Sunday, December 31, 2017

Nigeria Saves N30bn In Two Years

 

    The Nigerian government says it has saved at least N30bn in two years through the Efficiency Unit of the Finance Ministry. These were part of the achievements listed by the Ministry in its end of year report. The statement signed Oluyinka Akintunde, Special Adviser, Media & Communications to the Hon. Minister of Finance also revealed the government had saved N11bn through its cost- cutting initiative

  Read the full statement below:

 NOTABLE ACHIEVEMENTS BY THE MINISTER OF FINANCE, MRS. KEMI ADEOSUN IN TWO YEARS (DECEMBER 2015 – DECEMBER 2017)

1.   EFFICIENCY UNIT (NOVEMBER 25, 2015)


One of the major initiatives of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the Efficiency Unit (E-Unit). The first action taken by the Minister on assumption of Office was the establishment of an Efficiency Unit in the Federal Ministry of Finance on November 25, 2015.

The Efficiency Unit was established to ensure that all government expenditures are necessary and represent the best possible value for money. Prior to her assumption of office, available records show that the nation’s recurrent expenditure completely dwarfs capital expenditure by a ratio of 84/16. This includes non-wage related overhead expenditure such as travel costs, entertainment, events, printing, IT consumables, and stationeries, among others. Since its creation, the Unit has undertaken programmed reviews of all government overhead expenditure with a view to reducing wastage, promoted efficiency as well as guaranteed quantifiable savings for the country. Specifically, the Efficiency Unit has been monitoring the Ministries, Departments and Agencies (MDAs) of Government, identifying and eliminating wasteful spending, duplication and other inefficiencies; and identifying best practices in procurement and financial management.

The Federal Government currently saves at least N15 billion annually from the services of the Efficiency Unit of the Federal Ministry of Finance. The Unit has also introduced price guidelines and shared services policy among MDAs to increase transparency in the procurement process, while the work processes and practices would be reviewed to identify and eliminate areas of wastage, excess capacity and duplications.

The Efficiency Unit, in its short history, has made several achievements engaging and working with key public sector stakeholders. They include:

i.          Cost Cutting:

The E-Unit has embarked on several cost cutting initiatives that has influenced the issuance of Circulars to all MDAs by the Secretary to the Government of the Federation, the Head of the Civil Service of the Federation, and the National Salaries, Wages and Income Commission. The issuance of these Circulars has led to curtailed and better management of certain recurring processes and activities relating to travels, sitting allowances, souvenirs, and others resulting in savings over N11 billion Naira.

ii.         Promoting Transparency In Payments:

Another tool that has been recommended to the Accountant General of the Federation is the use of debit cards by government officials for payments. This would plug loopholes and improve accountability in spending.

iii.        Procurements:

The E-Unit has initiated some measures to improve the subsisting procurement process to generate savings using the government’s large purchasing power, improve transparency in the procurement process, and reduce the administrative costs associated with the procurement process. Successful outputs include:

a.         Secured discounts ranging from 5-50% from seventeen (17) airlines for local and foreign travels. The Federal Ministry of Finance has recently signed an agreement with Dana Airlines that provides discounts of 50% to all MDAs. The agreements with the other airlines are at various stages of finalization.

b.         The introduction of a Price Checker, a web based platform which is being developed with the Bureau of Public Procurement will provide a portal for vendors to upload prices of their goods which MDAs will use for procurement, thereby providing more transparency and eliminating sharp practices in the procurement process.

c.         The introduction of a Circular on Framework Agreements by the BPP (in progress) which will enable MDAs to pool their demands for standard goods thereby reducing the administrative costs associated with the subsisting procurement process and securing good discounts from suppliers.





2.   PRESIDENTIAL INITIATIVE ON CONTINUOUS AUDIT (PICA)



The Minister of Finance, Mrs. Kemi Adeosun, was instrumental to the establishment of the Presidential Initiative on Continuous Audit (PICA), a critical initiative in the implementation of a Continuous Audit Programme. The Federal Executive Council (FEC) had on 9th March, 2016, approved the establishment of PICA to ensure full accountability of all public funds expended under President Muhammadu Buhari Administration. The mandates of PICA include: validating controls, assessing risks, pruning personnel cost, ensuring compliance with public financial management reform, and detecting errors and making recommendations to management for necessary actions.

Adeosun noted that the establishment of PICA had become necessary in order to put systems and frameworks in place over finance and spending of government revenue.

“Our commitment to a lean and cost effective government remains a priority and the initiatives we are introducing will signal a fundamental change in how Government spends public revenue,” the Minister said.

Since its establishment, the Continuous Audit Team had undertaken series of investigations and recoveries for the Government, including infractions by the staff of Pension Transitional Arrangement Directorate (PTAD), recovery of salaries paid to ex-Diplomats, verification of subsidy claims, personnel costs to Ministries, Departments and Agencies (MDAs), and ghost workers scammers.

                                                     

Audit of PTAD Staff

The Continuous Audit Team conducted investigations into infractions committed by some staff of Pension Transitional Arrangement Directorate (PTAD). This investigation led to disciplinary action against five (5) top management staff of PTAD, including a former Director-General.



Recovery of Salaries Paid to Ex-Diplomats

PICA, in the course of its investigation, discovered that 196 Foreign Service officers continued to receive salaries after exiting the Federal Service. The sum of ₦192 million was collected by these officers as salaries even after leaving the service. The case was handed over to the Economic and Financial Crimes Commission (EFCC) for further investigation and recovery of the aforementioned funds on completion of the investigation.



Verification of Subsidy Claims

In its efforts to ensure steady supply of petroleum products nationwide, the Federal Government took measure aimed at settling outstanding debts owed to members of the Petroleum Products Marketers Association of Nigeria (DAPMA). An inter-agency Committee under the leadership of PICA was set up to verify the claims. Other members of the Committee are the Nigeria Customs Service, Debt Management Office, DPRRA and BOF. The Committee verified and recommended some payments to members of DAPMA and has thus far made remarkable savings for the Federal Government.

The details of achievements recorded are summarized below:



S/N

                                          ITEM



          NUMBER

  1

Number of Marketers Verified

               72

  2

Total Claims

 N45,999,999,865.98

  3

Savings made so far

       N887,108,438.31

  4

1.5% Palliative to FGN warehoused to date

   N1,014,345,777.88



Reduction in Personnel Cost to MDAs

Prior to the establishment of PICA, the personnel cost across Federal MDAs was high, making it difficult to channel enough funds to develop needed critical infrastructure. The intensive and diligent forensic audit of Integrated Payroll and Personnel Information (IPPIS) and nominal roll carried out by PICA led to monthly reduction of personnel cost (salaries) from ₦151 billion in February 2016 to ₦138 billion by August, 2016. Similarly, the exercise led to reduction in pension cost from ₦15 billion to ₦14.5 billion monthly. This reduction has since been sustained through efforts of the Honorable Minister of Finance.



Elimination of Ghost Workers

In the course of the period through its routine audit assignment, PICA has stopped the salaries of over 800 ex-employees, who had continued to draw monthly salaries even after exiting the Federal Service as well as removed over 50,000 ghost workers from the Federal Payroll. The details of the affected employees who had already collected the sum of ₦34 million before discovery have been handed over to the EFCC for investigation and prosecution.

For the first time in the history of this nation, the Federal Government is prosecuting the payroll fraudsters who created fictitious names and accounts. About nine principal suspects were on November 1, 2017 charged before Justice U.P. Kekemeke of Court 14. Those arraigned were Usman Aliyu Dayo, Osuntope Opeyemi, Johnson Adedokun, Ojeifo Robert Sylvanus, Oyebade Ebenezer Ayodeji, Florence Olaolu Dada, Olaolu Haruna Dada, Blessing Ejeh and Aderibigbe Isaac Taiwo.

The suspects are employees of the Office of the Accountant General of the Federation, Federal Ministry of Environment, Federal Ministry of Agriculture and Rural Development, Federal Ministry of Water Resources and Federal Civil Service Commission.



Payroll Shortfall Verification       

The Federal Government in 2016 received claims of shortfalls in personnel cost from various Ministries, Departments and Agencies across the country. To address these claims, PICA raised teams comprised of over 300 Accountants, Auditors and Administrative officers to undertake the verification of the shortfalls. To accurately profile the actual payroll costs of each of the agency, PICA designed a template to capture the vital financial information/data required for the exercise. The findings are summarized in the table below:



S/N      No of Agencies            2016 Shortfall Claims (N)       Recommended Shortfall (N)   Savings Recorded (N)

1.         181      101,061,077,642.01    70,780,214,053.29      30,280,863,588.72





In all, the sum of N30,280,863,588.72 (Thirty Billion, Two Hundred and Eighty Million, Eight Hundred and Sixty-Three Thousand, Five Hundred and Eighty-Eight Naira, Seventy-Two Kobo) was saved on account of this audit exercise.

However, it is important to note that the shortfall across most of the MDAs visited was as a result of shortfall in personnel cost in 2016 Appropriation. Others such as the Nigeria Army were due to the recruitment of about 10,000 soldiers based on presidential directive while shortfall in Defence Mission was on account of foreign exchange differentials.





3.         DEVELOPMENT OF WHISTLE BLOWER POLICY

One strong demonstration of the President Muhammadu Buhari Administration’s political will has been the development of a Whistleblowing Scheme. The Whistleblowing policy, which was developed by the Federal Ministry of Finance in December 2016, empowers citizens to report public corruption.

The primary goal of the policy is to support the fight against financial crimes and corruption by increasing exposure of financial crimes and rewarding whistle blowers. It is hoped that through this policy, there will be increase in accountability and transparency and more funds would be recovered and deployed in financing Nigeria’s infrastructural deficit. To step up the work, the Federal Ministry of Finance through PICA opened a portal where information were supplied, and also recruited competent staff to handle the assignment. Series of petitions have been received, some of which are currently undergoing investigation.

According to Adeosun, over 2,500 reports have been made through various reporting channels as at July 2017, with 365 being actionable tips.

The minister said the tips related to issues of contract inflation, ghost workers, illegal recruitment and misappropriation of funds. Others according to her, include illegal sale of government assets, diversion of revenues and violation of Treasury Single Account (TSA) regulations.

She said, “Thirty-nine per cent (144) of the actionable tips relate to misappropriation and diversion of funds/revenue, 16 per cent (60) relate to ghost workers, illegal recruitment and embezzlement of funds meant for personnel emolument.

“Fifteen per cent (56) relate to violation of TSA regulation, 13 per cent (49) relate to contract inflation/violation of the Procurement Act. Others include failure to carry out projects for which funds have been released and nine per cent (34) relate to non-remittance of pension and National Health Insurance Scheme (NHIS) deductions.”

According to the minister, others include concealed bail-out funds and embezzlement of funds from donor agencies.

She added that a commission of between 2.5 per cent and five per cent of the amount recovered as an incentive would be paid to the whistleblowers that provides information that are original and directly lead to the recovery of stolen or concealed funds or assets.

She disclosed that the sum of N375.8 million had been paid as reward for 20 whistleblowers in the first batch payment, while payment for the next batch would soon be made.

The impact of the Whistleblowing Policy in terms of recoveries has exceeded the Administration’s expectations.  The tighter rein on public finances has allowed the Government to invest US$500 million in country’s Sovereign Wealth Fund, during the recession.





4.  CLEARING OF INHERITED PENSION ARREARS

The Federal Government and the Federal Ministry of Finance have been eulogized by the various workers’ unions for deeming it fit to clear the inherited arrears of pension benefits for 2014, 2015 and 2016. In April 2017, the Federal Government through the Federal Ministry of Finance released N41.5 billion to the National Pension Commission for onward payment to retirees being their accrued pension benefits for 2014, 2015 and 2016.

The Finance Minister also confirmed that the sum of N12.5 billion being outstanding for January, February and March 2017 had been settled based on 2016 appropriation, bringing the tally to over N54 billion. The N41,566,565,184 released to PENCOM was the outstanding appropriated for the year 2014 and 2016 by the National Assembly for the settlement of the retirement benefits of Federal Government employees.





5.  DEVELOPMENT BANK OF NIGERIA (DBN)

The establishment of the Development Bank of Nigeria (DBN) is another milestone of the Federal Government through the Federal Ministry of Finance to spur growth of Micro, Small and Medium Enterprises (MSMEs). The Federal Government had during the 2016 Annual Meetings of the IMF/World Bank reached agreement with the World Bank Group, African Development Bank and the European Investment Bank for the release of $1.3 billion for the take-off of the DBN. The DBN became operationalized in the first quarter of 2017 following the issuance of operating license by the Central Bank of Nigeria (CBN). The Bank met the CBN’s minimum capital requirement of N100 billion as well as the reconstitution of the board of the bank. The DBN has created a credit line of N5 billion to be accessed by MSMEs through its partner financial institutions.



The Minister of Finance, Kemi Adeosun, who led Nigeria’s team to the meeting, explained that the Development Bank of Nigeria (DBN) will focus on SMEs and giving them low cost loans.

In March 2017, the Ministry announced that the Central bank of Nigeria had approved the grant of a Wholesale Development Finance Institution Licence with national authorization to the Development Bank of Nigeria (DBN) Plc. The approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.  The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability. The approval was subject to meeting the minimum capital requirement of N100 billion and the reconstitution of the Board of the Bank and reviewing its organogram.



On March 30, 2017, the Ministry announced the constitution of the  board and management of the Development Bank of Nigeria (DBN). The Management team is led by Mr. Tony Okpanachi, a banker and erstwhile Deputy Managing Director/Deputy CEO, Ecobank Nigeria Limited. Mr Okpanachi will be supported by the Chief Financial Officer, Mrs. Ijeoma Ozulumba and Chief Risk Officer, Mr. Olu Adegbola.



The Board members include:  Chairman, Dr. Shehu Yahaya (who was the interim MD of DBN and former Executive Director, AfDB); Managing Director/Chief Executive, Nigeria Sovereign Investment Authority, Uche Orji and Mohammed  Kalif, of the African Development Bank.



Independent Directors of the DBN are former Group Managing Director/CEO of United Bank for Africa (UBA), Mr. Philips Oduoza; President and CEO, African  Finance Corporation,  Mr. Andrew Alli; Chairman, FBN Merchant Bank, Alhaji Bello Maccido; Founder/Managing Director, JNC International Limited, Mrs Clare Omatseye and the Managing Director, CEO Excel Professional Service Limited, Mr. Oladimeji Alo.





6. VOLUNTARY ASSETS AND INCOME DECLARATION SCHEME (VAIDS)

One of the major initiatives in the history of the Nigerian Government is the Voluntary Assets and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods. VAIDS, an initiative of the Kemi Adeosun-led-Federal Ministry of Finance in collaboration with the State Tax Authorities, is a revolutionary programme that provides tax defaulters a nine-month opportunity to voluntarily and truthfully declare previously untaxed assets and incomes. It also ushers in an opportunity to increase the nation’s general tax awareness and compliance. As at May 2017, the total number of taxpayers in Nigeria is just 14 million out of an estimated 70 million who are economically active. This implies only 20 per cent of the economically active Nigerians pay tax, particularly the salary earners. Nigeria’s tax to Gross Domestic Product (GDP) ratio, at just 6%, is one of the lowest in the world (compared to India’s of 16%, Ghana’s of 15.9%, and South Africa’s of 27%). Most developed nations have tax to GDP ratios of between 32% and 35%. VAIDS is aimed at correcting the anomaly, getting the rich and big entrepreneurs to pay tax. Nigeria’s low tax revenues are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world. There has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations. These include but are not limited to, transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names. In addition, despite having some of the most profitable and well capitalized companies in Africa, the level of tax remittance in Nigeria is very low.



