Sunday, 23 January 2022

BUSINESS AND ECONOMY

The relevance of tax in the global economy cannot be under-estimated. In the developed world and in some of the emerging economy, emphasis is highly placed on revenue-drive through taxation to boost economy. However, in Nigeria the case is different because the cumbersome tax administration system. For instance, the 2012 World Bank in collaboration with PricewaterhouseCoopers report ranked Nigeria economy 138 out of 183 on the ease of paying tax.

According to the report, Nigeria dropped from its 134th position last year, to 138, making it the worst for the country, since the annual report was first published in 2006.Responding to the development, Mr Taiwo Oyedele, Partner/Tax and Corporate Advisory Service Leader, PricewaterhouseCoopers told News Agency of Nigeria (NAN) that the report showed the weakness of nation’s tax system. According to Oyedele, the report was a yearly report put together by the World Bank and PricewaterhouseCoopers.

According to him, the aim was to ascertain the countries doing well in terms of revenue generation using the instrument of taxation to boost her economy. Oyedele said that the report examined three aspects of tax payment, which were “the tax cost, ease of paying tax and the time involved in tax compliance”. The tax expert said that among the three tax indicators, Nigeria ranked 180 making it the worst in Africa on the time it took to comply with tax issues and only ahead of three countries in the world: Vietnam (181), Bolivia (182) and Brazil (183).

Oyedele explained that a medium size company in Nigeria made 35 tax payment annually, paid 32.7 per cent of its business profit in taxes and spends 938 hours to comply. He added, Nigeria ranked 123 on number of tax payment, 56 on total tax rate and 180 on time required to comply out of 183 economies. “The World Bank and PricewaterhouseCoopers looked at how difficult it is pay tax which is called ease of paying tax in 183 countries around the globe. “The body also examined the number of tax payment and the amount of time it takes to comply with tax issues, the time it takes to calculate your tax, file result and collect Tax Clearance Certificate (TCC). “They looked at these three factors and calculate the average for every country,” he said.Oyedele attributed the enormous time required for tax compliance in Nigeria to the bureaucratic, complex and cumbersome tax administration system. He said that Nigeria should avoid multiplicity of taxes where Federal, State and Local Governments collect different taxes thus making it difficult for tax payers to comply.Oyedele condemned the uncoordinated policies by the government were issues relating to tax administration were not well implemented.

“The National Tax Policy approved by the Federal Executive Council and the National Executive Council is there to guide tax administration. The idea is to reduce the number of taxes and be able to streamline our tax system,” he said. Oyedele suggested the adequate use of Information Communication Technology (ICT) to facilitate tax administrations in the country. Also speaking, Mr Rasaq Quadri, President West Africa Union of Tax Institutes said that the report may not necessarily represent the actual state of the nation’s economy. Quadri said that certain factors like security, epileptic power supply, transportation and other infrastructural challenges may have been put into consideration. “For instance, there is no investor that will like to invest where his life and business is not secured. “We should stop deceiving ourselves by saying that we are talking to investors, direct foreign investment when there are no amenities on ground,” he said. Quadri said if Nigeria economy must grow in 2013, there was need to diversify into agriculture, tourism and other non-oil sectors. He that the United Arab Emirate (UAE) solely depends on tourism to drive her economy, adding that Nigeria had numerous untapped tourism centres.

Quadri also suggested the immediate implementation of the recommendation by the working group constituted by the Federal government in 2002 to under-study the ways to improve the nation’s tax system. According to him one of the recommendations was that we should have a virile tax administration, good tax policy and laws. “Unfortunately, the National Tax Policy has been launched in February but since then it has not been implemented,” he said.

Quadri said that the implementation of the tax policy would enable us do away with the direct system of taxation and embrace indirect system of taxation where people would pay as they consumed. He said that the pay as you consumed system of tax as practiced in most part of the world would raise the revenue profile of the country. The tax expert condemned the five per cent Value Added Tax (VAT) practiced in Nigeria, saying it slowed down the nation’s revenue portfolios. He said that there was a need to increase it in the interest of the economy noting that the taxation industry was bright because of the abundant human and natural resources. He urged government to create an enabling business environment that would encourage investors, ‘Once there adequate and functional infrastructure, every other thing will fall into place. Quadri commended the federal government for the new Personal Income Tax Act (PITA) Amendment 2011 saying it had draw the President and every other political office holders into the tax dragnet. Mr Chukwuemeka Eze, former president, Chartered Institute of Taxation of Nigeria (CITN), Ikeja branch said that the taxation sub-sector had faired well in year 2012.

