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NSE: Index drops further by 2.11%, amid sell pressure

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NSE: Market indices extend growth by 0.35%

…As Report says Trade misinvoicing cost Nigeria $2.2bn in 2014***

Sell pressure was persistent on the Nigerian Stock Exchange (NSE) on Wednesday with major blue chips recording price depreciation forcing the index to drop further by 2.11 per cent.

Dangote Cement, one of the highly capitalised equity, recorded the highest loss to lead the laggards’ table dropping by N7 to close at N209 per share.

Nigerian Breweries trailed with a loss of N5.60 to close at N82.40, while Stanbic IBTC shed N5.25 to close at N47.25 per share.

Guinness declined by 40k to close at N73, while Presco dipped N1.80 to close at N56.20 per share.

Consequently, the All-Share Index declined further by 701.61 points or 2.11 per cent to close at 32,466.27 as against 33,167.88 on Tuesday.

Similarly, the market capitalisation which opened at N12.108 trillion shed N206 billion to close at N11.852 trillion.

On the other hand, International Breweries led the gainers’ table, growing by N3.05 to close at N33.55 per share.

Air Service followed with a gain of 60k to close at N6.60, while Forte Oil gained 40k to close at N22 per share.

Oando gained 25k to close at N5.30, while C & I Leasing increased by 20k to close at N2.80 per share.

In the same vein, the volumes of shares traded declined by 31.26 per cent, while the value of shares dropped by 37.06 per cent.

Specifically, a total of 212.51 million shares valued at N3.77 billion were exchanged by investors in 3, 211 deals.

This was in contrast with a turnover of 309.16 million shares worth N5.99 billion traded in 3,418 deals on Tuesday.

Guaranty Trust Bank was the most active stock, trading 43.59 million shares valued at N1.63 billion.

Zenith Bank followed with an account of 29.564 million shares worth N695.77 million, while FCMB Group traded 22.19 million shares valued at   N33.64 million.

Fidelity Bank traded 15.23 million shares worth N30.55 million, while FBN Holdings sold a total of 13.98 million shares valued at N114.52 million.

Meanwhile, a new study by Global Financial Integrity (GFI), says that the potential loss of revenue by Nigeria to misinvoicing in 2014 was approximately 2.2 billion dollars.

This is according to an analysis of trade misinvoicing it carried out on Nigeria for 2014.
A statement issued by its Managing Director, Mr Tom Cardamone, on Wednesday in Washington DC, said the amount represents four per cent of total annual government revenue as reported to the International Monetary Fund (IMF).

“Put still another way, the estimated value gap of all imports and exports represents approximately 15 per cent of the country’s total trade.”

The report which was published with the support of the Ford Foundation is titled: “Nigeria: Potential Revenue Losses Associated with Trade Misinvoicing.”
According to Cardamone, the report analyses Nigeria’s bilateral trade statistics for 2014 (the most recent year for which sufficient data are available) which are published by the United Nations Comtrade.

He said that the detailed breakdown of bilateral Nigerian trade flows in Comtrade allowed for the computation of trade value gaps that are the basis for trade misinvoicing estimates.
He added that import gaps represent the difference between the value of goods Nigeria reports having imported from its partner countries and the corresponding export reports by Nigeria’s trade partners.

“Export gaps represent the difference in value between what Nigeria reports as having exported and what its partners report as imported.
“The portion of revenue lost due to the misinvoicing of exports was 1.3 billion dollars during the year which was related to a reduction in corporate income taxes.

“The portion of revenue lost due to the misinvoicing of imports was 880 million dollars.
“This amount can be further divided into its component parts: uncollected Value Added Tax (VAT), 100 million dollars, customs duties 365 million dollars and corporate income tax 415 million dollars.”

Cardamone added that lost revenue due to misinvoiced exports was 1.3 billion dollars for the year, a figure he said was related to lower than expected corporate income and royalties.

He also said that the report’s examination of the underlying commodity groups which comprise Nigeria’s global trade showed that a large amount of lost revenue of 200 million dollars was related to import under-invoicing of just five products.
Those products and the related estimated revenue losses include: vehicles 100 million dollars, iron and steel products 40 million dollars, electrical machinery 20 million dollars, ceramics 20 million dollars and aluminum products 20 million dollars.

He also said that lost revenue due to mispriced exports which stood at 1.3 billion dollars might be related to the mineral fuels trade, given that this category of goods makes up over 90 per cent of all exports.
He said that the report added that trade misinvoicing occurs in four ways: under-invoicing of imports or exports and over-invoicing of imports or exports.

“In the case of import under-invoicing, fewer VAT and customs duties are collected due to the lower valuation of goods.
“When import over-invoicing occurs (when companies pay more than would normally be expected for a product), corporate revenues are lower and therefore less income tax is paid.

“In export under-invoicing the exporting company collects less revenue than would be anticipated and, therefore, reports lower income.
“Thus, it pays less income tax. Corporate royalties are also lower.”
Cardamone said that total misinvoicing gaps related to imports could be broken down by under-invoicing which was 2.4 billion dollars and over-invoicing which was 1.9 billion dollars.