VAIDS has however yielded over $50 million in revenue between June 29, 2017 when it was launched and October 31, 2017. Two foreign companies have also agreed to pay $110 million in regularizing their tax status. About $1 billion additional revenue is being targeted from the scheme. Already, the Federal Government has recruited and trained 2,190 Community Tax Liaison Officers (CTLOs) under the Scheme. Of the 2,190 CTLOs, 1,710 have been deployed to 33 States to raise awareness about the scheme and taxation in general. The States include Adamawa, Cross River, Delta, Edo, Enugu, Kaduna, Kwara, Lagos, Nassarawa, Niger, Ogun and Oyo, among others.

Job creation is one of the spin-offs of the VAIDS initiative, with the scheme expected to create a total of 7,500 opportunities for Nigerians as CTLOs through the N-Power scheme of the Federal Government.

In a recent interview, the Minister of Finance explained that the signing of an Executive Order by the Acting President, Professor Yemi Osinbajo, on Assets Declaration, underlined the seriousness attached to the VAIDS.

According to her, the Federal Government will deploy and heavily rely on technology to increase tax compliance under the VAIDS.



ADDITIONAL BACKGROUND ON VAIDS AND TAXATION



●    Over N17 billion has been realised since the launch of VAIDS;



●  Very low world ranking: Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6%;



●     The poor are the hardest hit: Tax evasion leaves an unfair burden of payment on those who can afford it least – Nigeria’s poorest people;



●      Regulatory change is enabling easier access to information across the world:

–     International agreements, effective from 2018, make the exchange of banking information across borders, automatic

–     Nigeria has signed agreements with a number of nations (US, UK, Canada, UAE, Switzerland, Mauritius, Panama and Bahamas) – all of whom have pledged support and cooperation to exchange information on citizens that is relevant for tax purposes;



●      Punishment for evasion is severe: All tax evaders – when identified – are subject to the full force of Nigerian and international law:

–     Imprisonment of up to five years

–     Severe extra penalties – up to 100% of the outstanding tax due, compound interest at 21% per annum, forfeiture of assets



B.         The Plan

●      One-off opportunity for evaders to avoid the full force of the law – Between 1 July and 31 December 2017 – evaders can regularise their tax status in exchange for immunity from prosecution of tax offences and a tax audit, and be absolved from penalty charges and interest



●      Less forgiveness for evaders who delay – evaders who delay participation past 31 December 2017 will be liable for interest on overdue tax balances

●      Provision for installmental payment has been built into the scheme

●      Experts in place to assist the Federal Government: Expert, international asset tracers and investigative specialists have been appointed to assist the Federal Government in tracing assets held by Nigerians

●      In line with other proven, international schemes: Recent, similar schemes in 2016 have been implemented successfully in India, Indonesia and South Africa. VAIDS will bring Nigeria in line with international best practice and contribute to worldwide efforts to tackle corruption

●      Much needed funds will be generated and transparently invested – anticipated funds to be raised are at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development





7.  ACCOUNTING SOFTWARE

On March 21, 2017, the Federal Ministry of Finance announced the development of an International Public Sector Accounting Standards (IPSAS) Compliant accounting software suite “OneBook” towards improving public financial management across all levels of Government. This move by the Federal Government through the Finance Ministry is aimed at enhancing efficiency, accountability, and transparency. The OneBook suite offers a complete solution that allows for standardization and seamless exchange of information across all tiers of Government by providing a unified accounting and reporting solution across key areas: government expenditure, financial, treasury and receipts management.  The software package, which was launched at the Federation Account Allocation Committee (FAAC) meeting, captured various revenue types and would impact the entire financial operations from budgeting, through revenue and expenditure management to final accounts.

The software is being made available to all States and Local Governments to support their accounting and reporting processes.





8.  PROJECT NOLLYWOOD ACT



Project Objectives:

            The objective is to:

(i)                 Sustain the growth of Nigeria’s movie Industry,

(ii)               Encourage the Industry realize its potential of being a significant creator of employment and considerable contributor to GDP

(iii)             Address some of the key challenges currently facing the Industry.



The programme aims to improve and promote key components of the value chain through the provision of grants scheme designed to support existing or aspiring practitioners within the Industry, including the Diaspora.

Project Components

Project ACT-Nollywood has 3 primary components aimed at developing and addressing inhibitors to further growth, which exist along the movie making value chain.  The components are as follows:-

i.                    Film Production Fund (FPF)

ii.                  Capacity Building Fund (CBF)

iii.                Innovative Distribution Fund (IDF)



The (FPF) and (CBF) have been fully implemented while the (IDF) which is the third component of the project is on-going.  The (IDF) covers online, National, Regional and community categories of Nollywood Film distribution and exhibition.  The objectives of IDF are to:

i.                    Improve the distribution network of Nigerian Audio-Visual contents.

ii.                  Cut down on piracy

iii.                Create jobs (direct and indirect)

iv.                Better protect Intellectual Property Rights (IPR) within the Nigerian Entertainment Industry.



A total sum of N1.8 billion was approved for disbursement to 106 beneficiaries in this component.  N1.335 billion has earlier on the year been disbursed as first tranche to 105 beneficiaries.



During the Monitoring and Evaluation (M & E) of this first tranche disbursement, the Project Implementation Unit (PIU) recorded a number of achievements in line with the objectives of the programme as follows:



i.  15 community cinemas and viewing centers have been established through the grant and this has improved the distribution network of movies in Nigeria.

ii.   The programme has supported 18 firms in strengthening online distribution platforms.  This has helped curbed illegal downloads and piracy.

iii.  256 permanent jobs and 544 temporary jobs have been created through the financial support provided to 105 beneficiaries by the programme.

iv.  The programme has equally aided the extension of the Nollywood Industry to sub-Sahara Africa through the funding of National distributors to expand their distribution capacity and network.  National distributors are expanding their capacity to lip-synching their content in French for onward distribution to the ECOWAS sub-region.



Consequent upon the above, the Honourable Minister has approved the disbursement of the balance sum of N420,200,000.00 to 105 IDF beneficiaries in the 2nd/final tranche.





8. ATMProject

The Ministry launched an Asset Tracking and Management Project (ATMProject), through which for the first time, the Government would be able to locate, identify, assess and evaluate all its moveable and immoveable assets. Similarly, a Central Asset Register would be created and domiciled in the Federal Ministry of Finance for recording the actual quantity, value, condition and location of all the capital assets belonging to the Federal Government. Under the International Public Sector reporting Standard (IPSAS) Government is expected to record both its assets and liabilities.

The Assets Tracking and Management Project and the creation of the Assets Register were new initiatives of the Federal Ministry of Finance designed to enhance accountability, promote transparency and deepen efficiency in line with the change agenda of the Administration of President Muhammadu Buhari. The Asset Register would afford the Government to know and monitor in real time online information on the inventory of Government Assets.

A circular signed by the Minister of Finance was dispatched to all Federal Ministries, Departments and Agencies (MDAs) requesting their Accounting Officers  to prepare an inventory of all fixed assets held as at 31st December  2016, to facilitate physical verification by the Project Team.





9.  HOUSING REFINANCING SCHEME

The federal government has launched a N13 billion Federal Civil Servants Mortgage Refinancing Scheme through the Nigeria Mortgage Refinance Company (NMRC). With the scheme, NMRC will refinance mortgages for 5,635 beneficiaries of the federal government workforce.  At the launch of the project, the Minister of Finance, Mrs. Kemi Adeosun said the federal government had earmarked N40 billion in the 2016 Budget for the implementation of a comprehensive housing scheme to address the housing challenges facing the country, improve the living conditions and welfare of the workforce and people, and generate gainful employment for the nation’s teeming youth. Housing under construction in Nasarawa, Ogun, Edo and Enugu States.





10.  PROJECTS FUNDING

At the 2016 World Bank/IMF Meeting, the delegation from Nigeria was able to secure investments into the $500 million irrigation projects covering the Bakalori-Kano River and Hadejia Valley Irrigation. In the power sector, the country secured commitments from Japan International Co-operation Agency to invest in the Jebba Hydro project and also facilitate trade and investment in Nigeria. Furthermore, apart from the commitment of the two Bretton Woods Institutions, the Nigerian delegation was able to secure the cooperation of representatives of other developed countries who were ready to share economic intelligence on how certain challenges in the Nigerian economy could be tackled.





11.  TREASURY SINGLE ACCOUNT (TSA) INITIATIVE:

The TSA is another initiative towards efficient and transparent management of federal government finance and revenue collections that have been implemented in the past year, through the Federal Ministry of Finance.  The Federal Government can monitor and manage revenue from revenue collecting and revenue generating agencies of government, through a window. The Federal Government has so far mopped up over N3 trillion as revenue accruals since the policy of Treasury Single Account commenced.



12.  IPPIS PLATFORM:

The IPPIS project commenced in April 2007 with seven pilot Ministries, Departments and Agencies, with the objective of ensuring centralized payment of salaries; aiding of manpower planning and budgeting as well as reducing financial wastages. At present, capturing of more Agencies on the IPPIS platform is ongoing and the Minister of Finance, Mrs Kemi Adeosun is working tirelessly to ensure that all institutions of government are captured under IPPIS.

NSIA – CHAMPIONING A NEW ERA OF SUSTAINABLE INFRASTRUCTURE FINANCING







The series of initiatives targeting high growth sectors of the Nigerian economy being promoted by the Nigeria Sovereign Investment Authority (NSIA), managers of the $1.5billion Sovereign Wealth Fund (SWF), have all the potentials of having a defining impact on infrastructure financing in the country. They stand out because they are innovative, practical and built on standard frameworks that are designed to encourage profitable sustainable investments by the private sector.

A notable component of the entity’s infrastructure investment strategy is the building of strategic partnerships with reputable global investment companies with a view to attract inflow of global finance for infrastructure development.

Beginning in 2014, the NSIA, under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, has entered into a collaboration with GuarantCo, a leading international credit guarantee firm to explore ways to unlock latent pools of capital for investments in infrastructure. It’s partner, Guarantco, is sponsored by the governments of Australia, United Kingdom, Sweden, Switzerland and Netherlands through the Private Infrastructure Development Group and has had extensive experience in such schemes in diverse economies, some similar to Nigeria’s. The outcome of the collaboration was the establishment of InfraCredit in early 2017.

The Infrastructure Credit Enhancement Company, otherwise called InfraCredit is designed to help address and overcome existing constraints in the supply of local financing to infrastructure projects and help the development of the local financial markets. Being the first of its kind in Nigeria, the company is set to play a critical and game changing role in facilitating access to finance for infrastructure projects. This it will do by providing credit guarantees for infrastructure bonds issued by corporate bodies and state governments to finance viable development projects in the country.

The real revolution that the credit enhancement vehicle brings to the table is its institutional capacity to attract and unlock the massive unused funds from international pension and insurance administrations without putting future savings at risk. Currently, on the local scene, the pension fund has accumulated close to N6trillion in assets and is still growing. The coming on stream of InfraCredit to provide credit guarantees addresses at a fundamental level, the safety concerns of pension fund administrators. Set to start operations in the second quarter with about $200 million, InfraCredit will serve the critical role of providing the much-needed comfort by fund managers. This is necessary for the access and use of part of the funds for profitable investments in viable infrastructure projects without putting at risk the savings of workers.

NSIA in August 2016 announced two major interventions in the housing and agriculture sector. It floated two special purpose vehicles for each of the sectors with a $500 million fund for Real Estate and a $200 million fund for Agriculture. The two funds were firmed up in partnership with the Old Mutual Group, a global investment conglomerate with over 16 million customers and over £300 billion in assets under management.

Under the terms of the co-investment collaboration, NSIA and Old Mutual are to jointly raise the $700 million that would be earmarked for strategic investments in viable real estate and agriculture projects.

The beauty of the partnership is that it will leverage the knowledge, experience and network of Old Mutual’s Agriculture Asset Management to bring institutional investors to invest in Nigeria’s real estate and agriculture sectors.

This is good news for the economy on many fronts. The investments in real estate, which is targeting commercial, industrial and retail real estate investments will stimulate increase of Nigeria’s stock of premium real estate and contribute to growth in the industry. Similarly, the investments in agriculture will provide impetus to food production, job creation and self-sufficiency in key staples.

The ability of the NSIA to identify, structure and firm up partnership with such high profile global investment firms speaks volumes about the promise it holds for the country and what is possible. It is a testimonial to the rising confidence of the investing community in the NSIA – a development that is underscored by its adoption of world class corporate governance principles as well as the obvious competence and integrity of the management team led by Uche Orji as the Managing Director.

NSIA’s groundbreaking entry into the infrastructure financing space holds great promise for the nation’s infrastructure development. By doing very little over the years in the area of building roads, power, housing, healthcare systems, successive governments dug a wide social infrastructure deficit that would require trillions of dollars to fix. According to the 30-year National Integrated Infrastructure Master Plan (NIIMP), the country needs at least $2 trillion, which is roughly N398.1 trillion to bridge the deficit over the next three decades.  In other words, even if the entire annual budget – using the record setting 2017 budget of N7.298 trillion – is wholly dedicated to funding infrastructure – a highly unlikely scenario – it will take over 56 years to deal with this backlog, talk less of that which will be building up.

To say the obvious, the quantum of resources needed to fix the country’s widening infrastructure gap cannot be found in the government’s national treasury. The government has long lost both the advantage of time and financial capacity to make any significant impact. Oil prices have crashed by about 60 percent. National revenues have shrunk by more than half and the country’s economy has only just recovered from a recession. Although the option to borrow to fund infrastructure from organizations such as the World Bank, the International Monetary Fund and the African Development Bank is being explored, the process takes time and often stirs up controversies.

A more feasible option is therefore the private sector. However, the private sector has not stepped forward to fill the gap because of lack of institutional capacity to protect their investments. The coming on board of NSIA is helping to fix this problem. NSIA has the financial muscle, the institutional framework, the governance structure, and capacity to function as a strategic institution that can engage constructively with the global investing community and unlock those funds into the infrastructure sector. And so far, it has done a good job of that by building an attractive and respectable track record of stellar achievements which have earned it very high ratings from respectable global rating agencies.

NSIA’s core mandate as manager of the country’s Sovereign Wealth Fund (SWF) – now with a capital base of $1.50billion gives the institution aptly positions the entity to catalyze infrastructure investments with reputable partners. For one, its investment finance models are transparent and structured according to world class standards. Two, although it was set up by the government, it is largely private sector driven. Three, its funds which comprise a $300M Stabilization Fund (SF), $600M Nigeria Infrastructure Fund (NIF) and the $600M Future Generations Funds (FGF) are all ring fenced. This simply means, the funds are not co-mingled.

