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7 Northern States Declared Bankrupt In Nigeria

7 Northern States

7 Northern states, one oil-producing state declared bankrupt in Nigeria

7 Northern states and one Southern state have been declared bankrupt based on their internally generated revenue in comparison with their Federal Accounts Allocation (FAA).

Jigawa, Katsina, Adamawa, Yobe, Niger, Taraba and Benue were tagged insolvent states alongside oil-producing Bayelsa State by the Annual State Viability Index (ASVI) of Economic Confidential.

The status of the states were determined by percentage arrived at when their IGR and FAA was compared, and states with IGR of less than 10 percent of their federal allocation are classified insolvent.

Bayelsa topped the list of the poorest states in Nigeria as it received a total of N152.54 billion as FAA in 2020, but generated only N12.18 billion as IGR – this represents 8.0 percent of earnings from FAA.

Jigawa State came next with IGR of N8.6 billion in contrast to the N107 billion it received as allocation during the same period – this represented 8.1 percent of total earning.

Katsina recorded 8.8 percent after generating N11.3 billion against the N130 billion federal allocation.

Adamawa received N91 billion of FAA, but could only generate N8.3 billion IGR, putting the differences at 9.1 percent.

Yobe state recorded N7.7 billion IGR, but got N84 billion federal allocation – this represented 9.2 percent in total receipt.

Niger State was next with 9.6 percent as its internally generated revenue was put at N10.5 billion compared to N109 billion of FAA.

Taraba generated N8.1 billion as IGR, but was given N82 billion from federal allocation, putting its difference in earnings at 9.8 percent.

Benue completed the list with IGR of N10.46 billion, far below the N106 billion it received as FAA, representing 9.8 percent last year.

Best performing states in Nigeria

Lagos state topped the list of best performing states in Nigeria as its IGR, N418 billion, surpassed its N299 billion federal allocation, putting its earnings difference at 139 percent in 2020.

Rivers State came next with N117 billion to comparison to the N198 billion secured from the FAA – this represents 58 percent difference.

Ogun State finished last year with N50 billion as internally generated revenue, falling below the N88 billion FAA it received, but its revenue difference stood at 57 percent.

Kaduna State is fourth on the list, obtaining N124 billion federal allocation, while generating N50 billion IGR, representing 40 percent difference.

Oyo made the list with 29.7 percent difference having generated N38 billion in IGR, but received federal allocation to the tune of N127 billion.

Anambra State’s internally generated revenue was put at N28 billion, but it got N94 billion as federal allocation, representing 29.6 percent in earnings.

More problem for the seven insolvent states

The seven states are believed can’t survive without federal allocation, which is set to drop following a Rivers State court ruling that the Federal Government is not authorised by the constitution to demand and collect non-import value added taxes.

Justice Stephen Pam, who presided over the ruling stated that the Concurrent Legislative List of the constitution empowered only states and its agent(s) to collect non-import vat within their region.

This will reduce the tax revenue shared by FG to states by N1.64 trillion if the ruling stands, and it will reduce the total allocation of low-income generating states like Bayelsa, Katsina, Adamawa, Yobe, Niger, Taraba, Benue, Kano and others.

Business

NNPC refineries may never work again – Dangote

The President of Dangote Group, Alhaji Aliko Dangote, has stated that Nigeria’s state-owned refineries in Port Harcourt, Warri, and Kaduna may never function properly again, despite the reported $18 billion spent on their rehabilitation.

Speaking while hosting members of Global CEO Africa at the Dangote Petroleum Refinery, Dangote revealed that his decision to construct the 650,000-barrel-per-day facility followed the late President Umar Musa Yar’Adua’s administration’s refusal to sell the refineries to him.

According to Dangote, he and other investors had acquired the refineries in January 2007 but were compelled to return them to government ownership after a change in administration. He observed that despite significant subsequent investment, the refineries have remained inoperative.

“The refineries we bought before, which were owned by Nigeria, were producing about 22 per cent of PMS. We bought them in January 2007 but had to return them due to a change in government. The managing director at that time convinced Yar’Adua that the refineries would work,” he said.

“As of today, they have spent about $18 billion on those refineries, and they are still not working. I doubt very much if they will ever work,” he added.

Dangote likened the rehabilitation efforts to attempting to upgrade a 40-year-old car with modern technology, suggesting that even a new engine would not be compatible with the outdated framework.

