News
Nigeria Tax Spat Reignites Federalism Debate
A legal battle between the federal government and states over sales tax is fueling fierce debate about federalism in the country as politicians jockey for position before 2023 elections.
The spat –- whether federal or state governments have the right to collect value-added tax (VAT) –- may be about money, and the sum at stake runs into billions of dollars.
According to AFP, but the squabble also reflects long-standing questions about how Nigeria is governed and how wealth is shared in the continent’s top oil producer.
How the dispute ends may open up more state autonomy, analysts say, as wealthier southern regions test federal management of issues from oil resources and security policing to cattle grazing rights.
In August, a court in southern Rivers State, Nigeria’s petroleum heartland, ruled states should be responsible for collecting VAT and not the Federal Inland Revenue Service (FIRS).
Ezenwo Nyesom Wike, Rivers State governor, a staunch opposition Peoples Democratic Party (PDP) leader, pushed through a law authorising local collection of VAT, warning FIRS against any “sabotage.”
Southern Lagos State, the nation’s economic powerhouse including the commercial capital Lagos, quickly followed with its own law to collect VAT.
After a federal government appeal, the dispute is caught up in competing demands, with Abuja considering a Supreme Court challenge.
Abubakar Malami, attorney general, last week told reporters that only the national assembly could legislate on how VAT is levied.
“The federal government is looking at all options at its disposal, including the possibility of involving the jurisdiction of the Supreme Court,” he said.
Under Nigeria’s system, FIRS collects VAT centrally and the resources are distributed across federal, state and local governments.
VAT receipts in 2020 were N1.5 trillion or $3.6 billion. Under the current system the federal government gets 15 percent, with the rest split between states and local governments.
But richer southern states like Lagos and Rivers — Lagos alone produces around half of Nigeria’s VAT — have long complained they end up paying for poorer states mostly in the agricultural north but also some southern ones.
They want more “fiscal federalism,” meaning getting a bigger share of the VAT they collect and more responsiblity to manage their own affairs.
“What we are after is to ensure that this money is used for the people of Lagos State, and that is exactly what we have achieved,” Setonji David, a Lagos assembly lawmaker, told Channels TV.
– ‘Restructuring’ Nigeria –
The “restructuring” debate often resurfaces during election times in Nigeria, which became a single entity under British colonial rule in 1914 when the mainly Muslim north was joined with the mostly Christian south.
Regional identities for Nigeria’s major ethnic groups are often fiercely guarded — sometimes with separatist rhetoric — even as the federal government promotes national unity.
“We will see more of these scenarios, where different constituent entities will try to assert more control economically using political means over what is extracted or generated from their territories,” SBM Intelligence analyst Tunde Ajileye said of the VAT fallout.
The tax debate is especially sensitive after the coronavirus pandemic that battered Nigeria’s oil revenues and pushed Africa’s largest economy into its second recession in five years.
During the pandemic, the federal government increased VAT from five percent to 7.5 percent, providing much-needed revenue.
Eurasia Group’s Amaka Anku said decentralisation of tax management is unlikely, as most states lack expertise or willingness.
“Outside Lagos and the federal capital territory (Abuja), states are likely to be negatively affected by a decentralization of VAT collection, making the proposition politically unfeasible.”
But the VAT fight also plays into the heated tones before the 2023 election to replace President Muhammadu Buhari, a northern Muslim in power since 2015.
– Election tensions –
Critics of Buhari say since he came to power he has favoured northeners in a way that has intensified calls for more autonomy for states and even calls for separatism by some southern agitators.
Officials of the All Progressives Congress’ ruling party dismiss such claims and point to government investments across north or south.
But mass kidnappings, attacks and insecurity have also prompted calls from some southern leaders to have control over their own security forces.
VAT has joined a list of disputes where southern and northern leaders appear to be digging in on rival sides.
One of those is “zoning” — an unofficial power-sharing deal that rotates the presidency between candidates from the north and the south.
After two terms with northern Buhari, many southern leaders want a president from their region. Many leaders from the north disagree.
But despite the squabbling, analysts say a compromise on VAT is the likely outcome.
“The good thing about this is there has not been a use of violence or rhetoric, it is more the use of the court process,” said SBM’s Ajileye.
“I expect there will be some political settlement ultimately.”
This holiday season just got a whole lot more exciting! PalmPay, one of Africa’s leading fintech platforms, operates Nigeria’s most used mobile wallet and has teamed up with Jumia, the continent’s e-commerce giant, to launch a festive campaign that’s all about convenience, rewards, and enhancing your shopping experience.
Running from December 11th to 28th, 2024, this holiday campaign is set to reward shoppers who use the new “Pay with PalmPay” feature on Jumia with cash prizes. Every purchase made using the direct payment method automatically enters participants into a draw, giving them a chance to win exciting cash rewards while enjoying the seamless shopping and payment process.
A Strategic Partnership To Enhance Digital Payments
The integration of the “Pay with PalmPay Wallet” feature on Jumia marks a major milestone in the partnership between the two industry leaders.
Speaking at the media announcement, Mr. Chika Nwosu, Managing Director of PalmPay, highlighted the broader mission driving this collaboration: “We are thrilled to join forces with Jumia to redefine convenience for shoppers. At PalmPay, our mission has always been to drive economic empowerment through accessible and user-friendly financial services. This partnership is a natural step forward in achieving that goal.”