The fourth reason is that the agency is managed by a competent team of Nigerian professionals who have made strong marks in the global investing and business community. Mr. Uche Orji, the pioneer Managing Director and Chief Executive Officer of the institution is arguably one of Nigeria’s finest and experienced global investment professionals. Orji, a Harvard Business School alumni, has worked at top executive positions for UBS, New York; Goldman Sachs, London; and JP Morgan, London. Mr Orji was ranked the number one semiconductor analyst out of over 200 European based analysts in 2003 by Thomson/Extel Investor magazine, and top three by Institutional Investor magazine and number five globally by Forbes Magazine. Mr Orji also achieved number one ranking across Europe in all Institutional Investor polls. Bottom-line, NSIA from the structure of its set up and manner of operations lends itself a credible institutional vehicle that the global investing community can do business with.

The Uche Orji led management of the entity have proven the NSIA as a good example of a world class, wholly Nigerian-run institution with both the institutional capacity, experience and technical expertise to represent and do business with the international investing community for the benefit of the country.

The agency has, within the past three years, done an impressive job of profitably investing the $1billion seed capital of the Sovereign Wealth Fund (SWF). For instance, its income grew by 440.6 percent from N26.36 billion in 2015 to N149.83 billion as at year end 2016. The income came from strategic investments that the agency made in public as well as private equities in developed markets such as US, Japan, Europe and developing markets from Brazil to China. In all these investments were denominated across 17 different currencies across the globe.

Also, the total assets of the agency have nearly doubled from N213.67billion in 2015 to over N420.93 billion in 2016. Earlier this year, the National Economic Council (NEC) as a sign of confidence and endorsement of the agency’s handling of the fund approved an additional $250 million from the excess crude account for investment in the fund. So, as it stands today, the NSIA has a core asset value of about $1.5billion that it manages. Added to this is $350 million and another $100 million third party fund which the Authority manages on behalf of the Nigeria Bulk Electricity Trading Company and Debt Management Office Respectively. the FGN Stab fund up to December 2016 was N8.9bn

The NSIA’s successes showcase Nigeria’s potential and the possibilities available to the country, when a fiscal initiative is appropriately set up and manned by a competent team of professionals. How the NSIA is leveraging its $600 million infrastructure fund to radically redefine the concept of infrastructure financing in the country in a way that is sustainable, puts less pressure on government finances and encourages active private sector participation. It is a commendable vehicle and should be supported by all those who want to see Nigeria move forward on the back of a strong infrastructure.







 NSIA: DRIVING THE BUHARI FERTILIZER REVOLUTION



2017 marks a significant shift in the story of fertilizer production and supply in Nigeria. After decades of being defined by scarcity, high prices, non-availability, subsidy, corruption and other related sharp practices, we are now witnessing early signs of a positive reversal in the fertilizer narrative. This is good news for farmers, good news for the economy and a boost to the diversification plan of the government.



Across the country, fertilizer blending plants are roaring back to life; local fertilizer production has been stepped up; importation of raw materials that can be produced locally has been eliminated and is only limited to those that cannot be sourced locally. The fertilizer supply and distribution systems are working efficiently and enhancing access to fertilizer by ordinary farmers. To cap it, for the first time in Nigeria, fertilizer is being sold at record low prices and the government is no longer carrying the burden of subsidizing its supply. This is huge.

In late 2017, the Nigeria Sovereign Investment Authority (NSIA), under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the managing the special purpose vehicle set up to drive the Buhari administration’s fertilizer initiative released impressive statistics on milestones achieved so far. Some of these include the strategic provision of technical support and financing for the revival of eleven fertilizer blendingplants across the country; the production and sale of 8 million bags of fertilizer at N5,500 against the market rate of N8,000 and creation of an estimated 50,000 direct jobs. The report also estimates that the initiative saved the country about $1500million in foreign currency. Overall, the scheme has so far saved the country an estimated N50billion that would have been used to import raw materials from abroad and implementation of subsidy.

Commenting on the development last month, a visibly elated Managing Director of NSIA, Mr. Uche Orji who has done a brilliant job of steering the company said:

“If you put that in context, in 10 months, we sold more than 80% of the entire programme of 2016. We have materials on ground to deliver more than 8 million bags. Soon, more materials will arrive for another four million bags. This programme targets 10 million bags for this year, it has never been done in this country. In our opinion, there is enough fertilizer for everyone. So, anyone hoarding is just wasting his/her time because more is coming.”

According to him the development is a classic case of import substitution:

“In the past, we would have imported these fertilizers and no job would have been created locally. Out of the over one million so far sold to the dealers, not one naira subsidy has been used. There is no need for subsidy.”

It is important to note that the right policy leadership and political support has been central to the very good news that is coming out from government on fertilizer. The MD stated that President, Muhammadu Buhari set the tone early on by outlining a clear vision: to make fertilizer available and affordable to farmers. So when the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) approached him after the elections in 2015 with their concerns about the appalling state of the industry and sought government interventions to fix them he was quick to take action.

The first defining action was his spirited engagement of the President of Morocco, King Mohammed VI. These engagements progressed quite rapidly and eventually culminated to a strategic agreement in December 2016 with the OCP SA, Morocco, a global market leader of phosphate and its derivatives and a key player in the international market that mines, processes, produces, and sells phosphate rock, acid, and fertilizers. The agreement has the strategic goal of aiding collaboration that will help develop the fertilizer industry in Nigeria through supply at highly discounted rates a key raw material for fertilizer – phosphate – that could not be sourced locally.

Next, was the setting up of the Presidential Fertilizer Initiative (PFI) to drive the goal of achieving self-sufficiency in local fertilizer production by 2019 starting with one million metric tons for the 2017 wet season farming and an additional 500, 000 metric tons for the dry season farming.

Another strong feature of the scheme is the collaboration between industry stakeholder and the involvement of private sector led government institution: NSIA, FEPSAN, the Presidential Committee on Fertilizer Initiative (PCFI) under the Chairmanship of the Governor of Jigawa State, Alhaji Mohammed Badaru Abubakar, the Federal Ministry of Agriculture and Rural Development, accredited blending Plants, agro-Dealers and State Governments.

Beyond the political leadership and stakeholder support, what has kept the system from being abused and going the way of previous interventions is the involvement of the NSIA with its business driven framework. Its unique business approach to managing the Presidential Fertilizer Initiative of the Buhari administration is working. As the leading financial driver of the initiative, it did a brilliant job of conceiving and designing a strong business system for managing the project. The system is built on strong financial governance, integrates all the key actors in the fertilizer eco-system using a transparent financing model that defines the relationships and financial transactions between the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN), the eleven fertilizer blending plants, suppliers of the raw materials and off takers which include State Governments, Anchor Borrower Programs and licensed agro distributors/dealers. This ring fenced processes ensure that things are done right and reduces the risk of money being diverted, misappropriated or lost. It has helped through coordination to keep the focus of the system on producing fertilizer at affordable rates.

Specifically, under the arrangement, NSIA’s vehicle (NAIC-NPK) plays the role of a lead financier and coordinator of the project. To ensure a steady supply of the raw materials for fertilizer production, it makes direct payments to FEPSAN’s foreign and local suppliers. The raw materials include Di-ammonium phosphate (DAP) and Muriate of potash (MOP) supplied by OCP Morrocco and other European suppliers. Two are sourced locally: urea from Indorama Eleme Fertilizer & Chemicals Company and Notore Chemical Industries; granulated Limestone from the West Africa Fertilizer Company (WAFERT).

Next, the raw materials are delivered to FEPSAN who in turn pushes them to the blending plants for production. After production, the finished products are sold to off takers at ₦5,000 per 50kg bag – a price that covers production costs and a healthy profit margin.

Off takers in turn resell to farmers at a target price of ₦5,500 per 50kg bag. The N500 is to cover the up takers’costs for transportation, profit and other logistics. In this way, production is guaranteed.

Blending plants are required to provide performance guarantees from their banks to NAIC-NPK as security for the raw materials.  In the event of default, NAIC-NPK calls up the guarantees. This is another potential loophole plugged.

For blending plants their transactions are kept liquid. To state governments, supplies are only made based on the strength of irrevocable standing payment orders that are certified by the ministry of finance. For dealers and distributors supplies are only made on the basis of cash advances. This reduces the likelihood of money missing in the transaction process.

The early successes are helping to validate the principle that when the political leadership provides a clear vision of what it intends to achieve, lends strong political support and the right business systems are properly designed – on the back of a strong governance framework – to deal with known gaps that could be exploited, workable solutions can indeed be found. In many ways, it gives hope that the country can indeed achieve its target of stimulating the growth of the agriculture sector, attaining self-sufficiency in food production, reducing food imports, diversifying the economy as well as enhancing inclusive economic growth. This is good news for the country and for the economy. Especially, given the urgent national imperative of building a robust multi-pillar post-oil economy that can with stand shocks and guarantee a shot at success for every one that is ready to work hard.

These stellar results from the fertilizer initiative are undoubtedly remarkable. They mark a defining historic moment for fertilizer supply in the country: the end of an old troubled era and the beginning of a new one which holds great promise. It is helping to establish that government efforts at fixing seemingly intractable social and economic problems are not necessarily jinxed to fail. That good formulas exist, progress is possible and is not alien to the country.

Overall, it is clear that the Presidential Fertilizer Initiative (PFI) of the Buhari administration has in barely less than one year proven itself in many ways to be a runaway success. It has moved with speed, focus and a determination to succeed and deliver on the president’s charge – to make fertilizer available to farmers at affordable rates. NSIA’s innovative strategy and business driven framework for increasing fertilizer production has proven to be a game changing formula to the fertilizer problem. Its processes and systems that are driving the fertilizer revolution should be fully institutionalized and strengthened.







Kind Regards

Oluyinka Akintunde

Special Adviser, Media & Communications to the Hon. Minister of Finance

Federal Ministry of Finance

Central Business District, Abuja

Email:  oluyinkaakintunde@gmail.com

Phone:  +2348023001052

Sent from Yahoo Mail on AndroidNOTABLE ACHIEVEMENTS BY THE MINISTER OF FINANCE, MRS. KEMI ADEOSUN IN TWO YEARS (DECEMBER 2015 – DECEMBER 2017)









1.   EFFICIENCY UNIT (NOVEMBER 25, 2015)



One of the major initiatives of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the Efficiency Unit (E-Unit). The first action taken by the Minister on assumption of Office was the establishment of an Efficiency Unit in the Federal Ministry of Finance on November 25, 2015.

The Efficiency Unit was established to ensure that all government expenditures are necessary and represent the best possible value for money. Prior to her assumption of office, available records show that the nation’s recurrent expenditure completely dwarfs capital expenditure by a ratio of 84/16. This includes non-wage related overhead expenditure such as travel costs, entertainment, events, printing, IT consumables, and stationeries, among others. Since its creation, the Unit has undertaken programmed reviews of all government overhead expenditure with a view to reducing wastage, promoted efficiency as well as guaranteed quantifiable savings for the country. Specifically, the Efficiency Unit has been monitoring the Ministries, Departments and Agencies (MDAs) of Government, identifying and eliminating wasteful spending, duplication and other inefficiencies; and identifying best practices in procurement and financial management.

The Federal Government currently saves at least N15 billion annually from the services of the Efficiency Unit of the Federal Ministry of Finance. The Unit has also introduced price guidelines and shared services policy among MDAs to increase transparency in the procurement process, while the work processes and practices would be reviewed to identify and eliminate areas of wastage, excess capacity and duplications.

The Efficiency Unit, in its short history, has made several achievements engaging and working with key public sector stakeholders. They include:

i.          Cost Cutting:

The E-Unit has embarked on several cost cutting initiatives that has influenced the issuance of Circulars to all MDAs by the Secretary to the Government of the Federation, the Head of the Civil Service of the Federation, and the National Salaries, Wages and Income Commission. The issuance of these Circulars has led to curtailed and better management of certain recurring processes and activities relating to travels, sitting allowances, souvenirs, and others resulting in savings over N11 billion Naira.

ii.         Promoting Transparency In Payments:

Another tool that has been recommended to the Accountant General of the Federation is the use of debit cards by government officials for payments. This would plug loopholes and improve accountability in spending.

iii.        Procurements:

The E-Unit has initiated some measures to improve the subsisting procurement process to generate savings using the government’s large purchasing power, improve transparency in the procurement process, and reduce the administrative costs associated with the procurement process. Successful outputs include:

a.         Secured discounts ranging from 5-50% from seventeen (17) airlines for local and foreign travels. The Federal Ministry of Finance has recently signed an agreement with Dana Airlines that provides discounts of 50% to all MDAs. The agreements with the other airlines are at various stages of finalization.

b.         The introduction of a Price Checker, a web based platform which is being developed with the Bureau of Public Procurement will provide a portal for vendors to upload prices of their goods which MDAs will use for procurement, thereby providing more transparency and eliminating sharp practices in the procurement process.

c.         The introduction of a Circular on Framework Agreements by the BPP (in progress) which will enable MDAs to pool their demands for standard goods thereby reducing the administrative costs associated with the subsisting procurement process and securing good discounts from suppliers.





2.   PRESIDENTIAL INITIATIVE ON CONTINUOUS AUDIT (PICA)



The Minister of Finance, Mrs. Kemi Adeosun, was instrumental to the establishment of the Presidential Initiative on Continuous Audit (PICA), a critical initiative in the implementation of a Continuous Audit Programme. The Federal Executive Council (FEC) had on 9th March, 2016, approved the establishment of PICA to ensure full accountability of all public funds expended under President Muhammadu Buhari Administration. The mandates of PICA include: validating controls, assessing risks, pruning personnel cost, ensuring compliance with public financial management reform, and detecting errors and making recommendations to management for necessary actions.

Adeosun noted that the establishment of PICA had become necessary in order to put systems and frameworks in place over finance and spending of government revenue.

“Our commitment to a lean and cost effective government remains a priority and the initiatives we are introducing will signal a fundamental change in how Government spends public revenue,” the Minister said.

Since its establishment, the Continuous Audit Team had undertaken series of investigations and recoveries for the Government, including infractions by the staff of Pension Transitional Arrangement Directorate (PTAD), recovery of salaries paid to ex-Diplomats, verification of subsidy claims, personnel costs to Ministries, Departments and Agencies (MDAs), and ghost workers scammers.

                                                       

Audit of PTAD Staff

The Continuous Audit Team conducted investigations into infractions committed by some staff of Pension Transitional Arrangement Directorate (PTAD). This investigation led to disciplinary action against five (5) top management staff of PTAD, including a former Director-General.



Recovery of Salaries Paid to Ex-Diplomats

PICA, in the course of its investigation, discovered that 196 Foreign Service officers continued to receive salaries after exiting the Federal Service. The sum of ₦192 million was collected by these officers as salaries even after leaving the service. The case was handed over to the Economic and Financial Crimes Commission (EFCC) for further investigation and recovery of the aforementioned funds on completion of the investigation.



