Business
How Nigeria lost N1.4tr to waivers – Okonjo-Iwela
… Customs contradict Okonjo-Iweala
ABUJA – Nigeria lost N1.4 trillion through import duty waivers and concessions given in the last three years, according to documents from the Nigerian Customs Service, contradicting claims by the Finance Minister that N170.7 billion was lost in the period.
Mrs. Okonjo-Iwela had said in her response to the 50 questions by the House of Representatives that a total of N170.7 billion was conceeded through import duty waivers and exemptions in 2011-2013.
She said the amounts were N55.965 billion in 2011, N55.345 billion in 2012 and N59.4 billion in 2013.
But documents from the Customs, obtained by Daily Trust on Friday, reveal that a total of N1.435 trillion was lost through import duty waivers and concessions since 2011.
In 2011, about N480 billion was lost, through waiving N389 billion under the fuel, lubricants and similar products category for 149 beneficiaries, and N91 billion through other concessions to 290 companies.
The same amount of N480 billion was lost in 2012, with N288 billion going to companies trading in oil and similar products and the remaining N191 billion being lost through other concessions.
Another N474 billion was lost in 2013. The breakdown of that shows that N359 billion went to 80 oil firms while N114 billion was lost through concessions to another 287 companies.
The Customs documents indicate that about 65 percent of beneficiaries received the waiver/concessions for goods not approved by the government, which ordinarily should be limited to raw materials, machinery and spare parts.
The inclusion by the Finance Ministry of “other goods” in the categories eligible for concessions, according to the Customs, enabled finished goods that add no economic value to the country to be imported. These goods include fish, bullet-proof vehicles, kola nut, palm oil and others.
A spokesman for the Finance Ministry did not respond to questions emailed by Daily Trust yesterday, but he had said previously that, under the existing policy, import concessions are given as incentives to critical sectors for the greater good.
The Customs records show that the concessions in 2011-2013 were granted mostly to fuel dealers, with Conoil being the biggest beneficiary among them in 2013, with N53 billion.
Oando was next with N22 billion, followed by NIPCO Plc (N19 billion), Sahara Energy (N14 billion) and Folawiyo Energy (N12billion).
In 2011, the oil firm that benefited most was still Oando with N83 billion, followed by Capital Oil and Gas (N47 billion), Integrated Oil and Gas (N20 billion), Folawiyo Energy (N18 billion) and Sahara Energy (N14 billion).
The documents show that in 2012, the Nigerian National Petroleum Corporation (NNPC) was the biggest beneficiary, getting N80 billion in concessions, and Sopon Nigeria Ltd was the highest non-oil beneficiary in 2011, netting about N33 billion.
Coscharis Motors, which supplied Aviation Minister Stella Oduah’s controversial bulletproof cars and supplied 200 cars to the African First Ladies summit in 2012, received waivers of N400 million in 2011 and N698 million in 2013.
Other beneficiaries of import tax concessions include companies in the Dangote Group, the African First Ladies Peace Mission (AFLPM), Inspector General of Police, Chief of Army Staff, Central Bank of Nigeria, Bayelsa State government, Minister of Police Affairs, Nigerian Police Force, Sokoto State Government, Akwa Ibom State Government and the Watchtower Society.
N/Assembly to check abuses
When contacted on Monday, chairman of the Senate Committee on Finance, Senator Ahmed Mohammed Makarfi (PDP, Kaduna), said they were aware that waivers that do not have any significant benefit to the ordinary man were being granted.
“We are aware of waivers based on returns made to our committee sometime last year. About 60 percent of it went to a single businessman and his business empire…. I don’t believe that the ordinary man derived significant benefit from (such waivers),” he said.
Makarfi said “there is also a bill that if promptly considered can be expanded to curtail such waivers. The way to deal with this issue is through legislation and it’s our collective responsibility to do so, not continuing investigations and investigations.”
He said documents from Customs show that in 2013 they had collection shortfall of N243.69 billion due many factors including waivers, concessions, duty exemptions and other policies.
Daily Trust sought to get the Finance Ministry’s reaction to the revelation in the Customs documents yesterday, but Mrs Okonjo-Iweala spokesman Paul Nwabuikwu did not respond to emailed questions.
However, Nwabuikwu had issued a statement on Friday in response to a story done by Sahara Reporters which said the minister understated the amounts lost to the import waivers in 2011-2013.
The statement said “the waivers and exemptions policy is a direct government intervention whose objective is to provide incentives to improve industrial competiveness and support job creation in the economy.
“This policy, also implemented by other emerging economies such as South Korea and Malaysia, was misapplied in the past through implementation in a manner that created an unlevel playing field and gave unfair advantage to some individuals.
“The policy was revised and strengthened starting 2012 and is now largely applied on a sectoral basis.
