By Omoh Gabriel, Deputy Business Editor
LAGOS‚Äî THE Federal Government earned, in the last four years, a total ofN357.507 billion as excess retlenue from crude oil proceeds. Since the assumption of office, by the administration four years ago, the average price of crude oil in the international market has been above the budget benchmark. While the budget was based on $18 or $22 in most cases, the price of crude had risen during the period on the average to between $25 and $30 per barrel, thus giving rise to oil windfall sometimes referred to as excess crude oil proceeds.
The proceeds have, most of the time, generated disagreement between the Federal Government and state governments which clamour for the sharing of the money.
The excess crude earnings ordinarily should have enhanced the welfare ofNigerians but this seems not to have impacted positively on the citizenry in terms of improved standard of living which, by current estimate, has gone down as more than 70 per cent of the population are said to be living below one dollar per day.
Available data with the Central Bank of Nigeria showed that in 1998, the Federal Government earned nothing in terms of excess crude proceeds but in 1999, when Obasanjo took over the Presidency of the country, Nigeria got a total ofN29. 891 billion from excess crude oil proceeds. In 2000, CBN records showed that govermnent got a total ofN227.002 billion as revenue from excess proceeds from crude oil export, while in 2001 it earned an additional income of N97 billion from excess crude oil proceeds. The sum ofN2.388.8 billion accrued from excess crude oil proceeds in2002. Because ofthe fall in the excess crude oil export, government embarked on fuel price increase to shore up its revenue from local sources in 2003.
But the same government in these years of bumper price from the international oil market has run its affairs
on deficit, borrowing huge sums from the money market to finance its expenditure at very high cost. Alleged profligacy of the Federal Government drew flak from the International Monetary Fund (IMF) and
the World Bank which described Nigeria as a country where oil wealth has not benefitted its populace. Despite governmentÃìs excess earnings from crude oil which is far above successive budget estimates,
govermnent, in1999, incurred a deficit of N285 billion.
CBN data showed that in 2000, government incurred a deficit ofNl 03 billion, N22 1.04 billion in 2002 and in 2003 N301 .4 billion.
As a result of this huge deficit financing, despite government earnings, the Federal Government spent a total ofN556 billion to service domestic debt. This implies that because a chunk of the money was borrowed from the banking system, government spent a large portion of the yearly recurrent budget in paying domestic as well as external debts.
Financial analysts are worried that much of the country resouices is being frittered away on debt servicing.
‚Ä¢ In 2002, government spent N 12.4 billion on agriculture, one of its priority sectors, while a total ofN3 3.3 billion was spent on servicing domestic debt. Another priority area of government‚Äî road and construction‚Äîhad only N9.27 billion as total expenditure inthe recurrent expenditure of government, while health received N50 billion.
The organised private sector at, the weekend, lamented governmentÃìs poor handling of the economy. According to the half year review of the economy by NACCIMA, the sluggish growth of the economy
‚Ä¢ witnessed in 2002 has continued in the first half of 2003. The NACCIMA said Nigeria was in dire need of considerable improvement as the performance of macro-economic variables showed that economic recovery had not shown a significant progress. The private sector umbrella body said that an assessment of the attendant effects of this unfortunate scenario indicated existence of low productivity, low quality social services, rising rate of unemployment, low social welfare policy programme, tensed industrial relations climate, dysfunctional infrastructural facilities, epileptic supply of electricity, scarcity of petroleum products, insecurity of life and property, high cost of funds, continuous naira depreciation, among others.
Debt deductions cripple state govts
By Omoh Gabriel
LAGOS‚ÄîEIGHT states in the country have been bogged down by heavy debts as 24-5 0 per cent of their monthly allocations are deducted by the federal authority at source. This leaves these states with little resources to prosecute meaningful projects. Deduction at the source is only one of the various debts state governments are grappling with. The Appropriation Act requires that state governments owing external debts should have their debt service obligations deducted at source by the Federal Government on pro-rata basis.