Verification of Subsidy Claims

In its efforts to ensure steady supply of petroleum products nationwide, the Federal Government took measure aimed at settling outstanding debts owed to members of the Petroleum Products Marketers Association of Nigeria (DAPMA). An inter-agency Committee under the leadership of PICA was set up to verify the claims. Other members of the Committee are the Nigeria Customs Service, Debt Management Office, DPRRA and BOF. The Committee verified and recommended some payments to members of DAPMA and has thus far made remarkable savings for the Federal Government.

The details of achievements recorded are summarized below:



S/N

                                          ITEM



          NUMBER

  1

Number of Marketers Verified

               72

  2

Total Claims

 N45,999,999,865.98

  3

Savings made so far

       N887,108,438.31

  4

1.5% Palliative to FGN warehoused to date

   N1,014,345,777.88



Reduction in Personnel Cost to MDAs

Prior to the establishment of PICA, the personnel cost across Federal MDAs was high, making it difficult to channel enough funds to develop needed critical infrastructure. The intensive and diligent forensic audit of Integrated Payroll and Personnel Information (IPPIS) and nominal roll carried out by PICA led to monthly reduction of personnel cost (salaries) from ₦151 billion in February 2016 to ₦138 billion by August, 2016. Similarly, the exercise led to reduction in pension cost from ₦15 billion to ₦14.5 billion monthly. This reduction has since been sustained through efforts of the Honorable Minister of Finance.



Elimination of Ghost Workers

In the course of the period through its routine audit assignment, PICA has stopped the salaries of over 800 ex-employees, who had continued to draw monthly salaries even after exiting the Federal Service as well as removed over 50,000 ghost workers from the Federal Payroll. The details of the affected employees who had already collected the sum of ₦34 million before discovery have been handed over to the EFCC for investigation and prosecution.

For the first time in the history of this nation, the Federal Government is prosecuting the payroll fraudsters who created fictitious names and accounts. About nine principal suspects were on November 1, 2017 charged before Justice U.P. Kekemeke of Court 14. Those arraigned were Usman Aliyu Dayo, Osuntope Opeyemi, Johnson Adedokun, Ojeifo Robert Sylvanus, Oyebade Ebenezer Ayodeji, Florence Olaolu Dada, Olaolu Haruna Dada, Blessing Ejeh and Aderibigbe Isaac Taiwo.

The suspects are employees of the Office of the Accountant General of the Federation, Federal Ministry of Environment, Federal Ministry of Agriculture and Rural Development, Federal Ministry of Water Resources and Federal Civil Service Commission.



Payroll Shortfall Verification       

The Federal Government in 2016 received claims of shortfalls in personnel cost from various Ministries, Departments and Agencies across the country. To address these claims, PICA raised teams comprised of over 300 Accountants, Auditors and Administrative officers to undertake the verification of the shortfalls. To accurately profile the actual payroll costs of each of the agency, PICA designed a template to capture the vital financial information/data required for the exercise. The findings are summarized in the table below:



S/N      No of Agencies            2016 Shortfall Claims (N)       Recommended Shortfall (N)   Savings Recorded (N)

1.         181      101,061,077,642.01    70,780,214,053.29      30,280,863,588.72





In all, the sum of N30,280,863,588.72 (Thirty Billion, Two Hundred and Eighty Million, Eight Hundred and Sixty-Three Thousand, Five Hundred and Eighty-Eight Naira, Seventy-Two Kobo) was saved on account of this audit exercise.

However, it is important to note that the shortfall across most of the MDAs visited was as a result of shortfall in personnel cost in 2016 Appropriation. Others such as the Nigeria Army were due to the recruitment of about 10,000 soldiers based on presidential directive while shortfall in Defence Mission was on account of foreign exchange differentials.





3.         DEVELOPMENT OF WHISTLE BLOWER POLICY

One strong demonstration of the President Muhammadu Buhari Administration’s political will has been the development of a Whistleblowing Scheme. The Whistleblowing policy, which was developed by the Federal Ministry of Finance in December 2016, empowers citizens to report public corruption.

The primary goal of the policy is to support the fight against financial crimes and corruption by increasing exposure of financial crimes and rewarding whistle blowers. It is hoped that through this policy, there will be increase in accountability and transparency and more funds would be recovered and deployed in financing Nigeria’s infrastructural deficit. To step up the work, the Federal Ministry of Finance through PICA opened a portal where information were supplied, and also recruited competent staff to handle the assignment. Series of petitions have been received, some of which are currently undergoing investigation.

According to Adeosun, over 2,500 reports have been made through various reporting channels as at July 2017, with 365 being actionable tips.

The minister said the tips related to issues of contract inflation, ghost workers, illegal recruitment and misappropriation of funds. Others according to her, include illegal sale of government assets, diversion of revenues and violation of Treasury Single Account (TSA) regulations.

She said, “Thirty-nine per cent (144) of the actionable tips relate to misappropriation and diversion of funds/revenue, 16 per cent (60) relate to ghost workers, illegal recruitment and embezzlement of funds meant for personnel emolument.

“Fifteen per cent (56) relate to violation of TSA regulation, 13 per cent (49) relate to contract inflation/violation of the Procurement Act. Others include failure to carry out projects for which funds have been released and nine per cent (34) relate to non-remittance of pension and National Health Insurance Scheme (NHIS) deductions.”

According to the minister, others include concealed bail-out funds and embezzlement of funds from donor agencies.

She added that a commission of between 2.5 per cent and five per cent of the amount recovered as an incentive would be paid to the whistleblowers that provides information that are original and directly lead to the recovery of stolen or concealed funds or assets.

She disclosed that the sum of N375.8 million had been paid as reward for 20 whistleblowers in the first batch payment, while payment for the next batch would soon be made.

The impact of the Whistleblowing Policy in terms of recoveries has exceeded the Administration’s expectations.  The tighter rein on public finances has allowed the Government to invest US$500 million in country’s Sovereign Wealth Fund, during the recession.





4.  CLEARING OF INHERITED PENSION ARREARS

The Federal Government and the Federal Ministry of Finance have been eulogized by the various workers’ unions for deeming it fit to clear the inherited arrears of pension benefits for 2014, 2015 and 2016. In April 2017, the Federal Government through the Federal Ministry of Finance released N41.5 billion to the National Pension Commission for onward payment to retirees being their accrued pension benefits for 2014, 2015 and 2016.

The Finance Minister also confirmed that the sum of N12.5 billion being outstanding for January, February and March 2017 had been settled based on 2016 appropriation, bringing the tally to over N54 billion. The N41,566,565,184 released to PENCOM was the outstanding appropriated for the year 2014 and 2016 by the National Assembly for the settlement of the retirement benefits of Federal Government employees.





5.  DEVELOPMENT BANK OF NIGERIA (DBN)

The establishment of the Development Bank of Nigeria (DBN) is another milestone of the Federal Government through the Federal Ministry of Finance to spur growth of Micro, Small and Medium Enterprises (MSMEs). The Federal Government had during the 2016 Annual Meetings of the IMF/World Bank reached agreement with the World Bank Group, African Development Bank and the European Investment Bank for the release of $1.3 billion for the take-off of the DBN. The DBN became operationalized in the first quarter of 2017 following the issuance of operating license by the Central Bank of Nigeria (CBN). The Bank met the CBN’s minimum capital requirement of N100 billion as well as the reconstitution of the board of the bank. The DBN has created a credit line of N5 billion to be accessed by MSMEs through its partner financial institutions.



The Minister of Finance, Kemi Adeosun, who led Nigeria’s team to the meeting, explained that the Development Bank of Nigeria (DBN) will focus on SMEs and giving them low cost loans.

In March 2017, the Ministry announced that the Central bank of Nigeria had approved the grant of a Wholesale Development Finance Institution Licence with national authorization to the Development Bank of Nigeria (DBN) Plc. The approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.  The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability. The approval was subject to meeting the minimum capital requirement of N100 billion and the reconstitution of the Board of the Bank and reviewing its organogram.



On March 30, 2017, the Ministry announced the constitution of the  board and management of the Development Bank of Nigeria (DBN). The Management team is led by Mr. Tony Okpanachi, a banker and erstwhile Deputy Managing Director/Deputy CEO, Ecobank Nigeria Limited. Mr Okpanachi will be supported by the Chief Financial Officer, Mrs. Ijeoma Ozulumba and Chief Risk Officer, Mr. Olu Adegbola.



The Board members include:  Chairman, Dr. Shehu Yahaya (who was the interim MD of DBN and former Executive Director, AfDB); Managing Director/Chief Executive, Nigeria Sovereign Investment Authority, Uche Orji and Mohammed  Kalif, of the African Development Bank.



Independent Directors of the DBN are former Group Managing Director/CEO of United Bank for Africa (UBA), Mr. Philips Oduoza; President and CEO, African  Finance Corporation,  Mr. Andrew Alli; Chairman, FBN Merchant Bank, Alhaji Bello Maccido; Founder/Managing Director, JNC International Limited, Mrs Clare Omatseye and the Managing Director, CEO Excel Professional Service Limited, Mr. Oladimeji Alo.





6. VOLUNTARY ASSETS AND INCOME DECLARATION SCHEME (VAIDS)

One of the major initiatives in the history of the Nigerian Government is the Voluntary Assets and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods. VAIDS, an initiative of the Kemi Adeosun-led-Federal Ministry of Finance in collaboration with the State Tax Authorities, is a revolutionary programme that provides tax defaulters a nine-month opportunity to voluntarily and truthfully declare previously untaxed assets and incomes. It also ushers in an opportunity to increase the nation’s general tax awareness and compliance. As at May 2017, the total number of taxpayers in Nigeria is just 14 million out of an estimated 70 million who are economically active. This implies only 20 per cent of the economically active Nigerians pay tax, particularly the salary earners. Nigeria’s tax to Gross Domestic Product (GDP) ratio, at just 6%, is one of the lowest in the world (compared to India’s of 16%, Ghana’s of 15.9%, and South Africa’s of 27%). Most developed nations have tax to GDP ratios of between 32% and 35%. VAIDS is aimed at correcting the anomaly, getting the rich and big entrepreneurs to pay tax. Nigeria’s low tax revenues are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world. There has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations. These include but are not limited to, transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names. In addition, despite having some of the most profitable and well capitalized companies in Africa, the level of tax remittance in Nigeria is very low.



VAIDS has however yielded over $50 million in revenue between June 29, 2017 when it was launched and October 31, 2017. Two foreign companies have also agreed to pay $110 million in regularizing their tax status. About $1 billion additional revenue is being targeted from the scheme. Already, the Federal Government has recruited and trained 2,190 Community Tax Liaison Officers (CTLOs) under the Scheme. Of the 2,190 CTLOs, 1,710 have been deployed to 33 States to raise awareness about the scheme and taxation in general. The States include Adamawa, Cross River, Delta, Edo, Enugu, Kaduna, Kwara, Lagos, Nassarawa, Niger, Ogun and Oyo, among others.

Job creation is one of the spin-offs of the VAIDS initiative, with the scheme expected to create a total of 7,500 opportunities for Nigerians as CTLOs through the N-Power scheme of the Federal Government.

In a recent interview, the Minister of Finance explained that the signing of an Executive Order by the Acting President, Professor Yemi Osinbajo, on Assets Declaration, underlined the seriousness attached to the VAIDS.

According to her, the Federal Government will deploy and heavily rely on technology to increase tax compliance under the VAIDS.



ADDITIONAL BACKGROUND ON VAIDS AND TAXATION



●    Over N17 billion has been realised since the launch of VAIDS;



●  Very low world ranking: Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6%;



●     The poor are the hardest hit: Tax evasion leaves an unfair burden of payment on those who can afford it least – Nigeria’s poorest people;



●      Regulatory change is enabling easier access to information across the world:

–     International agreements, effective from 2018, make the exchange of banking information across borders, automatic

–     Nigeria has signed agreements with a number of nations (US, UK, Canada, UAE, Switzerland, Mauritius, Panama and Bahamas) – all of whom have pledged support and cooperation to exchange information on citizens that is relevant for tax purposes;



●      Punishment for evasion is severe: All tax evaders – when identified – are subject to the full force of Nigerian and international law:

–     Imprisonment of up to five years

–     Severe extra penalties – up to 100% of the outstanding tax due, compound interest at 21% per annum, forfeiture of assets



B.         The Plan

●      One-off opportunity for evaders to avoid the full force of the law – Between 1 July and 31 December 2017 – evaders can regularise their tax status in exchange for immunity from prosecution of tax offences and a tax audit, and be absolved from penalty charges and interest



●      Less forgiveness for evaders who delay – evaders who delay participation past 31 December 2017 will be liable for interest on overdue tax balances

●      Provision for installmental payment has been built into the scheme

●      Experts in place to assist the Federal Government: Expert, international asset tracers and investigative specialists have been appointed to assist the Federal Government in tracing assets held by Nigerians

●      In line with other proven, international schemes: Recent, similar schemes in 2016 have been implemented successfully in India, Indonesia and South Africa. VAIDS will bring Nigeria in line with international best practice and contribute to worldwide efforts to tackle corruption

●      Much needed funds will be generated and transparently invested – anticipated funds to be raised are at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development





7.  ACCOUNTING SOFTWARE

On March 21, 2017, the Federal Ministry of Finance announced the development of an International Public Sector Accounting Standards (IPSAS) Compliant accounting software suite “OneBook” towards improving public financial management across all levels of Government. This move by the Federal Government through the Finance Ministry is aimed at enhancing efficiency, accountability, and transparency. The OneBook suite offers a complete solution that allows for standardization and seamless exchange of information across all tiers of Government by providing a unified accounting and reporting solution across key areas: government expenditure, financial, treasury and receipts management.  The software package, which was launched at the Federation Account Allocation Committee (FAAC) meeting, captured various revenue types and would impact the entire financial operations from budgeting, through revenue and expenditure management to final accounts.

The software is being made available to all States and Local Governments to support their accounting and reporting processes.





8.  PROJECT NOLLYWOOD ACT



Project Objectives:

            The objective is to:

(i)                 Sustain the growth of Nigeria’s movie Industry,

(ii)               Encourage the Industry realize its potential of being a significant creator of employment and considerable contributor to GDP

(iii)             Address some of the key challenges currently facing the Industry.



The programme aims to improve and promote key components of the value chain through the provision of grants scheme designed to support existing or aspiring practitioners within the Industry, including the Diaspora.

Project Components

Project ACT-Nollywood has 3 primary components aimed at developing and addressing inhibitors to further growth, which exist along the movie making value chain.  The components are as follows:-

i.                    Film Production Fund (FPF)

ii.                  Capacity Building Fund (CBF)

iii.                Innovative Distribution Fund (IDF)



The (FPF) and (CBF) have been fully implemented while the (IDF) which is the third component of the project is on-going.  The (IDF) covers online, National, Regional and community categories of Nollywood Film distribution and exhibition.  The objectives of IDF are to:

i.                    Improve the distribution network of Nigerian Audio-Visual contents.

ii.                  Cut down on piracy

iii.                Create jobs (direct and indirect)

iv.                Better protect Intellectual Property Rights (IPR) within the Nigerian Entertainment Industry.