“Saharareporters arrived at the conclusion that the country has lost $9 billion because it considers every waiver granted by government to critical sectors such as manufacturing, agriculture, power, gas etc as fraudulent and as a loss to the nation.
“This implies that Saharareporters doesn’t understand government policy and the importance of giving incentives to industries. We do not share that view and there is no question of loss to the country when it is government policy. The policy choice is between customs revenue and incentive revenues for industries. The government chose the latter because we believe the country stands to gain more from the incentives.”
– DAILY TRUST
The need for stronger regional collaboration, government-private sector synergy, and innovative market solutions to unlock Africa’s economic potential has been brought to the fore.
Group CEO of the Nigerian Exchange Group Plc (NGX Group), Temi Popoola, shed light on the transformative potential of Africa’s capital markets at the launch of the Ethiopian Securities Exchange (ESX).
The NGX Group’s strategic investment in ESX underscores its leadership in advancing Africa’s capital market infrastructure. “The launch of ESX represents a pivotal moment for Ethiopia and the broader African financial landscape,” Popoola stated. “ESX will serve as a crucial mechanism for capital formation and market liquidity, driving sustainable economic growth.”
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Expounding on NGX Group’s investment rationale, Popoola highlighted Ethiopia’s immense market potential and the shared vision of fostering economic growth through innovation. “Our partnership transcends traditional investment parameters,” he explained. “It is about ensuring that ESX evolves into a key player in Africa’s financial ecosystem, enabling cross-border investments and setting benchmarks for market development.”
Popoola also drew parallels with global success stories like India, which has leveraged its capital markets to achieve significant economic transformation. He emphasized the importance of responsible market opening to attract local and continental capital. “By following this path, Ethiopia can become a financial hub in Africa,” he remarked.
Prime Minister Abiy Ahmed lauded the launch of ESX as a transformative milestone in the country’s journey toward economic modernization. “Today, we have officially rung the bell to launch the Ethiopian Securities Exchange, our nation’s first stock exchange,” the Prime Minister announced on X. “This is a call to global investors: Ethiopia offers immense potential, a fast-growing economy, and a clear trajectory toward shared prosperity.”
CEO of the Ethiopian Securities Exchange, Tilahun Esmael Kassahun, expressed confidence in the partnership with NGX Group. “We are pleased to welcome NGX Group as a strategic partner, building upon the existing support we continue to receive from them,” he said. Kassahun also emphasized the value of NGX Group’s expertise in shaping ESX’s growth and success.
Drawing from NGX Group’s six decades of experience, Popoola shared insights on diversifying financial instruments and expanding access to investment opportunities. “With the right mix of innovation, policy support, and regional collaboration, Ethiopia’s capital market can play a transformative role in driving economic development and establish itself as a leader in Africa’s financial ecosystem,” he concluded.
With the ESX poised to redefine Ethiopia’s financial landscape, NGX Group’s involvement highlights the critical role of partnerships and shared expertise in advancing Africa’s economic narrative.
The Office of the Auditor-General of the Federation has uncovered financial irregularities amounting to ₦514 billion in the 2021 operations of the Nigerian National Petroleum Company Limited (NNPC Ltd).
The revelations were contained in a comprehensive audit report highlighting non-compliance and internal control weaknesses within Ministries, Departments, and Agencies (MDAs) during the 2021 financial year.
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Breakdown of Infractions
The audit detailed four major financial discrepancies within NNPCL:
“Irregular Deductions: A total of ₦343.64 billion was deducted from domestic crude oil sales at source without proper documentation.
“Sinking Fund Deposits: ₦83.66 billion, categorized as miscellaneous income, was retained in a sinking fund account.
“Unauthorised Refinery Deductions: ₦82.95 billion was deducted from federation revenue purportedly for refinery rehabilitation.
“Unsubstantiated Payments: ₦3.75 billion was flagged for transactions related to petrol sales that lacked proper verification.
The Auditor-General’s report stated that these financial activities violated the 1999 Constitution and the Financial Regulations Act of 2009, underscoring significant lapses in compliance with statutory guidelines.
According to the report, NNPCL generated ₦484.73 billion from domestic crude oil sales in March and May 2021.
However, ₦343.64 billion was deducted for various purposes, including “Value Shortfall,” “Strategic Stock Holding Cost,” and “Pipeline Maintenance.”
The deductions were made unilaterally by NNPCL without adequate documentation or justification.
Additionally, the report flagged ₦50 billion of the net payable amount for May 2021 as unaccounted for, creating a significant gap in the federation’s revenue.
“Audit observed from the review of NNPC SAP payment record for March and May 2021 payments that the sum of ₦484.73bn was the gross amount generated for the sale of domestic crude for the months of March and May 2021.