“It should be noted that these figures represent the estimated value of the gap between what was reported by Nigeria and its trading partners.
“The loss in government revenue is a subset of these amounts and is based on VAT rates.
“It represents five per cent, customs duties 15.2 per cent, corporate income taxes 22.4 per cent and royalties 0.2 per cent which are then applied to the value gap.
“Export misinvoicing gaps were a massive 5.9 billion dollars for export under-invoicing and 5.6 billion dollars for export over-invoicing.

“Lost corporate income taxes and royalties are then applied to export under-invoicing amounts to calculate lost government revenue.”
The statement quoted GFI President, Mr Raymond Baker, as saying that the practice of trade misinvoicing had become normalised in many categories of international trade.

“It is a major contributor to poverty, inequality and insecurity in emerging markets and developing economies.
“The social cost attendant to trade misinvoicing undermines sustainable growth in living standards and exacerbates inequities and social divisions, issues which are critical in Nigeria today.”

 

Economy

FAAC: FG, States, LGs Share N1.208trn Revenue For April

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FAAC: FG, States, LGs Share N1.208trn Revenue For April

The Federation Account Allocation Committee (FAAC), has shared the sum of N1.208 trillion as revenue for April among the Federal Government, states and Local Government Councils (LGCs).

The revenue was shared on Thursday at the May meeting of FAAC in Abuja.

A communiqué issued by the committee said that the N1.208 trillion total distributable revenue comprised statutory revenue of N284.716 billion, and Value Added Tax (VAT) revenue of N466.457 billion.

It also comprised Electronic Money Transfer Levy (EMTL) revenue of N18.024 billion, and Exchange Difference revenue of N438.884 billion.

The communique said the total revenue of N2.192 billion was available in April.

“Total deduction for cost of collection is N80.517 billion; total transfers, interventions and refunds is N903.479 billion.

The communique said the Gross statutory revenue of N1.233 billion was received for the month under review. This was higher than the sum of N1.017 billion received in March by N216.282 billion,” it said.

It said that the gross revenue available from VAT in April was N500.920 billion, which is lower than the N549.698 billion available in March by N48.778 billion.

The communiqué said that from the N1.208 trillion total distributable revenue, the Federal Government received N390.412 billion, the state governments received N403.403 billion and the LGCs received N293.816 billion.

“A total sum of N120.450 billion (13 per cent of mineral revenue) was shared to the benefiting states as derivation revenue,” it said.

It said that on the N284.716 billion distributable statutory revenue, the Federal Government received N112.148 billion, the state governments received N56.883 billion and the LGCs received N43.855 billion.

It said that the sum of N71.830 billion (13 per cent of mineral revenue) was shared to the benefiting states as derivation revenue.

“The Federal Government received N69.969 billion, the state governments received N233.229 billion and the LGCs received N163.260 billion from the N466.457 billion distributable VAT revenue.

“A total sum of N2.704 billion was received by the Federal Government from the N18.024 billion EMTL, the state governments received N9.012 billion and the LGCs received N6.308 billion.

“The Federal Government received N205.591 billion from the N438.884 billion Exchange Difference revenue; the state governments received N104.279 billion, and the LGCs received N80.394 billion.

“The sum of N48.620 billion (13 per cent of mineral revenue) was shared to the benefiting states as derivation revenue,” it said.

According to the communiqué, Oil and Gas Royalties, Companies Income Tax (CIT), Excise Duty, Petroleum Profit Tax (PPT), EMTL and CET Levies increased significantly.

It, however, said that Import Duty and VAT recorded considerable decreases.

“The balance in the ECA was 473.754 million dollars.

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Economy

Extension Of Nigeria’s Continental Shelf As Lesson On Continuity

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Extension Of Nigeria’s Continental Shelf As Lesson On Continuity

On May 14, the High Powered-Presidential Committee on Nigeria’s Extended Continental Shelf Project was in the Presidential Villa, Abuja.

The committee came to brief President Bola Tinubu on recommendations given to Nigeria regarding its submission for an extended continental shelf by the United Nations Commission on the Limits of the Continental Shelf (CLCS).

The briefing was led by veteran diplomat, Amb. Hassan Tukur, the Chairman of the committee.

The update with the president featured technical presentations by Prof. Larry Awosika, a renowned marine scientist and Mr Aliyu Omar, Member/Secretary of the Committee and former staff of the National Boundary Commission (NBC).

Omar also served as the Desk Officer for the project office in New York for several years.

Worthy of note, Nigeria’s request to have it continental shelf extended was approved by the CLCS in August 2023.

The project, which aims to extend Nigeria’s maritime boundaries under the United Nations Convention on the Law of the Sea (UNCLOS), has granted Nigeria sovereignty over an additional 16,300 square kilometres of maritime territory.

This is roughly five times the size of Lagos State.

The CLCS is mandated to, inter alia, consider the data and information submitted and provide recommendations on the outer limits submitted by the coastal state.