A total sum of N1.8 billion was approved for disbursement to 106 beneficiaries in this component.  N1.335 billion has earlier on the year been disbursed as first tranche to 105 beneficiaries.



During the Monitoring and Evaluation (M & E) of this first tranche disbursement, the Project Implementation Unit (PIU) recorded a number of achievements in line with the objectives of the programme as follows:



i.  15 community cinemas and viewing centers have been established through the grant and this has improved the distribution network of movies in Nigeria.

ii.   The programme has supported 18 firms in strengthening online distribution platforms.  This has helped curbed illegal downloads and piracy.

iii.  256 permanent jobs and 544 temporary jobs have been created through the financial support provided to 105 beneficiaries by the programme.

iv.  The programme has equally aided the extension of the Nollywood Industry to sub-Sahara Africa through the funding of National distributors to expand their distribution capacity and network.  National distributors are expanding their capacity to lip-synching their content in French for onward distribution to the ECOWAS sub-region.



Consequent upon the above, the Honourable Minister has approved the disbursement of the balance sum of N420,200,000.00 to 105 IDF beneficiaries in the 2nd/final tranche.





8. ATMProject

The Ministry launched an Asset Tracking and Management Project (ATMProject), through which for the first time, the Government would be able to locate, identify, assess and evaluate all its moveable and immoveable assets. Similarly, a Central Asset Register would be created and domiciled in the Federal Ministry of Finance for recording the actual quantity, value, condition and location of all the capital assets belonging to the Federal Government. Under the International Public Sector reporting Standard (IPSAS) Government is expected to record both its assets and liabilities.

The Assets Tracking and Management Project and the creation of the Assets Register were new initiatives of the Federal Ministry of Finance designed to enhance accountability, promote transparency and deepen efficiency in line with the change agenda of the Administration of President Muhammadu Buhari. The Asset Register would afford the Government to know and monitor in real time online information on the inventory of Government Assets.

A circular signed by the Minister of Finance was dispatched to all Federal Ministries, Departments and Agencies (MDAs) requesting their Accounting Officers  to prepare an inventory of all fixed assets held as at 31st December  2016, to facilitate physical verification by the Project Team.





9.  HOUSING REFINANCING SCHEME

The federal government has launched a N13 billion Federal Civil Servants Mortgage Refinancing Scheme through the Nigeria Mortgage Refinance Company (NMRC). With the scheme, NMRC will refinance mortgages for 5,635 beneficiaries of the federal government workforce.  At the launch of the project, the Minister of Finance, Mrs. Kemi Adeosun said the federal government had earmarked N40 billion in the 2016 Budget for the implementation of a comprehensive housing scheme to address the housing challenges facing the country, improve the living conditions and welfare of the workforce and people, and generate gainful employment for the nation’s teeming youth. Housing under construction in Nasarawa, Ogun, Edo and Enugu States.





10.  PROJECTS FUNDING

At the 2016 World Bank/IMF Meeting, the delegation from Nigeria was able to secure investments into the $500 million irrigation projects covering the Bakalori-Kano River and Hadejia Valley Irrigation. In the power sector, the country secured commitments from Japan International Co-operation Agency to invest in the Jebba Hydro project and also facilitate trade and investment in Nigeria. Furthermore, apart from the commitment of the two Bretton Woods Institutions, the Nigerian delegation was able to secure the cooperation of representatives of other developed countries who were ready to share economic intelligence on how certain challenges in the Nigerian economy could be tackled.





11.  TREASURY SINGLE ACCOUNT (TSA) INITIATIVE:

The TSA is another initiative towards efficient and transparent management of federal government finance and revenue collections that have been implemented in the past year, through the Federal Ministry of Finance.  The Federal Government can monitor and manage revenue from revenue collecting and revenue generating agencies of government, through a window. The Federal Government has so far mopped up over N3 trillion as revenue accruals since the policy of Treasury Single Account commenced.



12.  IPPIS PLATFORM:

The IPPIS project commenced in April 2007 with seven pilot Ministries, Departments and Agencies, with the objective of ensuring centralized payment of salaries; aiding of manpower planning and budgeting as well as reducing financial wastages. At present, capturing of more Agencies on the IPPIS platform is ongoing and the Minister of Finance, Mrs Kemi Adeosun is working tirelessly to ensure that all institutions of government are captured under IPPIS.

NSIA – CHAMPIONING A NEW ERA OF SUSTAINABLE INFRASTRUCTURE FINANCING







The series of initiatives targeting high growth sectors of the Nigerian economy being promoted by the Nigeria Sovereign Investment Authority (NSIA), managers of the $1.5billion Sovereign Wealth Fund (SWF), have all the potentials of having a defining impact on infrastructure financing in the country. They stand out because they are innovative, practical and built on standard frameworks that are designed to encourage profitable sustainable investments by the private sector.

A notable component of the entity’s infrastructure investment strategy is the building of strategic partnerships with reputable global investment companies with a view to attract inflow of global finance for infrastructure development.

Beginning in 2014, the NSIA, under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, has entered into a collaboration with GuarantCo, a leading international credit guarantee firm to explore ways to unlock latent pools of capital for investments in infrastructure. It’s partner, Guarantco, is sponsored by the governments of Australia, United Kingdom, Sweden, Switzerland and Netherlands through the Private Infrastructure Development Group and has had extensive experience in such schemes in diverse economies, some similar to Nigeria’s. The outcome of the collaboration was the establishment of InfraCredit in early 2017.

The Infrastructure Credit Enhancement Company, otherwise called InfraCredit is designed to help address and overcome existing constraints in the supply of local financing to infrastructure projects and help the development of the local financial markets. Being the first of its kind in Nigeria, the company is set to play a critical and game changing role in facilitating access to finance for infrastructure projects. This it will do by providing credit guarantees for infrastructure bonds issued by corporate bodies and state governments to finance viable development projects in the country.

The real revolution that the credit enhancement vehicle brings to the table is its institutional capacity to attract and unlock the massive unused funds from international pension and insurance administrations without putting future savings at risk. Currently, on the local scene, the pension fund has accumulated close to N6trillion in assets and is still growing. The coming on stream of InfraCredit to provide credit guarantees addresses at a fundamental level, the safety concerns of pension fund administrators. Set to start operations in the second quarter with about $200 million, InfraCredit will serve the critical role of providing the much-needed comfort by fund managers. This is necessary for the access and use of part of the funds for profitable investments in viable infrastructure projects without putting at risk the savings of workers.

NSIA in August 2016 announced two major interventions in the housing and agriculture sector. It floated two special purpose vehicles for each of the sectors with a $500 million fund for Real Estate and a $200 million fund for Agriculture. The two funds were firmed up in partnership with the Old Mutual Group, a global investment conglomerate with over 16 million customers and over £300 billion in assets under management.

Under the terms of the co-investment collaboration, NSIA and Old Mutual are to jointly raise the $700 million that would be earmarked for strategic investments in viable real estate and agriculture projects.

The beauty of the partnership is that it will leverage the knowledge, experience and network of Old Mutual’s Agriculture Asset Management to bring institutional investors to invest in Nigeria’s real estate and agriculture sectors.

This is good news for the economy on many fronts. The investments in real estate, which is targeting commercial, industrial and retail real estate investments will stimulate increase of Nigeria’s stock of premium real estate and contribute to growth in the industry. Similarly, the investments in agriculture will provide impetus to food production, job creation and self-sufficiency in key staples.

The ability of the NSIA to identify, structure and firm up partnership with such high profile global investment firms speaks volumes about the promise it holds for the country and what is possible. It is a testimonial to the rising confidence of the investing community in the NSIA – a development that is underscored by its adoption of world class corporate governance principles as well as the obvious competence and integrity of the management team led by Uche Orji as the Managing Director.

NSIA’s groundbreaking entry into the infrastructure financing space holds great promise for the nation’s infrastructure development. By doing very little over the years in the area of building roads, power, housing, healthcare systems, successive governments dug a wide social infrastructure deficit that would require trillions of dollars to fix. According to the 30-year National Integrated Infrastructure Master Plan (NIIMP), the country needs at least $2 trillion, which is roughly N398.1 trillion to bridge the deficit over the next three decades.  In other words, even if the entire annual budget – using the record setting 2017 budget of N7.298 trillion – is wholly dedicated to funding infrastructure – a highly unlikely scenario – it will take over 56 years to deal with this backlog, talk less of that which will be building up.

To say the obvious, the quantum of resources needed to fix the country’s widening infrastructure gap cannot be found in the government’s national treasury. The government has long lost both the advantage of time and financial capacity to make any significant impact. Oil prices have crashed by about 60 percent. National revenues have shrunk by more than half and the country’s economy has only just recovered from a recession. Although the option to borrow to fund infrastructure from organizations such as the World Bank, the International Monetary Fund and the African Development Bank is being explored, the process takes time and often stirs up controversies.

A more feasible option is therefore the private sector. However, the private sector has not stepped forward to fill the gap because of lack of institutional capacity to protect their investments. The coming on board of NSIA is helping to fix this problem. NSIA has the financial muscle, the institutional framework, the governance structure, and capacity to function as a strategic institution that can engage constructively with the global investing community and unlock those funds into the infrastructure sector. And so far, it has done a good job of that by building an attractive and respectable track record of stellar achievements which have earned it very high ratings from respectable global rating agencies.

NSIA’s core mandate as manager of the country’s Sovereign Wealth Fund (SWF) – now with a capital base of $1.50billion gives the institution aptly positions the entity to catalyze infrastructure investments with reputable partners. For one, its investment finance models are transparent and structured according to world class standards. Two, although it was set up by the government, it is largely private sector driven. Three, its funds which comprise a $300M Stabilization Fund (SF), $600M Nigeria Infrastructure Fund (NIF) and the $600M Future Generations Funds (FGF) are all ring fenced. This simply means, the funds are not co-mingled.

The fourth reason is that the agency is managed by a competent team of Nigerian professionals who have made strong marks in the global investing and business community. Mr. Uche Orji, the pioneer Managing Director and Chief Executive Officer of the institution is arguably one of Nigeria’s finest and experienced global investment professionals. Orji, a Harvard Business School alumni, has worked at top executive positions for UBS, New York; Goldman Sachs, London; and JP Morgan, London. Mr Orji was ranked the number one semiconductor analyst out of over 200 European based analysts in 2003 by Thomson/Extel Investor magazine, and top three by Institutional Investor magazine and number five globally by Forbes Magazine. Mr Orji also achieved number one ranking across Europe in all Institutional Investor polls. Bottom-line, NSIA from the structure of its set up and manner of operations lends itself a credible institutional vehicle that the global investing community can do business with.

The Uche Orji led management of the entity have proven the NSIA as a good example of a world class, wholly Nigerian-run institution with both the institutional capacity, experience and technical expertise to represent and do business with the international investing community for the benefit of the country.

The agency has, within the past three years, done an impressive job of profitably investing the $1billion seed capital of the Sovereign Wealth Fund (SWF). For instance, its income grew by 440.6 percent from N26.36 billion in 2015 to N149.83 billion as at year end 2016. The income came from strategic investments that the agency made in public as well as private equities in developed markets such as US, Japan, Europe and developing markets from Brazil to China. In all these investments were denominated across 17 different currencies across the globe.

Also, the total assets of the agency have nearly doubled from N213.67billion in 2015 to over N420.93 billion in 2016. Earlier this year, the National Economic Council (NEC) as a sign of confidence and endorsement of the agency’s handling of the fund approved an additional $250 million from the excess crude account for investment in the fund. So, as it stands today, the NSIA has a core asset value of about $1.5billion that it manages. Added to this is $350 million and another $100 million third party fund which the Authority manages on behalf of the Nigeria Bulk Electricity Trading Company and Debt Management Office Respectively. the FGN Stab fund up to December 2016 was N8.9bn

The NSIA’s successes showcase Nigeria’s potential and the possibilities available to the country, when a fiscal initiative is appropriately set up and manned by a competent team of professionals. How the NSIA is leveraging its $600 million infrastructure fund to radically redefine the concept of infrastructure financing in the country in a way that is sustainable, puts less pressure on government finances and encourages active private sector participation. It is a commendable vehicle and should be supported by all those who want to see Nigeria move forward on the back of a strong infrastructure.







 NSIA: DRIVING THE BUHARI FERTILIZER REVOLUTION



2017 marks a significant shift in the story of fertilizer production and supply in Nigeria. After decades of being defined by scarcity, high prices, non-availability, subsidy, corruption and other related sharp practices, we are now witnessing early signs of a positive reversal in the fertilizer narrative. This is good news for farmers, good news for the economy and a boost to the diversification plan of the government.



Across the country, fertilizer blending plants are roaring back to life; local fertilizer production has been stepped up; importation of raw materials that can be produced locally has been eliminated and is only limited to those that cannot be sourced locally. The fertilizer supply and distribution systems are working efficiently and enhancing access to fertilizer by ordinary farmers. To cap it, for the first time in Nigeria, fertilizer is being sold at record low prices and the government is no longer carrying the burden of subsidizing its supply. This is huge.

In late 2017, the Nigeria Sovereign Investment Authority (NSIA), under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the managing the special purpose vehicle set up to drive the Buhari administration’s fertilizer initiative released impressive statistics on milestones achieved so far. Some of these include the strategic provision of technical support and financing for the revival of eleven fertilizer blendingplants across the country; the production and sale of 8 million bags of fertilizer at N5,500 against the market rate of N8,000 and creation of an estimated 50,000 direct jobs. The report also estimates that the initiative saved the country about $1500million in foreign currency. Overall, the scheme has so far saved the country an estimated N50billion that would have been used to import raw materials from abroad and implementation of subsidy.

Commenting on the development last month, a visibly elated Managing Director of NSIA, Mr. Uche Orji who has done a brilliant job of steering the company said:

“If you put that in context, in 10 months, we sold more than 80% of the entire programme of 2016. We have materials on ground to deliver more than 8 million bags. Soon, more materials will arrive for another four million bags. This programme targets 10 million bags for this year, it has never been done in this country. In our opinion, there is enough fertilizer for everyone. So, anyone hoarding is just wasting his/her time because more is coming.”

According to him the development is a classic case of import substitution:

“In the past, we would have imported these fertilizers and no job would have been created locally. Out of the over one million so far sold to the dealers, not one naira subsidy has been used. There is no need for subsidy.”

It is important to note that the right policy leadership and political support has been central to the very good news that is coming out from government on fertilizer. The MD stated that President, Muhammadu Buhari set the tone early on by outlining a clear vision: to make fertilizer available and affordable to farmers. So when the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) approached him after the elections in 2015 with their concerns about the appalling state of the industry and sought government interventions to fix them he was quick to take action.