“The sum of ₦343.64bn from the gross amount was unilaterally deducted from the gross domestic crude sales as NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.
“The details of each of the cost components deducted were not provided for audit review. Hence, the reasons for the deductions could not be justified by the management.”
On the unremitted ₦50 billion from May 2021, the report noted: “In the month of May, the net payable that could have been remitted ought to have been ₦127.075bn, but only the sum of ₦77.075bn was remitted, leaving an unremitted balance of N50bn to the Federation Account, which has remained unaccounted for.”
The report attributed these anomalies to weaknesses in NNPCL’s internal control systems, warning of the risks they pose to public funds.
It read, “The above anomalies could be attributed to weaknesses in the internal control system at NNPC, now NNPC Ltd. This is a potential loss of Federation revenue, diversion of public funds, or misapplication or misappropriation of funds.”
The success of the maiden edition of the Lagos Shopping Festival (LSF), Africa’s first 72-hour non-stop commerce and entertainment event has been credited to the Governor of Lagos State, Babajide Sanwo-Olu.
This is the view of Managing Director/Chief Strategist of Chain Reactions Africa Ltd, Israel Jaiye Opayemi, one of the main organisers of the event.
According to Opayemi, though Chain Reactions Africa conceptualised the event, the festival could be rightly described as the Governor’s baby and owes its success to his leadership. “Firstly, the Lagos Shopping Festival could not have come to fruition if the Governor did not buy into our audacious plan when we first presented the idea to him during the Covid-19 pandemic in 2020. Secondly, it was the Governor’s exemplary leadership of the project as its Chief Marketing Officer which attracted the buy-in of key sponsors like Zenith Bank, Tolaram Group, First Bank Plc, and Guinness Nigeria Plc,” Opayemi revealed.
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While the duo of Zenith Bank and First Bank provided their bank on wheel platforms for buyers at the Lagos Shopping Festival, they also supported the Vendors with special Point of Sale Machines with which to process payments from buyers. The banks were also seen marketing their diverse banking products to guests within the shopping arena.
For Tolaram, it was a time to support the citizens and give back to society. Guests at the Lagos Shopping Festival were freely given some of the products of the group such as PowerOil, Indomie and Kellogg’s packaged into goodie bags and given out to prospective buyers at the shopping arena. The Children’s Arena was however activated by Indomie with the children entertained by Santa Claus within a well-equipped arena manned by the Indomie Brands team and the Lagos State Safety Marshalls. The children were daily treated to free Indomie meals daily and given various gifts to go home with.
On its part, Guinness Nigeria came through as the real life of the Nigerian party by organizing product sampling activation for the teeming guests at the festival using brands such as Singleton, Johnnie Walker, Ciroc, Don Royale and Captain Morgan to deliver pleasant experiences to guests aside from Guinness and Malta Guinness.
While unveiling the identity of the festival last month, Governor Babajide Sanwo-Olu had thanked the management of Zenith Bank Plc, Tolaram Africa Group, Guinness Nigeria Plc and First Bank of Nigeria for supporting the idea of a Lagos Shopping Festival, describing it as a value addition on the state’s tourism calendar and the overall efforts to grow the State’s GDP. The Governor further said, “I must specially acknowledge your pioneering sponsorship role. It is easy for a corporate sponsor to jump on the sponsorship band wagon of an already established festival and fund it. But you are supporting the maiden edition of this Lagos Shopping Festival with us. The competition is watching you now. Do not build this brand with us and yield the space for the competition to take over. I do hope you would all commit long term to this brilliant initiative.”
On his part, Girish Sharma, CEO Guinness Nigeria Plc, expressed enthusiasm for the initiative. “Lagos is the commercial heartbeat of Nigeria and Africa’s entertainment capital, and the Lagos Shopping Festival captures its essence. We see opportunities in this initiative because it is a creative fusion of commerce and entertainment. This partnership reflects our dedication to fostering economic opportunities and support the nation’s vibrant entertainment industry.”
A first-of-its-kind, the festival was a convergence of commerce and entertainment, bringing together buyers and sellers in the MSME ecosystem, and hordes of fun-seekers who were entertained with thrilling performances by A-list entertainers, including Adekunle Gold, Wande Coal, Teni, Young Jonn, BNXN, Ayo Maff, SB Live and EmmaOMG. The list also included some of Nigeria’s most sought after DJs such as DJ Neptune, DJ YK Mule, DJ Baddo while Gbenga Adeyinka the 1st and Larry J dished out rib-cracking comedy performances.
Held from 23rd to 25th Day of December 2024, at the iconic Mobolaji Johnson Arena, Onikan Stadium, Lagos, the Lagos Shopping Festival saw thousands of fans throng the main venue and select Lagos malls during the three-day period to bag the latest bargains from local and top global brands.
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