Business

2023 Budget: Concerns Mount Over N8.2 Trillion Recurrent Expenditure

Published

2 years ago

October 14, 2022

Editor

When the 2023 annual budget of N20.51 trillion annual budget was presented to the joint session of the upper and lower legislative Chambers, it would have been taken as a normal exercise without raising an eyebrow, considering that the presentation was in line with some relevant provisions of the Constitution.

However, issues of legitimacy and otherwise began to prop up as both Chambers commenced the legislative debate on the general principles of the document on Wednesday.

The debate on the general principles of the budget document, which is officially an executive bill, has nonetheless revealed figures in detail, item by item in line with the priority of government under Capital, Personnel and Recurrent expenditures.

It is in line with this that DAILY POST observed that the recurrent expenditure of the current administration has been alarmingly on steady rise amid the yearning of government to cut cost in governance. For instance, the recurrent expenditure or overhead cost as it is also called for 2023 has surged from N6.9 trillion in 2022 to N8.2 trillion.

The recurrent expenditure is the yearly cost of activities of government and it was expected that this cost reduces due to certain measures or policies of the President Muhammadu Buhari administration which were aimed at putting this expenditure on the downward spiral.

It is observed that in 2018, three years after President Muhammadu Buhari took over governance on the platform of the All Progressives Congress (APC), the recurrent expenditure was out at N3.5 trillion in rise of the preceding year; again in 2019, it went up to N4.7 trillion. This is even when governance was completely shut down due to the COVID-19 pandemic. DAILY POST recalled that both public and private establishments resorted to virtual means of doing business, yet no single amount of money was refunded to the national treasury of the Federal government as unspent overhead.

Again in 2020, the total amount for recurrent stood at N4.8 trillion. This is notwithstanding the embargo placed on recruitment of workers into the Federal Civil Service in the past seven years of Buhari’s administration. This is except for replacement of workers who have either died or resigned from service.

Though, the legislative session in the upper and lower legislative Chambers have been suspended to enable the Committees conduct public hearings on the appropriation of Ministries, Departments and Agencies of government, it should be a matter of curiosity on the part of the Chairmen and the members of those Committees to subject heads of the agencies of government to serious interrogation.

To also dwell much on budget performance of each agency of government would be the right thing to do, particularly on their recurrent expenditure where it would lay bare value for funds released by the Federal Ministry of Finance for the year under review.

Reacting on Wednesday after plenary, the Senator representing Borno South Senatorial district, and Chairman of Committee on Army, Ali Ndume decried the yearly rise in recurrent expenditure without the commensurate results or successes in government circle.

In what he described as “Yahoo Yahoo boys in government offices”, the lawmaker lamented that some civil servants in government were worse off when it comes to the handling of public funds, stressing that they steal with impunity.

He queried the 2023 recurrent expenditure which the Federal government was seeking approval from the parliament, saying that it amounted to a 43% increase compared to that of 2022, while insisting that the appropriation shouldn’t be allowed to scale third reading in a hurry after they have reconvened on 15th November.

The lawmaker believes that the upward trend in the recurrent expenditure means enriching individual pockets of some officials of government and further queried the essence of IPPIS and other payment platforms.

Though he lauded the Buhari administration’s timely releases of funds based on the yearly budget circle that runs from January to December, he doubted that meaningful achievements could be recorded amid rise in recurrent expenditure and debt servicing, particularly in 2023.

Ndume said: “What we witnessed in this administration is an improved implementation of the budget, in terms of releases.

“To the continuous rise in the recurrent expenditure and debt servicing, but that in debt servicing is even understandable. When you borrow to spend on recurrent and this money is going to less than 5 percent of Nigerian workers.

“Right now the recurrent expenditure is standing at about 43 per cent which should be a concern to everyone.”

He also called for investigation of the current figure, saying: “This rise in recurrent expenditure should be investigated.

“The introduction of TSA, GIFMIS and IPPIS is supposed to control this cost, but instead you know Nigerians. I suspect we have more yahoo Yahoo people in the government than you find in the hotels and on the streets.”

According to him, the sum of N32 billion allocated to the Nigerian Army as capital expenditure amid the high level of insecurity was grossly inadequate, adding that the figure has been static in the last three years.

He said the Army which he chairs have improved the security challenges across the nation, believing that if the amount was upscaled it could reduce insecurity in the country.

He added: “I’m in charge of the Army. Look at the funniest thing, we are in a war situation everywhere. We are saying the challenge of insecurity should be addressed which is very important.

“But guess what? The capital budget of the Nigerian Army again is only N32 billion. Are we serious? If we are not safe, how can we even spend?

“The capital budget of the Nigerian Army is still grossly inadequate compared to what they need to bring this issue of escalating insecurity to an end.”

In her view, Senator Oluremi Tinubu representing Lagos Central Senatorial district commended President Buhari for the 2023 budget, saying that he has laid a solid legacy over the years he has spent.