The first defining action was his spirited engagement of the President of Morocco, King Mohammed VI. These engagements progressed quite rapidly and eventually culminated to a strategic agreement in December 2016 with the OCP SA, Morocco, a global market leader of phosphate and its derivatives and a key player in the international market that mines, processes, produces, and sells phosphate rock, acid, and fertilizers. The agreement has the strategic goal of aiding collaboration that will help develop the fertilizer industry in Nigeria through supply at highly discounted rates a key raw material for fertilizer – phosphate – that could not be sourced locally.

Next, was the setting up of the Presidential Fertilizer Initiative (PFI) to drive the goal of achieving self-sufficiency in local fertilizer production by 2019 starting with one million metric tons for the 2017 wet season farming and an additional 500, 000 metric tons for the dry season farming.

Another strong feature of the scheme is the collaboration between industry stakeholder and the involvement of private sector led government institution: NSIA, FEPSAN, the Presidential Committee on Fertilizer Initiative (PCFI) under the Chairmanship of the Governor of Jigawa State, Alhaji Mohammed Badaru Abubakar, the Federal Ministry of Agriculture and Rural Development, accredited blending Plants, agro-Dealers and State Governments.

Beyond the political leadership and stakeholder support, what has kept the system from being abused and going the way of previous interventions is the involvement of the NSIA with its business driven framework. Its unique business approach to managing the Presidential Fertilizer Initiative of the Buhari administration is working. As the leading financial driver of the initiative, it did a brilliant job of conceiving and designing a strong business system for managing the project. The system is built on strong financial governance, integrates all the key actors in the fertilizer eco-system using a transparent financing model that defines the relationships and financial transactions between the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN), the eleven fertilizer blending plants, suppliers of the raw materials and off takers which include State Governments, Anchor Borrower Programs and licensed agro distributors/dealers. This ring fenced processes ensure that things are done right and reduces the risk of money being diverted, misappropriated or lost. It has helped through coordination to keep the focus of the system on producing fertilizer at affordable rates.

Specifically, under the arrangement, NSIA’s vehicle (NAIC-NPK) plays the role of a lead financier and coordinator of the project. To ensure a steady supply of the raw materials for fertilizer production, it makes direct payments to FEPSAN’s foreign and local suppliers. The raw materials include Di-ammonium phosphate (DAP) and Muriate of potash (MOP) supplied by OCP Morrocco and other European suppliers. Two are sourced locally: urea from Indorama Eleme Fertilizer & Chemicals Company and Notore Chemical Industries; granulated Limestone from the West Africa Fertilizer Company (WAFERT).

Next, the raw materials are delivered to FEPSAN who in turn pushes them to the blending plants for production. After production, the finished products are sold to off takers at ₦5,000 per 50kg bag – a price that covers production costs and a healthy profit margin.

Off takers in turn resell to farmers at a target price of ₦5,500 per 50kg bag. The N500 is to cover the up takers’costs for transportation, profit and other logistics. In this way, production is guaranteed.

Blending plants are required to provide performance guarantees from their banks to NAIC-NPK as security for the raw materials.  In the event of default, NAIC-NPK calls up the guarantees. This is another potential loophole plugged.

For blending plants their transactions are kept liquid. To state governments, supplies are only made based on the strength of irrevocable standing payment orders that are certified by the ministry of finance. For dealers and distributors supplies are only made on the basis of cash advances. This reduces the likelihood of money missing in the transaction process.

The early successes are helping to validate the principle that when the political leadership provides a clear vision of what it intends to achieve, lends strong political support and the right business systems are properly designed – on the back of a strong governance framework – to deal with known gaps that could be exploited, workable solutions can indeed be found. In many ways, it gives hope that the country can indeed achieve its target of stimulating the growth of the agriculture sector, attaining self-sufficiency in food production, reducing food imports, diversifying the economy as well as enhancing inclusive economic growth. This is good news for the country and for the economy. Especially, given the urgent national imperative of building a robust multi-pillar post-oil economy that can with stand shocks and guarantee a shot at success for every one that is ready to work hard.

These stellar results from the fertilizer initiative are undoubtedly remarkable. They mark a defining historic moment for fertilizer supply in the country: the end of an old troubled era and the beginning of a new one which holds great promise. It is helping to establish that government efforts at fixing seemingly intractable social and economic problems are not necessarily jinxed to fail. That good formulas exist, progress is possible and is not alien to the country.

Overall, it is clear that the Presidential Fertilizer Initiative (PFI) of the Buhari administration has in barely less than one year proven itself in many ways to be a runaway success. It has moved with speed, focus and a determination to succeed and deliver on the president’s charge – to make fertilizer available to farmers at affordable rates. NSIA’s innovative strategy and business driven framework for increasing fertilizer production has proven to be a game changing formula to the fertilizer problem. Its processes and systems that are driving the fertilizer revolution should be fully institutionalized and strengthened.







Kind Regards

Oluyinka Akintunde

Special Adviser, Media & Communications to the Hon. Minister of Finance

Federal Ministry of Finance

Central Business District, Abuja

Email:  oluyinkaakintunde@gmail.com

Phone:  +2348023001052

Sent from Yahoo Mail on AndroidNOTABLE ACHIEVEMENTS BY THE MINISTER OF FINANCE, MRS. KEMI ADEOSUN IN TWO YEARS (DECEMBER 2015 – DECEMBER 2017)









1.   EFFICIENCY UNIT (NOVEMBER 25, 2015)



One of the major initiatives of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the Efficiency Unit (E-Unit). The first action taken by the Minister on assumption of Office was the establishment of an Efficiency Unit in the Federal Ministry of Finance on November 25, 2015.

The Efficiency Unit was established to ensure that all government expenditures are necessary and represent the best possible value for money. Prior to her assumption of office, available records show that the nation’s recurrent expenditure completely dwarfs capital expenditure by a ratio of 84/16. This includes non-wage related overhead expenditure such as travel costs, entertainment, events, printing, IT consumables, and stationeries, among others. Since its creation, the Unit has undertaken programmed reviews of all government overhead expenditure with a view to reducing wastage, promoted efficiency as well as guaranteed quantifiable savings for the country. Specifically, the Efficiency Unit has been monitoring the Ministries, Departments and Agencies (MDAs) of Government, identifying and eliminating wasteful spending, duplication and other inefficiencies; and identifying best practices in procurement and financial management.

The Federal Government currently saves at least N15 billion annually from the services of the Efficiency Unit of the Federal Ministry of Finance. The Unit has also introduced price guidelines and shared services policy among MDAs to increase transparency in the procurement process, while the work processes and practices would be reviewed to identify and eliminate areas of wastage, excess capacity and duplications.

The Efficiency Unit, in its short history, has made several achievements engaging and working with key public sector stakeholders. They include:

i.          Cost Cutting:

The E-Unit has embarked on several cost cutting initiatives that has influenced the issuance of Circulars to all MDAs by the Secretary to the Government of the Federation, the Head of the Civil Service of the Federation, and the National Salaries, Wages and Income Commission. The issuance of these Circulars has led to curtailed and better management of certain recurring processes and activities relating to travels, sitting allowances, souvenirs, and others resulting in savings over N11 billion Naira.

ii.         Promoting Transparency In Payments:

Another tool that has been recommended to the Accountant General of the Federation is the use of debit cards by government officials for payments. This would plug loopholes and improve accountability in spending.

iii.        Procurements:

The E-Unit has initiated some measures to improve the subsisting procurement process to generate savings using the government’s large purchasing power, improve transparency in the procurement process, and reduce the administrative costs associated with the procurement process. Successful outputs include:

a.         Secured discounts ranging from 5-50% from seventeen (17) airlines for local and foreign travels. The Federal Ministry of Finance has recently signed an agreement with Dana Airlines that provides discounts of 50% to all MDAs. The agreements with the other airlines are at various stages of finalization.

b.         The introduction of a Price Checker, a web based platform which is being developed with the Bureau of Public Procurement will provide a portal for vendors to upload prices of their goods which MDAs will use for procurement, thereby providing more transparency and eliminating sharp practices in the procurement process.

c.         The introduction of a Circular on Framework Agreements by the BPP (in progress) which will enable MDAs to pool their demands for standard goods thereby reducing the administrative costs associated with the subsisting procurement process and securing good discounts from suppliers.





2.   PRESIDENTIAL INITIATIVE ON CONTINUOUS AUDIT (PICA)



The Minister of Finance, Mrs. Kemi Adeosun, was instrumental to the establishment of the Presidential Initiative on Continuous Audit (PICA), a critical initiative in the implementation of a Continuous Audit Programme. The Federal Executive Council (FEC) had on 9th March, 2016, approved the establishment of PICA to ensure full accountability of all public funds expended under President Muhammadu Buhari Administration. The mandates of PICA include: validating controls, assessing risks, pruning personnel cost, ensuring compliance with public financial management reform, and detecting errors and making recommendations to management for necessary actions.

Adeosun noted that the establishment of PICA had become necessary in order to put systems and frameworks in place over finance and spending of government revenue.

“Our commitment to a lean and cost effective government remains a priority and the initiatives we are introducing will signal a fundamental change in how Government spends public revenue,” the Minister said.

Since its establishment, the Continuous Audit Team had undertaken series of investigations and recoveries for the Government, including infractions by the staff of Pension Transitional Arrangement Directorate (PTAD), recovery of salaries paid to ex-Diplomats, verification of subsidy claims, personnel costs to Ministries, Departments and Agencies (MDAs), and ghost workers scammers.

                                                     

Audit of PTAD Staff

The Continuous Audit Team conducted investigations into infractions committed by some staff of Pension Transitional Arrangement Directorate (PTAD). This investigation led to disciplinary action against five (5) top management staff of PTAD, including a former Director-General.



Recovery of Salaries Paid to Ex-Diplomats

PICA, in the course of its investigation, discovered that 196 Foreign Service officers continued to receive salaries after exiting the Federal Service. The sum of ₦192 million was collected by these officers as salaries even after leaving the service. The case was handed over to the Economic and Financial Crimes Commission (EFCC) for further investigation and recovery of the aforementioned funds on completion of the investigation.



Verification of Subsidy Claims

In its efforts to ensure steady supply of petroleum products nationwide, the Federal Government took measure aimed at settling outstanding debts owed to members of the Petroleum Products Marketers Association of Nigeria (DAPMA). An inter-agency Committee under the leadership of PICA was set up to verify the claims. Other members of the Committee are the Nigeria Customs Service, Debt Management Office, DPRRA and BOF. The Committee verified and recommended some payments to members of DAPMA and has thus far made remarkable savings for the Federal Government.

The details of achievements recorded are summarized below:



S/N

                                          ITEM



          NUMBER

  1

Number of Marketers Verified

               72

  2

Total Claims

 N45,999,999,865.98

  3

Savings made so far

       N887,108,438.31

  4

1.5% Palliative to FGN warehoused to date

   N1,014,345,777.88



Reduction in Personnel Cost to MDAs

Prior to the establishment of PICA, the personnel cost across Federal MDAs was high, making it difficult to channel enough funds to develop needed critical infrastructure. The intensive and diligent forensic audit of Integrated Payroll and Personnel Information (IPPIS) and nominal roll carried out by PICA led to monthly reduction of personnel cost (salaries) from ₦151 billion in February 2016 to ₦138 billion by August, 2016. Similarly, the exercise led to reduction in pension cost from ₦15 billion to ₦14.5 billion monthly. This reduction has since been sustained through efforts of the Honorable Minister of Finance.



Elimination of Ghost Workers

In the course of the period through its routine audit assignment, PICA has stopped the salaries of over 800 ex-employees, who had continued to draw monthly salaries even after exiting the Federal Service as well as removed over 50,000 ghost workers from the Federal Payroll. The details of the affected employees who had already collected the sum of ₦34 million before discovery have been handed over to the EFCC for investigation and prosecution.

For the first time in the history of this nation, the Federal Government is prosecuting the payroll fraudsters who created fictitious names and accounts. About nine principal suspects were on November 1, 2017 charged before Justice U.P. Kekemeke of Court 14. Those arraigned were Usman Aliyu Dayo, Osuntope Opeyemi, Johnson Adedokun, Ojeifo Robert Sylvanus, Oyebade Ebenezer Ayodeji, Florence Olaolu Dada, Olaolu Haruna Dada, Blessing Ejeh and Aderibigbe Isaac Taiwo.

The suspects are employees of the Office of the Accountant General of the Federation, Federal Ministry of Environment, Federal Ministry of Agriculture and Rural Development, Federal Ministry of Water Resources and Federal Civil Service Commission.

 Payroll Shortfall Verification       

The Federal Government in 2016 received claims of shortfalls in personnel cost from various Ministries, Departments and Agencies across the country. To address these claims, PICA raised teams comprised of over 300 Accountants, Auditors and Administrative officers to undertake the verification of the shortfalls. To accurately profile the actual payroll costs of each of the agency, PICA designed a template to capture the vital financial information/data required for the exercise. The findings are summarized in the table below:

 S/N      No of Agencies            2016 Shortfall Claims (N)       Recommended Shortfall (N)   Savings Recorded (N)

1.         181      101,061,077,642.01    70,780,214,053.29      30,280,863,588.72

 In all, the sum of N30,280,863,588.72 (Thirty Billion, Two Hundred and Eighty Million, Eight Hundred and Sixty-Three Thousand, Five Hundred and Eighty-Eight Naira, Seventy-Two Kobo) was saved on account of this audit exercise.

However, it is important to note that the shortfall across most of the MDAs visited was as a result of shortfall in personnel cost in 2016 Appropriation. Others such as the Nigeria Army were due to the recruitment of about 10,000 soldiers based on presidential directive while shortfall in Defence Mission was on account of foreign exchange differentials.


3.         DEVELOPMENT OF WHISTLE BLOWER POLICY

One strong demonstration of the President Muhammadu Buhari Administration’s political will has been the development of a Whistleblowing Scheme. The Whistleblowing policy, which was developed by the Federal Ministry of Finance in December 2016, empowers citizens to report public corruption.

The primary goal of the policy is to support the fight against financial crimes and corruption by increasing exposure of financial crimes and rewarding whistle blowers. It is hoped that through this policy, there will be increase in accountability and transparency and more funds would be recovered and deployed in financing Nigeria’s infrastructural deficit. To step up the work, the Federal Ministry of Finance through PICA opened a portal where information were supplied, and also recruited competent staff to handle the assignment. Series of petitions have been received, some of which are currently undergoing investigation.

According to Adeosun, over 2,500 reports have been made through various reporting channels as at July 2017, with 365 being actionable tips.

The minister said the tips related to issues of contract inflation, ghost workers, illegal recruitment and misappropriation of funds. Others according to her, include illegal sale of government assets, diversion of revenues and violation of Treasury Single Account (TSA) regulations.

She said, “Thirty-nine per cent (144) of the actionable tips relate to misappropriation and diversion of funds/revenue, 16 per cent (60) relate to ghost workers, illegal recruitment and embezzlement of funds meant for personnel emolument.

“Fifteen per cent (56) relate to violation of TSA regulation, 13 per cent (49) relate to contract inflation/violation of the Procurement Act. Others include failure to carry out projects for which funds have been released and nine per cent (34) relate to non-remittance of pension and National Health Insurance Scheme (NHIS) deductions.”