Eze said that various reforms like the PITA and Industrial Trust Funds (ITF) Act were brought into limelight in the year under-review despite the fact that they were introduced last year. He said that the introduction of the rule of Transfer Pricing (TP) by the Federal Inland Revenue Service was also another milestone in the taxation industry. On the World Bank ranking, Eze said that the ranking portend danger for the economy because it showed that we do not have “sufficient power economically to absorbed shocks”. He said that the inflationary rate was 12.3 per cent in the economic index because we spent too much on recurrent expenditure. Eze said that for the nation improve economically in 2013, government should invest more on infrastructure like power, transportation and well security. He said those indices would encourage rapid economic transformation in the country.Mr Peter Olarenwaju, member CITN said the tax industry was vibrant in the year 2012 despite some challenges in the nation’s economy.

Olarenwaju said the World Bank ranking was as a result of poor utilisation of the nation’s resources. He urged the government to implement the various tax laws in the country to enable the tax authorities discharged their duty effectively in 2013. Similarly, Mr Anthony Aslem, a tax expert said that Nigeria had no justification to be ranked so low in the Word Bank reports. Aslem said that the taxation industry was bright if the “right pegs were put into the right holes” He urged government to put taxpayers’ money into use in 2013 saying that was the only way to encourage tax compliance.

The Nigerian capital market, which was severally hit by the impact of the last global financial crisis in 2008, has seen massive recovery this year. In what many analysts described as response to fundamental respite in economic down turn across the globe and series of attempt at reforms at the local level, the local bourse has seen large flows of investment in the second half of the year.

By the last count, the market has moved from huge loss recorded last year to achieve one of the biggest growth among its peers in the frontier market as the reforms in the financial market, the major driver of the market and strict adhere to governance by the regulators continue to yield positive result.
Record of trading on the Nigerian Stock Exchange as at December 20, 2012 showed that the equity market rose by 33 percent year-to-date with the market rated the best investment stopover in sub-Saharan Africa as offshore investors scramble to take position and benefit from the recovery in the market.
As part of move to stem the drift in the market and restore public confidence, the Securities and Exchange Commission (SEC) introduced major reforms such as the licensing of market makers in September, establishment of securities lending and short selling, while the upward review of circuit breaker and new listing rules kicked in investors’ interest in the market.
Others factors are the latest announcement of N22.6 billion forbearance packages for 84 stockbroking firms, elimination of stamp duties and Value Added Tax (VAT) on stock market transactions and improved regulatory framework.

The market was also positively impacted by the stability in the exchange rate, which encouraged more foreign investors to stay in the market. The market remains relatively stable around N157 to the dollar for the better part of the year due to various measures by the Central Bank of Nigeria (CBN) to stem capital flight and encourage offshore investment in local debt paper.
The key driver of offshore investors into the economy during the year was the change in the leadership of both the SEC and Nigerian Stock Exchange (NSE) with it attendant reforms.
The new leadership of the market has bolster confidence with fresh policy initiative aimed at increased regulations, enforcement of market rules and surveillance which have kept in check major breach that characterized the operations of the market in the past.
Market data showed as at the closed of Market on December 19, the All-Share Index of the Exchange during the review period appreciated by 31.93 per cent year-to-date to close trading at 27,349.10 against opening year index of 20,730.63. Also, the market capitalisation which opened trading for the year at N6.53 trillion grew by N2.24 trillion to close trading on Dec. 19 at N8.73 trillion.
Speaking on the market performance, Ms Arunma Oteh, the Director-General of SEC, attributed the growth to concerted efforts of by operators, regulators and the Federal Government through various reforms and initiatives to boost activities in the market. Oteh debunked claims in some quarter that the recent growth in the market will soon fizzy out, noting that "the capital market is not driven by euphoria, but by fundamentals of different sectors of the economy represented on the exchange."
She said the recent growth in the market was not only in the financial sector, “but the banking sector is leading because globally everybody recognizes the bold steps that Nigeria took to address the challenges in the financial sector."
"It is broader reflections that today many people recognise that Nigeria is indeed the preferred investment destination despite the challenges," Oteh said. According to her, SEC is monitoring the present reforms in the nation’s economy, including the privatisation programme of the government to ensure that privatised companies are encouraged to list on the local bourse.
She added that efforts are on top gear to create the enabling environment for energy companies operating in the upstream and downstream sector, and telecommunications companies also list on the Exchange.
Mr Nicholas Nyamali, the Managing Director, Investment One Financial Sevices Ltd., on his part noted that the recent growth in the market was driven by both the reforms in the banking sector and the performance of quoted companies. Nyamali said the last crash in the market brought it below par with its peers in other market with major stocks undervalued for several years, noting that the recent growth has ensure that most equities, including banking stocks have started reflecting their real values.
He however expressed optimism that the trend would continue if the reforms were sustained in the years ahead. Mr Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), said that the growth being witnessed in the market could also be attributed partly to the activities of market makers, while the impressive financial results by listed companies further strengthened investor confidence in the market.
He urged local investors to take advantage of the current market trends and improved companies’ results to increase their stake in the market. However, Mr Ariyo Olushekun, President, the Chartered Institute of Stockbrokers (CIS) expressed his reservation on the gains so far recorded in the market, saying over 70 percent of transactions are done by offshore investors, leaving local investors with mere 30 percent.
"We will only say that the market has recovered when we have more local investors participating in the market than foreign investors," Olushekun said. Over all, the Nigerian capital market no doubt has recorded impressive growth in 2012 but the market still has so many challenges to contend with in 2013 which borders on local investor confidence. This stemmed from the fact that local investor participation in the market is still very low with 30 per cent while foreign investors is dominating with 70 per cent.

