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he Minister of Finance, Kemi Adeosun said on Tuesday that a total of N1,580,270,755,084.44(One trillion, five hundred and eighty billion, two hundred and seventy million, seven hundred and fiftyfive thousand, eighty-four naira, forty-four kobo) capital cost/budget was released to Ministries, Departments and Agencies for the 2017 federal budget. The 2017 releases is higher than the N1,219,471,747,443 total capital releases for 2016. Giving a breakdown in a statement, the minister said out of the amount, Power, Works and Housing received the highest allocation of N523,011,701,723.25 or 33.10 percent of the total capital releases. The sector equally received the highest releases in the 2016 capital budget, which was a total of N307,411,749,682 or 25.21 percent of the 2016 capital budget. Defence and Security received the second highest capital releases of N197,596,016,072.02, some 12.50 percent of the total in 2017, as against N77,532,885,729.00 or 6.36 percent of total releases the sector received in 2016. Agriculture and Water Re-
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sources received a total of N149,485,276,897.37 (9.46%) in 2017. The sector had received N143,121,925,241.00 (11.74%) of the capital releases in 2016. Transportation received a total of N126,253,042,607.50 (7.99%) of the 2017 capital releases as against the N171,900,597,013.00 (14.10%) received in 2016. Health and Education tog e t h e r re c e i v e d a t o t a l o f N98,190,277,285.69 (6.21%) for 2017 as against N56,270,030,992.00 (4.61%) the sectors received in 2016. Other sectors combined received a total of N485,734,440,498.61, which was 30.74 percent of the 2017 capital releases. In 2016, a total of N463,234,558,786.00 (37.99%) was disbursed to these sectors. Adeosun said despite the economic challenges in 2017, the Federal Government was able to fully cash-back the capital releases. She further stressed that the sustained high allocations to key sectors was a reflection of the Federal Government’s commitment to infrastructure development in the country. The Minister said the Federal Government was working assiduously to attract private capital to complement government spending in these key areas.
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Adeosun says N1.58trn capital budget released to MDAs for 2017 ONYINYE NWACHUKWU
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Wednesday 20 June 2018
Insight
Does Conoil need a makeover? DIPO OLADEHINDE
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ne of Nigeria’s oldest company, Conoil Plc is looking like a company in need of a game changer as its lubricants sector seems to be playing second fiddle in a closely contested battle among companies in the downstream sector. The company which was incorporated in 1960 converted to a public limited company on the 29th of August, 1991 is gradually being squeezed out of the downstream sector in what seems to be a tight race in 2018. At first glance, Conoil’s 2017 financial performance looks good, revenue increased by 35percent from N85 billion in 2016 to N115 billion in 2017; the company also announced it is rewarding shareholders with N1.40 billion (N2.00 on every 50 kobo ordinary share), beating analysts’ expectation as they had envisioned that federal government protracted delay in
the payment of subsidy monies could undermine petroleum oil marketers’ financial potency. However comparison with major marketers such as TOTAL, Forte oil, 11plc, Eternal and MRS listed on the Nigerian Stock Exchange (NSE) shows that the company may be lagging. A further investigation into the 2017 financial books of Conoil Nigeria showed its Lubricants subsidiary contributes just 4 percent or N5 billion while its white products contributes N110 billion its total revenue of N115 billion. Earnings from lubricants subsidiary for TOTAL increased from N38.8 billion in 2016 to N47.5 billion in 2017 contributing 16 percent to the total revenue of N288 billion. Closely on its trail was Forte Oil with a revenue increase in its lubricant subsidiary from N11.4 billion to N12.1 billion in 2017 contributing 9.58 percent to the total revenue of N129.4, while Mobil Oil did not provide a breakdown of white product
(regular petroleum products) and lubricant revenue. “The other competitors are doing something right in terms of advertising, investments and value added Services which Conoil is obviously not doing,” Luqman Agboola, head of energy and infrastructure at Sofidam Capital Limited said. Ayodeji Ebo, managing director of Afri-invest securities limited said the downstream industry is very competitive and everybody is coming with new products to expand profits while Conoil has refused to act. “They need to expand their retail products and also improve branding as most of their filling stations are not properly branded,” Ebo added. Other firms playing second fiddle are MRS and Eternal oil; MRS lubricants subsidiary contributed 3.7 percent or N4 billion to its N107 billion revenue in full year 2017 while Eternal oil lubricants subsidiary contributes 3.4 percent
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Contradicting PMI reports confuse analysts David Ibidapo, Emeka Ucheaga & Jonathan Aderoju
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cifically, the differences lie in the components weightings and their sample size. While FBNQuest assigns equal weightings to all 5 components in the PMI, CBN and Stanbic IBTC assign unequal weightings to the different components in the index to account for their uneven importance to output production. For CBN, the composite PMI for the manufacturing sector is computed as the weighted average of five diffusion indices, namely: production level (25%), level of new orders (30%), suppliers’ delivery time (15%), employment level (10%) and raw materials inventory/ work in progress (20%). Stanbic IBTC methodology show that the PMI is a composite index based on five of the individual indexes with the following weights: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stock of Items Purchased (10%), with the Delivery Times index inverted so that it moves in a comparable direction. FBNQuest did not disclose the sample size for their analysis. FBNQuest indicated that their PMI reports cover a representative sample of the sector with large, mediumsized and small firms. They also included a disclaimer that any broad economic conclusions on the basis of their reports need to be tentative because they are operating in a near statistical void.