According to the minister, others include concealed bail-out funds and embezzlement of funds from donor agencies.

She added that a commission of between 2.5 per cent and five per cent of the amount recovered as an incentive would be paid to the whistleblowers that provides information that are original and directly lead to the recovery of stolen or concealed funds or assets.

She disclosed that the sum of N375.8 million had been paid as reward for 20 whistleblowers in the first batch payment, while payment for the next batch would soon be made.

The impact of the Whistleblowing Policy in terms of recoveries has exceeded the Administration’s expectations.  The tighter rein on public finances has allowed the Government to invest US$500 million in country’s Sovereign Wealth Fund, during the recession.


4.  CLEARING OF INHERITED PENSION ARREARS

The Federal Government and the Federal Ministry of Finance have been eulogized by the various workers’ unions for deeming it fit to clear the inherited arrears of pension benefits for 2014, 2015 and 2016. In April 2017, the Federal Government through the Federal Ministry of Finance released N41.5 billion to the National Pension Commission for onward payment to retirees being their accrued pension benefits for 2014, 2015 and 2016.

The Finance Minister also confirmed that the sum of N12.5 billion being outstanding for January, February and March 2017 had been settled based on 2016 appropriation, bringing the tally to over N54 billion. The N41,566,565,184 released to PENCOM was the outstanding appropriated for the year 2014 and 2016 by the National Assembly for the settlement of the retirement benefits of Federal Government employees.


5.  DEVELOPMENT BANK OF NIGERIA (DBN)

The establishment of the Development Bank of Nigeria (DBN) is another milestone of the Federal Government through the Federal Ministry of Finance to spur growth of Micro, Small and Medium Enterprises (MSMEs). The Federal Government had during the 2016 Annual Meetings of the IMF/World Bank reached agreement with the World Bank Group, African Development Bank and the European Investment Bank for the release of $1.3 billion for the take-off of the DBN. The DBN became operationalized in the first quarter of 2017 following the issuance of operating license by the Central Bank of Nigeria (CBN). The Bank met the CBN’s minimum capital requirement of N100 billion as well as the reconstitution of the board of the bank. The DBN has created a credit line of N5 billion to be accessed by MSMEs through its partner financial institutions.



The Minister of Finance, Kemi Adeosun, who led Nigeria’s team to the meeting, explained that the Development Bank of Nigeria (DBN) will focus on SMEs and giving them low cost loans.

In March 2017, the Ministry announced that the Central bank of Nigeria had approved the grant of a Wholesale Development Finance Institution Licence with national authorization to the Development Bank of Nigeria (DBN) Plc. The approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.  The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability. The approval was subject to meeting the minimum capital requirement of N100 billion and the reconstitution of the Board of the Bank and reviewing its organogram.



On March 30, 2017, the Ministry announced the constitution of the  board and management of the Development Bank of Nigeria (DBN). The Management team is led by Mr. Tony Okpanachi, a banker and erstwhile Deputy Managing Director/Deputy CEO, Ecobank Nigeria Limited. Mr Okpanachi will be supported by the Chief Financial Officer, Mrs. Ijeoma Ozulumba and Chief Risk Officer, Mr. Olu Adegbola.



The Board members include:  Chairman, Dr. Shehu Yahaya (who was the interim MD of DBN and former Executive Director, AfDB); Managing Director/Chief Executive, Nigeria Sovereign Investment Authority, Uche Orji and Mohammed  Kalif, of the African Development Bank.



Independent Directors of the DBN are former Group Managing Director/CEO of United Bank for Africa (UBA), Mr. Philips Oduoza; President and CEO, African  Finance Corporation,  Mr. Andrew Alli; Chairman, FBN Merchant Bank, Alhaji Bello Maccido; Founder/Managing Director, JNC International Limited, Mrs Clare Omatseye and the Managing Director, CEO Excel Professional Service Limited, Mr. Oladimeji Alo.





6. VOLUNTARY ASSETS AND INCOME DECLARATION SCHEME (VAIDS)

One of the major initiatives in the history of the Nigerian Government is the Voluntary Assets and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularize their tax status relating to previous tax periods. VAIDS, an initiative of the Kemi Adeosun-led-Federal Ministry of Finance in collaboration with the State Tax Authorities, is a revolutionary programme that provides tax defaulters a nine-month opportunity to voluntarily and truthfully declare previously untaxed assets and incomes. It also ushers in an opportunity to increase the nation’s general tax awareness and compliance. As at May 2017, the total number of taxpayers in Nigeria is just 14 million out of an estimated 70 million who are economically active. This implies only 20 per cent of the economically active Nigerians pay tax, particularly the salary earners. Nigeria’s tax to Gross Domestic Product (GDP) ratio, at just 6%, is one of the lowest in the world (compared to India’s of 16%, Ghana’s of 15.9%, and South Africa’s of 27%). Most developed nations have tax to GDP ratios of between 32% and 35%. VAIDS is aimed at correcting the anomaly, getting the rich and big entrepreneurs to pay tax. Nigeria’s low tax revenues are at variance with the lifestyles of a large number of its people and with the value of assets known to be owned by Nigerians resident around the world. There has been a systemic breakdown of compliance with the tax system with various strategies used to evade tax obligations. These include but are not limited to, transfer of assets overseas, the use of offshore companies in tax havens to secure assets, and the registration of assets in nominee names. In addition, despite having some of the most profitable and well capitalized companies in Africa, the level of tax remittance in Nigeria is very low.



VAIDS has however yielded over $50 million in revenue between June 29, 2017 when it was launched and October 31, 2017. Two foreign companies have also agreed to pay $110 million in regularizing their tax status. About $1 billion additional revenue is being targeted from the scheme. Already, the Federal Government has recruited and trained 2,190 Community Tax Liaison Officers (CTLOs) under the Scheme. Of the 2,190 CTLOs, 1,710 have been deployed to 33 States to raise awareness about the scheme and taxation in general. The States include Adamawa, Cross River, Delta, Edo, Enugu, Kaduna, Kwara, Lagos, Nassarawa, Niger, Ogun and Oyo, among others.

Job creation is one of the spin-offs of the VAIDS initiative, with the scheme expected to create a total of 7,500 opportunities for Nigerians as CTLOs through the N-Power scheme of the Federal Government.

In a recent interview, the Minister of Finance explained that the signing of an Executive Order by the Acting President, Professor Yemi Osinbajo, on Assets Declaration, underlined the seriousness attached to the VAIDS.

According to her, the Federal Government will deploy and heavily rely on technology to increase tax compliance under the VAIDS.



ADDITIONAL BACKGROUND ON VAIDS AND TAXATION



●    Over N17 billion has been realised since the launch of VAIDS;



●  Very low world ranking: Nigeria’s tax-to-GDP ratio is one of the lowest in the world at 6%;



●     The poor are the hardest hit: Tax evasion leaves an unfair burden of payment on those who can afford it least – Nigeria’s poorest people;



●      Regulatory change is enabling easier access to information across the world:

–     International agreements, effective from 2018, make the exchange of banking information across borders, automatic

–     Nigeria has signed agreements with a number of nations (US, UK, Canada, UAE, Switzerland, Mauritius, Panama and Bahamas) – all of whom have pledged support and cooperation to exchange information on citizens that is relevant for tax purposes;



●      Punishment for evasion is severe: All tax evaders – when identified – are subject to the full force of Nigerian and international law:

–     Imprisonment of up to five years

–     Severe extra penalties – up to 100% of the outstanding tax due, compound interest at 21% per annum, forfeiture of assets



B.         The Plan

●      One-off opportunity for evaders to avoid the full force of the law – Between 1 July and 31 December 2017 – evaders can regularise their tax status in exchange for immunity from prosecution of tax offences and a tax audit, and be absolved from penalty charges and interest



●      Less forgiveness for evaders who delay – evaders who delay participation past 31 December 2017 will be liable for interest on overdue tax balances

●      Provision for installmental payment has been built into the scheme

●      Experts in place to assist the Federal Government: Expert, international asset tracers and investigative specialists have been appointed to assist the Federal Government in tracing assets held by Nigerians

●      In line with other proven, international schemes: Recent, similar schemes in 2016 have been implemented successfully in India, Indonesia and South Africa. VAIDS will bring Nigeria in line with international best practice and contribute to worldwide efforts to tackle corruption

●      Much needed funds will be generated and transparently invested – anticipated funds to be raised are at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development


7.  ACCOUNTING SOFTWARE

On March 21, 2017, the Federal Ministry of Finance announced the development of an International Public Sector Accounting Standards (IPSAS) Compliant accounting software suite “OneBook” towards improving public financial management across all levels of Government. This move by the Federal Government through the Finance Ministry is aimed at enhancing efficiency, accountability, and transparency. The OneBook suite offers a complete solution that allows for standardization and seamless exchange of information across all tiers of Government by providing a unified accounting and reporting solution across key areas: government expenditure, financial, treasury and receipts management.  The software package, which was launched at the Federation Account Allocation Committee (FAAC) meeting, captured various revenue types and would impact the entire financial operations from budgeting, through revenue and expenditure management to final accounts.

The software is being made available to all States and Local Governments to support their accounting and reporting processes.


8.  PROJECT NOLLYWOOD ACT

 Project Objectives:

            The objective is to:

(i)                 Sustain the growth of Nigeria’s movie Industry,

(ii)               Encourage the Industry realize its potential of being a significant creator of employment and considerable contributor to GDP

(iii)             Address some of the key challenges currently facing the Industry.



The programme aims to improve and promote key components of the value chain through the provision of grants scheme designed to support existing or aspiring practitioners within the Industry, including the Diaspora.

Project Components

Project ACT-Nollywood has 3 primary components aimed at developing and addressing inhibitors to further growth, which exist along the movie making value chain.  The components are as follows:-

i.                    Film Production Fund (FPF)

ii.                  Capacity Building Fund (CBF)

iii.                Innovative Distribution Fund (IDF)



The (FPF) and (CBF) have been fully implemented while the (IDF) which is the third component of the project is on-going.  The (IDF) covers online, National, Regional and community categories of Nollywood Film distribution and exhibition.  The objectives of IDF are to:

i.                    Improve the distribution network of Nigerian Audio-Visual contents.

ii.                  Cut down on piracy

iii.                Create jobs (direct and indirect)

iv.                Better protect Intellectual Property Rights (IPR) within the Nigerian Entertainment Industry.

     A total sum of N1.8 billion was approved for disbursement to 106 beneficiaries in this component.  N1.335 billion has earlier on the year been disbursed as first tranche to 105 beneficiaries. During the Monitoring and Evaluation (M & E) of this first tranche disbursement, the Project Implementation Unit (PIU) recorded a number of achievements in line with the objectives of the programme as follows:

 i.  15 community cinemas and viewing centers have been established through the grant and this has improved the distribution network of movies in Nigeria.

ii.   The programme has supported 18 firms in strengthening online distribution platforms.  This has helped curbed illegal downloads and piracy.

iii.  256 permanent jobs and 544 temporary jobs have been created through the financial support provided to 105 beneficiaries by the programme.

iv.  The programme has equally aided the extension of the Nollywood Industry to sub-Sahara Africa through the funding of National distributors to expand their distribution capacity and network.  National distributors are expanding their capacity to lip-synching their content in French for onward distribution to the ECOWAS sub-region. Consequent upon the above, the Honourable Minister has approved the disbursement of the balance sum of N420,200,000.00 to 105 IDF beneficiaries in the 2nd/final tranche.


8. ATMProject

The Ministry launched an Asset Tracking and Management Project (ATMProject), through which for the first time, the Government would be able to locate, identify, assess and evaluate all its moveable and immoveable assets. Similarly, a Central Asset Register would be created and domiciled in the Federal Ministry of Finance for recording the actual quantity, value, condition and location of all the capital assets belonging to the Federal Government. Under the International Public Sector reporting Standard (IPSAS) Government is expected to record both its assets and liabilities.

The Assets Tracking and Management Project and the creation of the Assets Register were new initiatives of the Federal Ministry of Finance designed to enhance accountability, promote transparency and deepen efficiency in line with the change agenda of the Administration of President Muhammadu Buhari. The Asset Register would afford the Government to know and monitor in real time online information on the inventory of Government Assets.

A circular signed by the Minister of Finance was dispatched to all Federal Ministries, Departments and Agencies (MDAs) requesting their Accounting Officers  to prepare an inventory of all fixed assets held as at 31st December  2016, to facilitate physical verification by the Project Team.

9.  HOUSING REFINANCING SCHEME

The federal government has launched a N13 billion Federal Civil Servants Mortgage Refinancing Scheme through the Nigeria Mortgage Refinance Company (NMRC). With the scheme, NMRC will refinance mortgages for 5,635 beneficiaries of the federal government workforce.  At the launch of the project, the Minister of Finance, Mrs. Kemi Adeosun said the federal government had earmarked N40 billion in the 2016 Budget for the implementation of a comprehensive housing scheme to address the housing challenges facing the country, improve the living conditions and welfare of the workforce and people, and generate gainful employment for the nation’s teeming youth. Housing under construction in Nasarawa, Ogun, Edo and Enugu States.


10.  PROJECTS FUNDING

At the 2016 World Bank/IMF Meeting, the delegation from Nigeria was able to secure investments into the $500 million irrigation projects covering the Bakalori-Kano River and Hadejia Valley Irrigation. In the power sector, the country secured commitments from Japan International Co-operation Agency to invest in the Jebba Hydro project and also facilitate trade and investment in Nigeria. Furthermore, apart from the commitment of the two Bretton Woods Institutions, the Nigerian delegation was able to secure the cooperation of representatives of other developed countries who were ready to share economic intelligence on how certain challenges in the Nigerian economy could be tackled.


11.  TREASURY SINGLE ACCOUNT (TSA) INITIATIVE:

The TSA is another initiative towards efficient and transparent management of federal government finance and revenue collections that have been implemented in the past year, through the Federal Ministry of Finance.  The Federal Government can monitor and manage revenue from revenue collecting and revenue generating agencies of government, through a window. The Federal Government has so far mopped up over N3 trillion as revenue accruals since the policy of Treasury Single Account commenced.


12.  IPPIS PLATFORM:

The IPPIS project commenced in April 2007 with seven pilot Ministries, Departments and Agencies, with the objective of ensuring centralized payment of salaries; aiding of manpower planning and budgeting as well as reducing financial wastages. At present, capturing of more Agencies on the IPPIS platform is ongoing and the Minister of Finance, Mrs Kemi Adeosun is working tirelessly to ensure that all institutions of government are captured under IPPIS.

NSIA – CHAMPIONING A NEW ERA OF SUSTAINABLE INFRASTRUCTURE FINANCING


The series of initiatives targeting high growth sectors of the Nigerian economy being promoted by the Nigeria Sovereign Investment Authority (NSIA), managers of the $1.5billion Sovereign Wealth Fund (SWF), have all the potentials of having a defining impact on infrastructure financing in the country. They stand out because they are innovative, practical and built on standard frameworks that are designed to encourage profitable sustainable investments by the private sector.