Peter Odemwingie has reacted angrily to being omitted from Nigeria's Africa Cup of Nations squad.

The West Bromwich Albion forward last played for Nigeria in February's goalless draw with Rwanda in the Cup of Nations qualifying.

"Every manager has got his own plans and tactics - if I don't figure in your plans, please be honest to tell me directly," Odemwingie told BBC Sport.

The 31-year-old played at the 2004, 2006, 2008 and 2010 Nations Cups.

"For 10 years I gave my all to the country as a player on the pitch, played for the nation and fans, not individuals," he pointed out.

Odemwingie believes he is being overlooked because he often speaks his mind about the national team.

"Because I speak out when things are not right, I guess some people are not just comfortable with that openness," he said.

"No one seeks preferential treatment, footballers are like the average people and not perfect individuals.

"There's a long history of problems between the players, coaches and the federation and if they are not sorted - the country will continue to struggle.

"Football means so much to Nigerians and the fans deserve success and not be fed with lies in the media."

However Odemwingie says he will not completely shut the door on his international career.

"It's sudden and to be honest I don't know, because the individuals change but the problems remain," Odemwingie said.

"If the chance to play for my country presents itself, then I will speak to my dad and those close to me - then we'll see.

"Personally, I've got to be playing regularly for my club, focus my energy on being a better person every day.

"At the moment, all I can do is to wish the team all the best in South Africa."

The Super Eagles begin their Nations Cup campaign against Burkina Faso on 21 January and then face Zambia and Ethiopia in Group C.

Saturday, 22 December 2012 23:48

Algeria plans to open TV and radio sector

Algeria's TV and radio stations are state-controlled, but there is a lively private press.

A media bill passed in late 2011 aims to open the TV and radio sector to private operators. While promising press freedom, it requires journalists not to undermine national identity, sovereignty and security.

"Although journalists no longer fear for their lives, their room for manoeuvre in terms of freedom of expression is limited," Reporters Without Borders said in 2010.

Satellite TV is popular; stations based in France target viewers in Algeria. European channels are widely-watched.

There were 4.7 million internet users by June 2010 (InternetWorldStats.com). Most surfers rely on dial-up connections and cybercafes.

No widespread filtering is reported, but the blocking of a political website in January 2010 was said to be the first known instance of online censorship.

Writing in Arabic, English and French, Algerian bloggers cover social, cultural and political topics.

Saturday, 22 December 2012 23:43

'Gangnam Style' Makes YouTube History

South Korean pop artist Psy and his "Gangnam Style" video marked a historic milestone Friday, becoming the first YouTube video to receive one billion views. The video was posted on the site in July.

Psy raps in Korean in the video while dancing as if riding an invisible horse.

Psy, who is 34, is the first Korean pop artist to receive mainstream success in the United States.

He won the best video award at the MTV Europe Music Awards in November.

Rolling Stone magazine put "Gangnam Style" at number 25 on its top 50 list of best songs for 2012 and labeled Psy as "Seoul Brother Number One."

His rising star hit a speed bump in the United States last month when anti-American views he voiced a decade ago caught up with him. He apologized and went on to perform at a "Christmas in Washington" gala attended by President Barack Obama and his family.