Former President Olusegun Obasanjo had earlier expressed similar misgivings. In a previous interview, he asserted that the NNPC knew it was incapable of effectively operating the refineries but actively blocked private sector involvement.

Obasanjo disclosed that Dangote and other investors had paid $750 million to acquire the refineries, only for the deal to be reversed by the Yar’Adua administration.

“I told Yar’Adua the refineries would not work. I said, ‘NNPC cannot do it.’ He said, ‘NNPC said they can.’ I told him, ‘When you want to sell them again, you won’t find anyone willing to pay even $200 million as scrap.’ And that is where we are today,” Obasanjo said.

He alleged that the failure to privatise the refineries was fuelled by entrenched corruption within the NNPC, and insisted that those responsible should be held accountable.

Obasanjo further claimed that over $2 billion had been spent on the refineries in recent years, with no tangible results.

“If anyone says the refineries are working, why are they now relying on Aliko Dangote? He will make his refinery work and deliver,” he said.

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Business

Nigerian stock market hits historic N1.806trn gains

The Nigerian Stock Exchange, under Nigerian Exchange Group, NGX, Limited, recorded a historic milestone as investors gained N1.806 trillion in a single day.

This development follows a significant rise in the All-Share Index, ASI, which surged by 2,457.13 points, or 2.01 per cent, to close at 124,446.80, crossing the 124,000 mark for the first time, from its previous close of 121,989.67.

The market’s positive performance has been attributed to growing investor confidence in Nigeria’s equities market, bolstered by improved liquidity conditions and ongoing economic reforms.

Market capitalisation similarly rose by 2.35 per cent to settle at N78.726 trillion on Thursday, up from N76.970 trillion recorded on Wednesday.

Consequently, market breadth closed strongly positive, with 70 gainers and only 10 losers.

On the gainers’ table, FTN Cocoa rose by 10 per cent to end the session at N6.82, while UPDC also gained 10 per cent, closing at N4.62 per share.

United Bank for Africa, UBA, soared by 10 per cent to settle at N39.60, while Consolidated Hallmark Holdings similarly rose by 10 per cent to close at N3.30 per share.

Haldane McCall also gained 10 per cent, ending the session at N4.73 per share.

Conversely, Neimeth International Pharmaceutical declined by 9.91 per cent, finishing at N9, while Legend Internet shed 9.88 per cent to settle at N7.21 per share.

Industrial and Medical Gases dropped by 7.36 per cent to close at N34, and Cadbury Nigeria fell by 6.22 per cent, ending the day at N55 per share.

Similarly, Livestock Feeds lost 5.67 per cent, closing at N9.15 per share.

In terms of market activity, 1.3 billion shares valued at N27.73 billion were exchanged across 27,875 transactions.

This compares to 888.70 million shares worth N15.609 billion traded in 24,303 transactions on Wednesday.

Leading the activity chart was Access Corporation, with 174.22 million shares valued at N3.99 billion.

AIICO Insurance followed with 81.96 million shares worth N165 million, while Ja Paul Gold recorded 74.01 million shares traded, valued at N245.2 million.

UBA exchanged 64.51 million shares worth N2.52 billion, and First City Monument Bank traded 63.3 million shares valued at N585.75 million.

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Business

NAFDAC uncovers expired chemicals, additives, seals warehouses

The National Agency for Food and Drug Administration and Control (NAFDAC) has uncovered a massive illegal operation involving the sale of fake chemicals, expired food flavours, unauthorised fertilisers, and repackaged pharmaceutical raw materials in the Alapere area of Ketu, Lagos.

The agency, in a statement, disclosed that the operation led to the arrest of several suspects and the sealing of three warehouses filled with dangerous substances.

NAFDAC Director of Investigation and Enforcement, Martins Iluyomade, told journalists that the raid followed credible intelligence about a criminal network engaged in large-scale food and chemical counterfeiting.

Iluyomade described the agency’s action as its campaign carried out to protect the health of Nigerians, stressing that individuals posing as legitimate business operators while engaging in activities that seriously endanger public health.

According to him, the offence was the sale and repackaging of expired chemicals, some of which were dangerously redirected for use in food and drug production.

He explained that several controlled substances and high-risk materials, including fertilisers requiring special clearance from the National Security Adviser, were found stocked without any authorisation.

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