A notable component of the entity’s infrastructure investment strategy is the building of strategic partnerships with reputable global investment companies with a view to attract inflow of global finance for infrastructure development.

Beginning in 2014, the NSIA, under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, has entered into a collaboration with GuarantCo, a leading international credit guarantee firm to explore ways to unlock latent pools of capital for investments in infrastructure. It’s partner, Guarantco, is sponsored by the governments of Australia, United Kingdom, Sweden, Switzerland and Netherlands through the Private Infrastructure Development Group and has had extensive experience in such schemes in diverse economies, some similar to Nigeria’s. The outcome of the collaboration was the establishment of InfraCredit in early 2017.

The Infrastructure Credit Enhancement Company, otherwise called InfraCredit is designed to help address and overcome existing constraints in the supply of local financing to infrastructure projects and help the development of the local financial markets. Being the first of its kind in Nigeria, the company is set to play a critical and game changing role in facilitating access to finance for infrastructure projects. This it will do by providing credit guarantees for infrastructure bonds issued by corporate bodies and state governments to finance viable development projects in the country.

The real revolution that the credit enhancement vehicle brings to the table is its institutional capacity to attract and unlock the massive unused funds from international pension and insurance administrations without putting future savings at risk. Currently, on the local scene, the pension fund has accumulated close to N6trillion in assets and is still growing. The coming on stream of InfraCredit to provide credit guarantees addresses at a fundamental level, the safety concerns of pension fund administrators. Set to start operations in the second quarter with about $200 million, InfraCredit will serve the critical role of providing the much-needed comfort by fund managers. This is necessary for the access and use of part of the funds for profitable investments in viable infrastructure projects without putting at risk the savings of workers.

NSIA in August 2016 announced two major interventions in the housing and agriculture sector. It floated two special purpose vehicles for each of the sectors with a $500 million fund for Real Estate and a $200 million fund for Agriculture. The two funds were firmed up in partnership with the Old Mutual Group, a global investment conglomerate with over 16 million customers and over £300 billion in assets under management.

Under the terms of the co-investment collaboration, NSIA and Old Mutual are to jointly raise the $700 million that would be earmarked for strategic investments in viable real estate and agriculture projects.

The beauty of the partnership is that it will leverage the knowledge, experience and network of Old Mutual’s Agriculture Asset Management to bring institutional investors to invest in Nigeria’s real estate and agriculture sectors.

This is good news for the economy on many fronts. The investments in real estate, which is targeting commercial, industrial and retail real estate investments will stimulate increase of Nigeria’s stock of premium real estate and contribute to growth in the industry. Similarly, the investments in agriculture will provide impetus to food production, job creation and self-sufficiency in key staples.

The ability of the NSIA to identify, structure and firm up partnership with such high profile global investment firms speaks volumes about the promise it holds for the country and what is possible. It is a testimonial to the rising confidence of the investing community in the NSIA – a development that is underscored by its adoption of world class corporate governance principles as well as the obvious competence and integrity of the management team led by Uche Orji as the Managing Director.

NSIA’s groundbreaking entry into the infrastructure financing space holds great promise for the nation’s infrastructure development. By doing very little over the years in the area of building roads, power, housing, healthcare systems, successive governments dug a wide social infrastructure deficit that would require trillions of dollars to fix. According to the 30-year National Integrated Infrastructure Master Plan (NIIMP), the country needs at least $2 trillion, which is roughly N398.1 trillion to bridge the deficit over the next three decades.  In other words, even if the entire annual budget – using the record setting 2017 budget of N7.298 trillion – is wholly dedicated to funding infrastructure – a highly unlikely scenario – it will take over 56 years to deal with this backlog, talk less of that which will be building up.

To say the obvious, the quantum of resources needed to fix the country’s widening infrastructure gap cannot be found in the government’s national treasury. The government has long lost both the advantage of time and financial capacity to make any significant impact. Oil prices have crashed by about 60 percent. National revenues have shrunk by more than half and the country’s economy has only just recovered from a recession. Although the option to borrow to fund infrastructure from organizations such as the World Bank, the International Monetary Fund and the African Development Bank is being explored, the process takes time and often stirs up controversies.

A more feasible option is therefore the private sector. However, the private sector has not stepped forward to fill the gap because of lack of institutional capacity to protect their investments. The coming on board of NSIA is helping to fix this problem. NSIA has the financial muscle, the institutional framework, the governance structure, and capacity to function as a strategic institution that can engage constructively with the global investing community and unlock those funds into the infrastructure sector. And so far, it has done a good job of that by building an attractive and respectable track record of stellar achievements which have earned it very high ratings from respectable global rating agencies.

NSIA’s core mandate as manager of the country’s Sovereign Wealth Fund (SWF) – now with a capital base of $1.50billion gives the institution aptly positions the entity to catalyze infrastructure investments with reputable partners. For one, its investment finance models are transparent and structured according to world class standards. Two, although it was set up by the government, it is largely private sector driven. Three, its funds which comprise a $300M Stabilization Fund (SF), $600M Nigeria Infrastructure Fund (NIF) and the $600M Future Generations Funds (FGF) are all ring fenced. This simply means, the funds are not co-mingled.

The fourth reason is that the agency is managed by a competent team of Nigerian professionals who have made strong marks in the global investing and business community. Mr. Uche Orji, the pioneer Managing Director and Chief Executive Officer of the institution is arguably one of Nigeria’s finest and experienced global investment professionals. Orji, a Harvard Business School alumni, has worked at top executive positions for UBS, New York; Goldman Sachs, London; and JP Morgan, London. Mr Orji was ranked the number one semiconductor analyst out of over 200 European based analysts in 2003 by Thomson/Extel Investor magazine, and top three by Institutional Investor magazine and number five globally by Forbes Magazine. Mr Orji also achieved number one ranking across Europe in all Institutional Investor polls. Bottom-line, NSIA from the structure of its set up and manner of operations lends itself a credible institutional vehicle that the global investing community can do business with.

The Uche Orji led management of the entity have proven the NSIA as a good example of a world class, wholly Nigerian-run institution with both the institutional capacity, experience and technical expertise to represent and do business with the international investing community for the benefit of the country.

The agency has, within the past three years, done an impressive job of profitably investing the $1billion seed capital of the Sovereign Wealth Fund (SWF). For instance, its income grew by 440.6 percent from N26.36 billion in 2015 to N149.83 billion as at year end 2016. The income came from strategic investments that the agency made in public as well as private equities in developed markets such as US, Japan, Europe and developing markets from Brazil to China. In all these investments were denominated across 17 different currencies across the globe.

Also, the total assets of the agency have nearly doubled from N213.67billion in 2015 to over N420.93 billion in 2016. Earlier this year, the National Economic Council (NEC) as a sign of confidence and endorsement of the agency’s handling of the fund approved an additional $250 million from the excess crude account for investment in the fund. So, as it stands today, the NSIA has a core asset value of about $1.5billion that it manages. Added to this is $350 million and another $100 million third party fund which the Authority manages on behalf of the Nigeria Bulk Electricity Trading Company and Debt Management Office Respectively. the FGN Stab fund up to December 2016 was N8.9bn

The NSIA’s successes showcase Nigeria’s potential and the possibilities available to the country, when a fiscal initiative is appropriately set up and manned by a competent team of professionals. How the NSIA is leveraging its $600 million infrastructure fund to radically redefine the concept of infrastructure financing in the country in a way that is sustainable, puts less pressure on government finances and encourages active private sector participation. It is a commendable vehicle and should be supported by all those who want to see Nigeria move forward on the back of a strong infrastructure.

 NSIA: DRIVING THE BUHARI FERTILIZER REVOLUTION

 2017 marks a significant shift in the story of fertilizer production and supply in Nigeria. After decades of being defined by scarcity, high prices, non-availability, subsidy, corruption and other related sharp practices, we are now witnessing early signs of a positive reversal in the fertilizer narrative. This is good news for farmers, good news for the economy and a boost to the diversification plan of the government.



Across the country, fertilizer blending plants are roaring back to life; local fertilizer production has been stepped up; importation of raw materials that can be produced locally has been eliminated and is only limited to those that cannot be sourced locally. The fertilizer supply and distribution systems are working efficiently and enhancing access to fertilizer by ordinary farmers. To cap it, for the first time in Nigeria, fertilizer is being sold at record low prices and the government is no longer carrying the burden of subsidizing its supply. This is huge.

In late 2017, the Nigeria Sovereign Investment Authority (NSIA), under the supervision of the Honourable Minister of Finance, Mrs. Kemi Adeosun, is the managing the special purpose vehicle set up to drive the Buhari administration’s fertilizer initiative released impressive statistics on milestones achieved so far. Some of these include the strategic provision of technical support and financing for the revival of eleven fertilizer blendingplants across the country; the production and sale of 8 million bags of fertilizer at N5,500 against the market rate of N8,000 and creation of an estimated 50,000 direct jobs. The report also estimates that the initiative saved the country about $1500million in foreign currency. Overall, the scheme has so far saved the country an estimated N50billion that would have been used to import raw materials from abroad and implementation of subsidy.

Commenting on the development last month, a visibly elated Managing Director of NSIA, Mr. Uche Orji who has done a brilliant job of steering the company said:

“If you put that in context, in 10 months, we sold more than 80% of the entire programme of 2016. We have materials on ground to deliver more than 8 million bags. Soon, more materials will arrive for another four million bags. This programme targets 10 million bags for this year, it has never been done in this country. In our opinion, there is enough fertilizer for everyone. So, anyone hoarding is just wasting his/her time because more is coming.”

According to him the development is a classic case of import substitution:

“In the past, we would have imported these fertilizers and no job would have been created locally. Out of the over one million so far sold to the dealers, not one naira subsidy has been used. There is no need for subsidy.”

It is important to note that the right policy leadership and political support has been central to the very good news that is coming out from government on fertilizer. The MD stated that President, Muhammadu Buhari set the tone early on by outlining a clear vision: to make fertilizer available and affordable to farmers. So when the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN) approached him after the elections in 2015 with their concerns about the appalling state of the industry and sought government interventions to fix them he was quick to take action.

The first defining action was his spirited engagement of the President of Morocco, King Mohammed VI. These engagements progressed quite rapidly and eventually culminated to a strategic agreement in December 2016 with the OCP SA, Morocco, a global market leader of phosphate and its derivatives and a key player in the international market that mines, processes, produces, and sells phosphate rock, acid, and fertilizers. The agreement has the strategic goal of aiding collaboration that will help develop the fertilizer industry in Nigeria through supply at highly discounted rates a key raw material for fertilizer – phosphate – that could not be sourced locally.

Next, was the setting up of the Presidential Fertilizer Initiative (PFI) to drive the goal of achieving self-sufficiency in local fertilizer production by 2019 starting with one million metric tons for the 2017 wet season farming and an additional 500, 000 metric tons for the dry season farming.

Another strong feature of the scheme is the collaboration between industry stakeholder and the involvement of private sector led government institution: NSIA, FEPSAN, the Presidential Committee on Fertilizer Initiative (PCFI) under the Chairmanship of the Governor of Jigawa State, Alhaji Mohammed Badaru Abubakar, the Federal Ministry of Agriculture and Rural Development, accredited blending Plants, agro-Dealers and State Governments.

Beyond the political leadership and stakeholder support, what has kept the system from being abused and going the way of previous interventions is the involvement of the NSIA with its business driven framework. Its unique business approach to managing the Presidential Fertilizer Initiative of the Buhari administration is working. As the leading financial driver of the initiative, it did a brilliant job of conceiving and designing a strong business system for managing the project. The system is built on strong financial governance, integrates all the key actors in the fertilizer eco-system using a transparent financing model that defines the relationships and financial transactions between the Fertilizer Producers and Suppliers Association of Nigeria (FEPSAN), the eleven fertilizer blending plants, suppliers of the raw materials and off takers which include State Governments, Anchor Borrower Programs and licensed agro distributors/dealers. This ring fenced processes ensure that things are done right and reduces the risk of money being diverted, misappropriated or lost. It has helped through coordination to keep the focus of the system on producing fertilizer at affordable rates.

Specifically, under the arrangement, NSIA’s vehicle (NAIC-NPK) plays the role of a lead financier and coordinator of the project. To ensure a steady supply of the raw materials for fertilizer production, it makes direct payments to FEPSAN’s foreign and local suppliers. The raw materials include Di-ammonium phosphate (DAP) and Muriate of potash (MOP) supplied by OCP Morrocco and other European suppliers. Two are sourced locally: urea from Indorama Eleme Fertilizer & Chemicals Company and Notore Chemical Industries; granulated Limestone from the West Africa Fertilizer Company (WAFERT).

Next, the raw materials are delivered to FEPSAN who in turn pushes them to the blending plants for production. After production, the finished products are sold to off takers at ₦5,000 per 50kg bag – a price that covers production costs and a healthy profit margin.

Off takers in turn resell to farmers at a target price of ₦5,500 per 50kg bag. The N500 is to cover the up takers’costs for transportation, profit and other logistics. In this way, production is guaranteed.

Blending plants are required to provide performance guarantees from their banks to NAIC-NPK as security for the raw materials.  In the event of default, NAIC-NPK calls up the guarantees. This is another potential loophole plugged.

For blending plants their transactions are kept liquid. To state governments, supplies are only made based on the strength of irrevocable standing payment orders that are certified by the ministry of finance. For dealers and distributors supplies are only made on the basis of cash advances. This reduces the likelihood of money missing in the transaction process.

The early successes are helping to validate the principle that when the political leadership provides a clear vision of what it intends to achieve, lends strong political support and the right business systems are properly designed – on the back of a strong governance framework – to deal with known gaps that could be exploited, workable solutions can indeed be found. In many ways, it gives hope that the country can indeed achieve its target of stimulating the growth of the agriculture sector, attaining self-sufficiency in food production, reducing food imports, diversifying the economy as well as enhancing inclusive economic growth. This is good news for the country and for the economy. Especially, given the urgent national imperative of building a robust multi-pillar post-oil economy that can with stand shocks and guarantee a shot at success for every one that is ready to work hard.

These stellar results from the fertilizer initiative are undoubtedly remarkable. They mark a defining historic moment for fertilizer supply in the country: the end of an old troubled era and the beginning of a new one which holds great promise. It is helping to establish that government efforts at fixing seemingly intractable social and economic problems are not necessarily jinxed to fail. That good formulas exist, progress is possible and is not alien to the country.

Overall, it is clear that the Presidential Fertilizer Initiative (PFI) of the Buhari administration has in barely less than one year proven itself in many ways to be a runaway success. It has moved with speed, focus and a determination to succeed and deliver on the president’s charge – to make fertilizer available to farmers at affordable rates. NSIA’s innovative strategy and business driven framework for increasing fertilizer production has proven to be a game changing formula to the fertilizer problem. Its processes and systems that are driving the fertilizer revolution should be fully institutionalized and strengthened.



Kind Regards

Oluyinka Akintunde

Special Adviser, Media & Communications to the Hon. Minister of Finance

Federal Ministry of Finance

Central Business District, Abuja

Email:  oluyinkaakintunde@gmail.com

Phone:  +2348023001052

Source- TVC

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