Saturday, 22 December 2012 23:07

Ghana to Improve Transparency in Oil Contracts

In Ghana, efforts are underway to boost transparency in the country’s newly developed oil industry, which some say will likely double economic growth. New rules require the quarterly disclosure of contract agreements and oil revenues as a way of avoiding the corruption that that many African oil exporters call the “resource curse.”

The rules are included in two new laws: the Petroleum Commission Act and the Petroleum Revenue Management Act. They aim to empower citizens to demand accountability from government as Ghana develops its petroleum sector.

Stephen Manteaw, the chairman of the Civil Society Platform on Oil and Gas, describes the legislative push towards openness as a rarity in Africa. And, he says unfortunately, regulations are yet to be developed to make one of the laws workable. In particular, a public interest and accountability committee has not been set up to monitor the management and use of petroleum revenues. It would also provide a platform for public debate on the spending of the revenues

“There is absence of regulations to the Petroleum Revenue Management Act," he says. "We [had] a similar [issue] in the mining sector where we had the Mining Act in 2006, but it was only in 2012 that regulations to the act were developed. When you have a situation like this, it becomes very difficult to operationalize the law that have been developed to manage the sector.”

Manteaw says a Public Interest and Accountability Committee set up to monitor compliance with the law is poorly funded. The institution has no office space and is currently operating with the support of the German Development Agency and of non-governmental organizations such as Revenue Watch Institute.

Another challenge confronting Ghana’s oil industry is the failure of companies to reach a target of 12 thousand barrels per day. Current production levels fall between 60 thousand and 80 thousand barrels per day indicating shortfalls in the government’s projected revenues.

Meanwhile, foreign companies continue to dominate the sector. Government policies meant to encourage the participation of local business in the industry is not making much impact. Manteaw attributes the problem to high fees the government has established for any companies wanting to get involved in the lucrative oil business.

“In my view," he says, "these fees are exorbitant. Some of the companies are required to have turnover of up to about five million dollars and pay a subscription fee of 30 thousand dollars renewable on the payment of 25 thousand dollars. This, to many Ghanaians is exorbitant, in fact, unaffordable”.

The government is also encouraging the use of local expertise, goods, services and financing arrangements in the oil sector.

Kwame Djantua is the chief executive officer of the African Energy Consortium. He says the Petroleum Commission which regulates such policies must do more to train Ghanaians.

“When will Ghanaians take control of the oil industry? What did Brazil do?," he asks. "They invested in their people for their people to go and learn and come back. Trinidad and Tobago did the same, Norway did the same. Why can’t we do the same for Ghana?’

Djantua is not sure whether the oil industry has been managed well in 2012. For example, by law, oil company agreements with the government must be made public. But he says the details of some contracts have not yet been disclosed.

“Another issue," he says, "is this collateralization of the revenue and where 70% of the revenue is put into the consolidated fund. How do you target the revenue into projects? Once it goes into the consolidated fund how do you supervise how that money is being spent.”

Djantua says government is voted into power to serve the people, so it has to be open about how oil money is being spent. If it fails to do so, Ghana could join the ranks of other African oil producing nations – where proceeds are unaccounted for and little of it benefits the average person.

Nigeria and two other oil-producing African nations are preparing to sell as much as $3.75 billion in international bonds in 2013, the most from the continent ever, after yields sank below Italy and Spain and investors set aside concerns sparked by Ivory Coast’s default almost two years ago, reports Bloomberg.

Nigeria, the continent’s top oil producer plans to borrow $1 billion on overseas markets, twice as much as in 2011, while Angola is seeking $2 billion of debt.
Ghana, which issued the first Eurobonds in sub- Saharan Africa outside of South Africa in 2007, may sell a further $750 million, Deputy Finance Minister Seth Terkper said by phone from Accra December 13.

Sales the past 14 months by Namibia and Zambia drew five to 20 times more demand than sought. As the World Bank estimates sub-Saharan Africa needs $93 billion a year to overcome poor road networks and shortages of power and water, governments are taking advantage of historic- low yields across emerging markets.

Yields on Nigeria’s dollar bonds due January 2021 have dropped 201 basis points this year to 4.1 percent, while similar-maturity debt sold by Spain yields 5.18 percent and that for Italy 4.38 percent. Ivory Coast, which defaulted on $2.3 billion of bonds in January 2011, rewarded investors with the world’s best returns.

“Given their inherent financing needs and the lack of capital, it would be beneficial for African issuers to access cheap financing while it is available,” Kojo Amoo-Gottfried, a London-based analyst at FM Capital Partners Ltd., which manages about $1 billion, said by phone December 11. “Conducive market conditions will not persist indefinitely.”