n May, three different institutions published different Purchasing Manager’s Index (PMI) for Nigeria’s manufacturing industry. The Central Bank of Nigeria reported May PMI as 56.5, FBNQuest reported May PMI as 49.5 and StanbicIBTC reported the PMI to be 59.1. The conflicting PMI creates a big headache for economists, manufacturers, policymakers and other parties who rely on the PMI data to make strategic business and policy decisions as well as for economic forecasting. According to the Central Bank of Nigeria (CBN), The Manufacturing PMI Report on businesses is based on survey responses, indicating the changes in the level of business activities in the current month compared with the preceding month. A composite PMI above 50 points indicates that the manufacturing/non-manufacturing economy is generally expanding, 50 points indicates no change and any reading below 50 points indicates that it is generally contracting. The key factor that caused the variation in the PMI published by these institutions was the difference in their methodologies. While the general understanding of the concept of PMI is the same among these institutions, how it is calculated differs. Spe- Continues on wwwbusinessday online
Atiku Abubakar (m), former vice president and presidential hopeful of the Peoples Democratic Party (PDP); Gbenga Daniel, former governor, Ogun State/director general of the Atiku Presidential Campaign Organisation (l), and Seriake Dickson, governor of Bayelsa State (r), during Atiku’s visit to Yenagoa on Tuesday in continuation of his nationwide consultation with PDP stakeholders ahead of his 2019 presidential election bid.
Low tax collection in Nigeria reflects revenue administration weakness - IMF …reflects high level of systemic noncompliance Endurance Okafor
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espite successful initiatives to bring in a significant number of new corporate and self-employed individuals as Nigeria’s tax payers, these efforts have not delivered expected revenue. Of 1.5 million registered corporations, only 522,000 could be matched (as of May 2016) to any type of data available within the Federal Inland Revenue Service (FIRS), and only 77,000 filed Value Added Tax (VAT) returns in 2016, suggesting an active taxpayers’ population of only 5 percent. According to the International
Monetary Fund (IMF), comparing Nigeria’s tax structure with those of a selected sample of advanced, emerging, and developing economies, showed that none of its domestic tax collection indicated a promising performance, as Africa’s largest economy raised the least revenue of all comparators and at 5.3 percent of Gross Domestic Product (GDP) revenue in 2016 was significantly below the 22 percent of GDP average. “The very low tax collection rates in Nigeria are a direct reflection of weaknesses in revenue administration systems and a high level of systemic noncompliance,” IMF said in a statement.
Nigeria’s tax to Gross Domestic Product (GDP) ratio at 6 percent, is significantly lower than Ghana and Egypt at 16 percent, Morocco at 22 percent and South Africa at 27 percent. “For me it’s not the rate of tax that is important, in an economy like this, increasing the rate of tax is not even the issue and we have argued this a lot of times and you see what the federal government is trying to do, there is a bill now to reduce the tax levied on the small scale businesses to 15 percent, and corporate tax to 25 percent. Continues on wwwbusinessday online