Article 76 of UNCLOS (1982) allows a qualifying coastal state to extend its continental shelf up to a maximum of 350M (350 nautical miles) or 150m nautical miles beyond its traditional Exclusive Economic Zone of 200 nautical miles.

Extension Of Nigeria’s Continental Shelf As Lesson On Continuity
President Bola Tinubu receiving Nigeria’s CLCS report from the committee

The continental shelf is the natural submerged prolongation of its land territory.

The journey to extend Nigeria’s continental shelf project began in 2009 with the country’s submission to the CLCS.

The project faced delays due to a lack of funds and administrative challenges; in 2013 the Senate of the Federal Republic in its resolution of Feb. 14, 2013, urged the Federal Government to fund the project and set up an independent body to handle it.

However, it was only in November 2015 that the then President Muhammadu Buhari revitalised it.

Subsequently, he appointed the High-Powered Presidential Committee (HPPC), headed by the former Minister of Justice and Attorney-General of the Federation, Malam Abubakar Malami, to oversee the project.

The HPPC operated as an independent technical body, effectively managing the project by cutting down on government bureaucracy.

Omar had led the Nigerian Technical Team through the question-and-answer sessions with the UN Commission on the Limits of the Continental Shelf (CLCS).

He was also the Member/Secretary of the HPPC with a strong institutional memory of the project, highlighted this during the committee’s briefing to President Tinubu on May 14.

Omar said that when the HPPC briefed Buhari in 2022 on the status of the project, the United Nations Commission on the Limits of the Continental Shelf (CLCS) was still considering Nigeria’s submission and having technical interactions with the HPPC.

”These interactions and consideration have now culminated in the approval for Nigeria to extend its continental shelf beyond 200M (200 nautical miles).

”As it stands now, the area approved for Nigeria is about 16,300 square kilometres, which is about five times the size of Lagos State”, he said.

Nigeria’s extended continental shelf is in an area that is referred to as the ‘Golden Triangle of the Gulf of Guinea’ due to its abundance of natural resources such as hydrocarbons, natural gas, and a variety of solid minerals.

Awosika, a pioneer member and former Chairman of the CLCS, explained that the technical team’s work involved lengthy processes.

He said it also required highly technical steps in the acquisition, processing and analysis of extensive marine scientific data offshore Nigeria’s margin for the submission to the UN CLCS.

He said that the Nigerian team had to defend the submission with the CLCS which involved highly technical question-and-answer sessions and provision of additional data and information.

Receiving the report, Tinubu commended the members of the technical team for working tirelessly.

He applauded their high technical and scientific expertise and solidarity to national cause throughout the eight years of service to the nation before an agreement was finally reached with the UN CLCS in August 2023.

It is instructive to note that Tinubu highlighted the interactions he had with his predecessor, Buhari, on the project; given that it was he, Buhari, who set up the HPPC to oversee the project in 2015.

Tinubu recounted how Buhari briefed him on the importance of the project.

”This is a big congratulations for Nigeria. I commend the team and we must take advantage of this and invite you again to have a repeat of this knowledge exploration on geography, hydrography and marine life.

”Nigeria is grateful for the efforts that you put into gaining additional territory for the country without going to war; some nations went to war; and lost people and economic opportunities.

”We lost nothing but have gained great benefits for Nigeria; we will pursue the best option for the country,” Tinubu said.

Tinubu has also promised to ‘pursue the best option for the country’ on the project, even though the CLCS recommendations fall short of Nigeria’s submitted claim.

Perceptive observers say the achievement is a lesson on the importance of continuity in government projects. Abandoning projects due to changes in administration can lead to wasted resources and lost opportunities.

The extended continental shelf is a significant achievement of Tinubu’s administration and to Nigeria.

According to experts, this is something that has never happened in the nation’s history, and may never happen again.

By learning from the ECS project, Nigeria can improve its approach to governance and project management, ensuring that with perseverance and continuity strategic initiatives are completed despite challenges.

The ECS project, initiated in 2009, faced delays and funding issues but persistence through the efforts of the immediate past administration paid off, and was finally approved by the UN in August 2023, shortly after Tinubu assumed office.

The country has taken note of articles 7 and 8 in Annex II to the Convention on the Law of the Sea concerning recommendations received from the CLCS.

The project also demonstrates the importance of long-term thinking in governance.

Discerning stakeholders hold that while the project’s benefits may not be immediate, it will surely have a significant impact on Nigeria’s economy and maritime boundaries in the future.

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Economy

Naira Gains N61.38 Against Dollar At Official Market

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Naira Gains N61.38 Against Dollar At Official Market

The Naira on Wednesday appreciated at the official market, trading at N1,459.02 to the dollar.

Data from the official trading platform of the FMDQ Exchange revealed that the Naira gained N61.38.

This represents a 4.04 per cent gain when compared to the previous trading date on Tuesday, when the local currency exchanged at N1,520.40 to a dollar.

Also, the total daily turnover increased to 289.14 million dollars on Wednesday up from 128.76 million dollars recorded on Tuesday.

Meanwhile, at the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,593 and N1,401 against the dollar. 

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