Average emerging-market dollar-denominated bond yields have fallen 85 basis points, or 0.85 percentage point, this year to a record 5.57 percent, according to JPMorgan Chase & Co.’s EMBI Global Index.

The International Monetary Fund estimates developing nations will post growth rates next year almost four times faster than the developed world. Even with the declines, average yields compare with 1.8 percent on 10-year U.S. Treasuries, luring investors seeking higher returns.

Sub-Saharan Africa’s gross domestic product will expand 5.7 percent in 2013, the fastest pace after developing nations in Asia, from 5 percent this year, the IMF said October 9, boosted by higher commodity prices.
Investors are looking to tap into “a good growth story,” Aurelien Mali, a senior analyst at Moody’s Investors Service, said in a Nov. 7 phone interview from London.

While yields on Ghana’s dollar notes due October 2017 have dropped 164 basis points this year to 4.89 percent, those on five-year cedi-denominated debt stood at 21.25 percent, according to Standard Chartered Plc prices. The higher domestic yields reflect “underdevelopment of the domestic capital market and also the fact there is macroeconomic instability, inflation volatility and public finance with fiscal deficit volatility,” Mali said. “There is not a lot of credit stability for those markets.”

The drop in dollar funding costs reflects a “bubble” for emerging markets and doesn’t compensate for the risks investors are taking on, Charles Robertson, global chief economist at Renaissance Capital, said in a November 13 interview in London.

Nigeria’sinflation rate has stayed above the Central Bank’s 10 percent target this year, with price growth accelerating 12.3 percent in November. Sub-Saharan Africa’s second-biggest economy also relies on crude exports for about 95 percent of foreign-currency earnings and 80 percent of government revenue.

Ghana’s cedi has dropped 14 percent this year against the dollar, the worst performing currency in Africa after Sudan’s pound and Malawi’s kwacha. Kenya’s shilling plunged as much as 32 percent last year amid a fourfold surge in inflation.

“We are in a hard currency bond bubble globally,” Robertson said. “Local debt is the better prospect” because yields are higher than foreign securities to compensate for risk, he said.

Nigerian President Goodluck Jonathan said in his budget speech in October that the West African nation will sell its second Eurobond in 2013. Yields on Angola’s next international bonds may be lower than the 7 percent on seven-year debt sold in August because market conditions have improved, VTB Bank OJSC Chairman Andrey Kostin, which helped Angola sell its notes, said Oct. 31 after meeting the country’s President Jose Eduardo dos Santos and Vice President Manuel Vincente.

Kenya, Rwanda, Tanzania, Uganda and Mozambique may also issue their first foreign-currency bonds in the next few years, Moody’s said in October. Of the 54 countries in Africa, 13 have sold foreign-currency denominated debt on international markets, according to Moody’s. Dollar funding shields investors’ from currency swings and inflation, while giving issuers access to financing at lower rates than at home.

Investors are favouring African dollar bonds because they are scarce and holding them means they can diversify their portfolios, said Moody’s Mali. About 10 percent of the region’s external debt stock is international issuance, he said.
As Ivory Coast resumed interest payments in June and got an agreement from bondholders to service arrears by 2014, the government’s notes due December 2032 have returned 87 percent this year to 93.09 cents on the dollar, with yields dropping 765 basis points to 7.23 percent, according to data compiled by Bloomberg.

“If you’re looking for yield its really one of the last frontiers to find it,”Daniel Broby, deputy chief executive officer of Silk Invest Ltd., which holds Nigerian, Zambian and Senegalese Eurobonds, said in a Dec. 12 phone interview from London. “The risk is they get greedy. I just hope that in this rush for this window they act prudently.”

Manchester City midfielder YayaToure has been named the African Player of the Year for a second time.

Toure beat fellow Ivory Coast star and former Chelsea striker Didier Drogba into second place with former Arsenal midfielder Alex Song third.

He won the 2012 poll in a vote of head coaches or technical directors of countries affiliated to the Confederation of African Football.

Ex-Barcelona striker Samuel Eto'o holds the most titles, having won four times.

African Nations Cup winners Zambia were named team of the year with their coach Herve Renard named coach of the year.

Song currently plays for Barcelona while Drogba signed for Shanghai Shenhua in May.

Toure, who won the award last year, is part of the Ivory Coast team heading to the Africa Cup of Nations that starts in South Africa next month.

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