She said: “President Muhammadu Buhari has laid a solid legacy and the 2023 N20.51 trillion which is a combination of all subheads will be used to continue his legacies in infrastructure by the successive governments.

“Of course, Buhari is not a magician that will complete everything during his tenure. He did his best and he is still doing but another government will continue from where he stopped”, Oluremi said.
DAILY POST

Business

Customers Panic As CBN Bans Opay, Palmpay, Others’ New Accounts

Published

8 hours ago

April 30, 2024

Editor

Some bank customers have expressed panic as the Central Bank of Nigeria bans mobile money operators including fintech firms from onboarding new customers.

However, the Bank Customers Association of Nigeria backed the CBN directive.

The new directive will affect fintech companies such as OPay, Palmpay, Kuda Bank, and Moniepoint, from opening new accounts until further notice.

Reliable sources from three major fintechs who requested not to be mentioned as they were not permitted to speak, confirmed the development to The PUNCH on Monday.

The CBN’s move was linked to an ongoing audit of the Know-Your-Customer process of the fintechs, which have been under scrutiny in recent months over concerns around money laundering and terrorism financing.

It was gathered that the CBN had summoned some of the heads of fintechs to Abuja to discuss issues around KYC last week.

The CBN has not yet publicly commented on the directive to the fintech firms. The PUNCH’s attempts to reach the apex bank for comment were unsuccessful.

Several calls made to the telephone line of the CBN spokesperson, Hakama Ali Sidi, were not responded to as of the time of filing this report.

Also, the directive coincided with the court order that the Economic and Financial Crimes Commission (EFCC) obtained to freeze at least 1,146 bank accounts owned by various individuals and companies allegedly involved in illegal foreign exchange transactions.

The 85-page court order (document), which listed the bank account details suspected to be involved in illicit activities, was obtained by The PUNCH on Monday.

Justice Emeka Nwite, in a ruling on the ex-parte motion, moved by counsel for the anti-graft agency, Ekele Iheanacho, also granted the commission’s application to conclude the investigation within 90 days.

Part of the court document read, “That the applicant’s (EFCC) application is hereby granted as prayed.

“That an order of this honorable court is hereby made freezing the bank accounts stated in the schedule below, which accounts are owned by various individuals who are currently being investigated in a case involving the offenses of unauthorised dealing in foreign exchange, money laundering, and terrorism financing, to the extent that the investigation will be for a period of 90 (ninety) days.”

The EFCC, in the motion marked FHC/ABJ/CS/543/2024 dated and filed April 24 by Iheanacho, was heard by the judge the same day in the interest of national interest.

“The motion was brought pursuant to Section 44(2) and (K) of the 1999 Constitution; Section 34 of the EFCC Establishment Act 2004; Section 7(8) of the Money Laundering Prevention and Prohibition Act, 2022; and under the inherent jurisdiction of the court.”

The President of the Bank Customers Association of Nigeria, Uju Ogubunka, backed the CBN’s move to suspend new account opening on the affected platforms.

He told The PUNCH that the strict regulations that govern deposit money banks must apply to fintechs, and microfinance banks in order to ensure the integrity of the financial institutions.

He said, “Anything that can disrupt the system should not be permitted. If the platforms are being used for things that are against the regulations, I think the CBN decision is OK. I don’t see anything wrong with that. It behoves on the companies now to get their KYC right.

“Let them do what they are supposed to do. KYC applies to banks and other financial institutions that deposit money. It should also apply to them so that the regulators can understand what is going on and hold them accountable.”

On the other hand, Emmanuel Odunsi on X (formerly Twitter) welcomed the move, citing the need for better KYC processes to prevent scams and fraudulent activities.

“Their KYC isn’t that great. Lots of scammers are using their apps to defraud people.

“Most of the accounts were created by mining phone numbers, with subscribers’ permission. Almost every phone number has been linked to an account,” Odunsi said.

In October 2023, Fidelity Bank blocked transfers to OPay, Palmpay, Kuda, and Moniepoint due to concerns around KYC processes.

In response, the CBN introduced new KYC rules for all financial institutions in November 2023, which appeared to target fintech startups.

A source from Moniepoint said the company had complied with the directive, effectively halting new account creation on their platform. However, the source denied having anything to do with KYC.

“It’s just a regulation from the CBN, and we’ve complied. The real question is, why are fintechs always targeted,” he source argued.

“It has nothing to do with KYC; I am aware that the CBN communicated, but this particular issue dwells on accounts related to cryptocurrency transactions,” the source revealed.

The CBN has an ambitious target to increase overall financial inclusion to 95 per cent of the adult population by 2024.

With the new order, the target may be affected, as the company processes about 100 new accounts every day.

The source argued that fintechs had played significant roles in deepening financial inclusion in the country.

The company had deployed robust and reliable digital payment infrastructure that has facilitated an average monthly transaction value of $12bn for about 1.6 million businesses, it said last year.