Beyond the holidays, this partnership with Jumia m,k is a signal of bigger things to come. Mr. Chika added: “This is more than just about payments—it’s about creating value for our customers. We are excited about the opportunities this partnership will unlock in 2025, including campaigns and innovative initiatives that will further transform the online shopping landscape.”
Sunil Natraj, CEO of Jumia Nigeria, highlighted the shared vision between both companies, stating: “At Jumia, we are dedicated to creating value for our customers by ensuring a convenient, reliable, and secure shopping experience. This partnership with PalmPay strengthens our commitment to enhancing the digital payments within our platform. By integrating PalmPay, we are providing more options for customers to access affordable and quality goods with the convenience of cashless transactions.”
How to Join the Holiday Fun
Participating in the campaign is simple. When shopping on Jumia, select the “Pay with PalmPay” option at checkout, and your entry into the draw is automatic. It’s that easy!
Bonus Entry: Share a screenshot of your purchase on X (formerly Twitter) using the hashtag #PalmPayXJumia to increase your chances of winning. Additional winners will be selected from participants engaging with the campaign on Twitter.
Whether you are shopping for gifts, or gadgets this festive season, PalmPay and Jumia are making sure your experience is not only seamless but also rewarding.
To learn more about the campaign, stay tuned to the official X accounts (formerly Twitter) of @palmpay_ng and @JumiaNigeria. for updates, announcements, and more chances to win.
Independent Corrupt Practices and Other Related Offenses Commission (ICPC), has revealed that none of the Ministries, Departments, and Agencies (MDAs), in the country complied fully with ethical standards, policies, and anti-corruption measures in the passing year.
This was following the findings from the Commission’s Ethics and Integrity Compliance Scorecard (EICS) for the MDAs.
The Commission warned that henceforth, non-compliant MDAs will face necessary actions, including enforcement, to ensure adherence to government directives.
According to the EICS scorecard released on Thursday in Abuja by Demola Bakare, ICPC spokesperson, no MDA out of 330 MDAs that were assessed through physical deployment by ICPC teams achieved full compliance.
The EICS serves as a preventive tool used to assess and enhance the compliance of MDAs with ethical standards, policies, and anti-corruption measures.
Findings from the report indicated that no MDA achieved full compliance, while 29.55 per cent of MDAs captured attained substantial compliance, and 51.62 per cent had partial compliance.
The report also observed that 15.91 per cent showed poor compliance, while 292 per cent were non-compliant.
According to the report, common gaps included a lack of whistle-blower policies, strategic plans, and effective stock verification units, adding that many MDAs failed to conduct any forms of system studies or render financial and audit reports.
Commenting on the report, Bakare noted: “This year, 2024, the tool covered 323 responsive MDAs, with 15 MDAs non-responsive and categorised as high corruption risk.
“It is imperative to inform you that this initiative has yielded some positive and value-driven impacts, and these are, but not limited to, increased awareness and compliance with anti-corruption measures, enhanced competition among MDAs to meet criteria, and improved procurement processes and data reliability.
“The Commission recognises the MDAs with substantial compliance and will continue deploying these tools to promote integrity and accountability.
“Non-compliant MDAs will face necessary actions, including enforcement, to ensure adherence to government directives. We are certain that these efforts will continue to underline ICPC’s dedication to enhancing good governance and preventing corruption.”
Dangote Petroleum Refinery and Petrochemicals (DPRP) has dismissed claims that the Nigerian National Petroleum Company Limited (NNPCL) used a $1 billion loan secured through a crude forward sale agreement to support the refinery during a liquidity crisis.
In a statement on Wednesday, Anthony Chiejina, company’s chief branding and communications officer, said the NNPCL’s stance was a distortion of the facts.
“We would like to clarify that this is a misrepresentation of the situation as $1bn is just about 5% of the investment that went into building the Dangote Refinery,” Chiejina said.
Chiejina stated that the refinery’s decision to enter into a partnership with the NNPCL was based on the recognition of “their strategic position in the industry as the largest offtaker of Nigerian crude” and at the time, the sole supplier of petrol into Nigeria.
“We agreed on the sale of a 20% stake at a value of $2.76 billion. Of this, we agreed that they will only pay $1 billion while the balance will be recovered over a period of 5 years through deductions on crude oil that they supply to us and from dividends due to them,” Chiejina said.
“If we were struggling with liquidity challenges we wouldn’t have given them such generous payment terms. As at 2021 when the agreement was signed, the refinery was at the pre-commission stage.”
According to the statement, the agreement would have been cash-based rather than credit-driven if the refinery struggled with liquidity issues.
The refinery’s spokesman said the NNPCL was subsequently unable to supply the agreed 300,000 barrels a day of crude (bpd).
He stated that the shortfall was because the NNPPC “had committed a greater part of their crude cargoes to financiers with the expectation of higher production which they were unable to achieve”.
“We subsequently gave them a 12-month period for them to pay cash for the balance of their equity given their inability to supply the agreed crude oil volume,” he said.
“NNPCL failed to meet this deadline which expired on June 30th 2024. As a result, their equity share was revised down to 7.24%. These events have been widely reported by both parties,” he said.
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