn that they have already surpassed their goal for the first half of the year. And we anticipate that either before or by the time the year is over, they will have surpassed it.

They also provided us with some insight into what we can expect from them in the following year. And beginning with this year, we anticipate making some N10 trillion in revenue. The plan is that by the following year, they should be able to provide N25 trillion as their contribution to the national coffers by working with all of the agencies.

In the meantime, the Federal Inland Revenue Service (FIRS) reported the generation of a total of N5.79 trillion in tax revenues for the first half of the year yesterday. Mr. Muhammad Nami, Executive Chairman of the FIRS, was the one who made this information public and stated that the figure represented the highest tax revenue collection ever recorded by the service in the first six months of a fiscal year.

After achieving a self-set goal of N10 trillion in tax revenue for 2022 and exceeding that goal by N100 billion, the service decided to set a new self-target of at least N12 trillion in tax revenue for 2023.

According to a statement released by Nami, who made the remarks while presenting the 2023-2024 tax revenue outlook to NEC, he mentioned that the performance surpassed the N5.3 trillion mid-year target.

According to the report, tax revenue from the oil sector between January and June 2023 stood at N2.03 trillion, which was significantly lower than the target of N2.3 trillion. On the other hand, non-oil tax collection stood at N3.76 trillion, which was significantly higher than the target of N2.98 trillion.

In his presentation to the NEC, Nami stated additional information, one of which was that the service collected a total of N1.65 trillion in tax revenues in the month of June. This is the highest amount that the service has ever collected in a single month.

He attributed the remarkable performance to increased voluntary tax compliance, which was made possible by the FIRS’s increased use of automated tax administrative processes.

He stated that this was a good beginning as we worked towards achieving our goal for the year. And this was accomplished despite the fact that there were persistent headwinds, such as the effect that the redesign of the currency and the general elections in 2023 had on the economy in the first and second quarters of 2023.

“This performance for the first half of the year was accomplished 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,”

The Chairman of the FIRS gave assurances that “better days ahead” can be expected for the remainder of the year in terms of tax revenue collection. He was speaking in reference to the outlook for the second half of the year.

According to the statement that was distributed by his Special Assistant on Media and Communication, Mr. Johannes Oluwatobi Wojuola, Nami was quoted as saying, “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 the positive impact of current government’s policies on the economy.”