A senior employee of PalmPay confirmed to The PUNCH that there was a CBN directive for fintechs to reassess their KYC processes.

This is causing a temporary pause in onboarding new customers, the source stated.

She clarified that the KYC review was a collaborative effort with the CBN, and fintechs were awaiting further instructions without a specified timeline for resolution.

Another source at OPay, who also declined to be named, said they were following the CBN’s directive and could not comment further.

“We don’t really have anything to say. It’s just a directive that we are following. The CBN has issued their directive.“

Fintech companies have faced increased regulatory scrutiny over their account opening processes.

Customers worry

However, some customers have also used social media, both on X (formerly Twitter) and Facebook, to express their worries and opinions on the matter.

Some customers are anxious about the safety of their funds, with Warisenibo Jumbo suggesting it’s best to transfer their money out of Opay.

Oye Niran wondered if their Moniepoint account was safe, stating, “Hope my Moniepoint account is safe.”

Larry Leanz questioned the rationale for keeping money on these platforms.

“But is it still safe to keep money there?, Leanz questioned.

Business

CBN Sells Fresh Dollars To BDCs At N1,021/$

Published

7 days ago

April 23, 2024

Editor

The Central Bank of Nigeria (CBN) started fresh and direct sales of US dollars at N1,021 per dollar to Bureau De Change operators.

Nigeria’s apex bank disclosed this in a circular signed by its Director of Trade and Exchange Department Hassan Mahmud.

“We write to inform you of the sale of $10,000 by the Central Bank of Nigeria (CBN) to BDCs at the rate of N1,021/$1. The BDCs are in turn to sell to eligible end users at a spread of NOT MORE THAN 1.5 percent above the purchase price,” the circular posted on its website read.

“ALL eligible BDCs are therefore directed to commence payment of the Naira deposit to the underlisted CBN Naira Deposit Account Numbers from today, Monday, April 22, 2024, and submit confirmation of payment, with other necessary documentations, for disbursement of FX at the respective CBN Branches.”

CBN’s move is coming as the naira is recording a slight depreciation against the dollar after weeks of gains.

In late March, the bank also sold $10,000 to each of the eligible Bureau De Change (BDC) operators in the country at the rate of N1,251/$1.

Like in the most recent sales, it warned BDCs against breaching terms of the dollar sales, vowing to sanction defaulters “including outright suspension from further participation in the sale”.

The fortunes of the naira have fallen sharply since President Bola Tinubu took over in May. Inflation figures have reached new highs and the cost of living hitting the rooftops.

Nigeria’s currency slid to about N1,900/$ some months ago at the parallel market. But in recent weeks, it has gained against the dollar.

The Nigerian authorities have also doubled down on their crackdown against cryptocurrency platform Binance and illegal BDCs.

On March 1, the CBN revoked the licences of 4,173 BDCs over compliance failures.

Business

JUST IN: FirstBank Gets New MD/CEO

Published

1 week ago

April 22, 2024

Editor

Olusegun Alebiosu has been appointed as the Acting Managing Director/Chief Executive Officer of First Bank of Nigeria Limited (FirstBank Group), effective April 2024.

Alebiosu steps into this pivotal role from his previous position as the Executive Director, Chief Risk Officer, and Executive Compliance Officer, a position he held since January 2022.

Alebiosu brings to the helm of FirstBank over 28 years of extensive experience in the banking and financial services industry. His expertise spans various domains including credit risk management, financial planning and control, corporate and commercial banking, agriculture financing, oil and gas, transportation, and project financing.

Having embarked on his professional journey in 1991 with Oceanic Bank Plc. (now EcoBank Plc.), Alebiosu has held several notable positions in esteemed financial institutions.

Prior to joining FirstBank in 2016, he served as Chief Risk Officer at Coronation Merchant Bank Limited, Chief Credit Risk Officer at the African Development Bank Group, and Group Head of Credit Policy & Deputy Chief Credit Risk Officer at United Bank for Africa Plc.

Alebiosu’s academic credentials further enrich his professional profile. He is an alumnus of the Harvard School of Government and holds a Bachelor’s degree in Industrial Relations and Personnel Management. Additionally, he obtained a Master’s degree in International Law and Diplomacy from the University of Lagos, as well as a Master’s degree in Development Studies from the London School of Economics and Political Science.

A distinguished member of various professional bodies, including the Institute of Chartered Accountants (FCA), Nigeria Institute of Management (ANIM), and Chartered Institute of Bankers of Nigeria (CIBN), Alebiosu is renowned for his commitment to excellence and ethical practices in the banking sector.

Beyond his professional endeavors, Alebiosu is known for his passion for golf and adventure. He is happily married and a proud parent.

With Alebiosu’s appointment, FirstBank of Nigeria Limited anticipates continued growth and innovation under his leadership, reinforcing its position as a leading financial institution in Nigeria and beyond.