Figures from the Federal Ministry of Finance showed that Abia and Lagos states on monthly basis have 50 per cent of their monthly allocations deducted at source for external and internal debt settlement. On rnonthlybasis, the sum ofN464.6 million is deducted at source from the average monthly allocation of Ni .09 billion to Abia State. Of this amount, N409.6 million is deducted for external debt service while the sum ofN55 million is deducted at source for internal debt for which the ~ate has directed the Accountant-General of the Federation to pay at source.
According to Finance Ministry data, Lagos State.pays at source the sum ofN652.4 million. Of this amount, N353 million is deducted for external debt while the sum ofN299.3 million is deducted for internal debt to which the state has committed its statutory allocation. In all, the state has on balance the sum of N65 9.2 million with which to meet its obligation to other creditors as well as run the day to day affairs of the state from federal allocation.
Followed closely is Anambra State which has 41 per cent of its monthly allocation deducted for debt servicing. Finance Ministry figures showed that the sum ofN393 million is deducted at source from the stateÃìs average monthly revenue allocation ofN968.6 million, leaving the state with a balance ofN5 75.1 million from federal allocation to run the state.
Kogi State is next with 40 per cent of its statutory allocation committed to debt servicing. Available figures showed that of the N97i .6 million average monthly revenue accruing to the state from the federation account, N254. 1 million is deducted at source for external debt obligation while N13 8.5 million is
‚Ä¢ deducted for internal debt. This, therefore, leaves the state with a monthly average revenue ofN5 78.9 million.
Edo State, on the other hand, has 33 per cent of its average monthly revenue deducted at source to service its external and internal debt for which the Federal Government acted as guarantor. Of the Ni .01 billion average monthly revenue accruing to the state, N202.4 million is deducted at source to service the stateÃìs external debt while the sum ofNl 30 million is deducted by the Federal Government to service
internal debt. Equally affected is Adamawa State which 30 per cent of its average monthly revenue is deducted at source. Adamawa with a monthly average revenue ofN964.8 million has a total ofN293.0 million deducted monthly for debt servicing and the state is left with N67 1.7 million on the average to run its affairs from the federation account. It is the same story with Cross River and Ekiti states where also 30 per cent of their monthly revenue is deducted at source by the Federal Government to service debt. In the case of Cross River, a total ofN3 14.3 million is deducted monthly out ofa monthly average revenue of Ni .06 billion. On balance, the state has N746.0 million for its general administration and other purposes. Ekiti with N748.4 million average monthly revenue has N226.5 million deducted monthly leaving it with a balance ofN52 1.9 million with which to administer the state.
For Enugu State, 29 per cent of its average monthly revenue amounting to N257.6 million out of an average monthly revenue ofN897. 1 million is deducted by the Federal Government at source. Other states affected are Kwara with a monthly deduction ofN233.6 million, Imo N48 lmiulion, Bomo N284.3 million and Benue N258.7 million.
Imo State government, weekend, cried out over the deductions, urging well-meaning Nigerians to prevail on the Federal Government to stop the deductions. According to the state, if this is not done most of the development programmes of the state governments would be crippled. According to Imo State Commissioner for Information and Culture, Chief Chris Okewulonu, the Federal Government has a lot of money in its hands, saying it honestly has no business keeping that kind of money when the people at the grassroots are suffering undue hardship.
First Bank, Union Bank, UBA, Zenith, GTB top
By Omoh Gabriel
LAGOS‚ÄîFIRST Bank PLC, Union Bank PLC, UBA, Zenith and Guarantee Trust Bank emerged the highest income generating banks in the country, according to Vanguard survey of 2003. While First Bank had a gross earning of N44.6 billion in 2003 to place first in the earning scale, Union Bank with its N34.7 billion gross earning in 2003 placed second. The United Bank for Africa was third in terms of gross earning having posted a total of N23.7 billion in the 2003 financial year. The financial land scape was not for the first generation banks alone as Zenith displaced other older banks to clinch the fourth position in the club of high revenue generating banks in the country. Another new generation bank, Guarantee Trust Bank, was next with a gross earning of N15.7 billion. Afribank with a gross earning of N13.8 billion earnings in 2003 is the sixth highest revenue generating bank in the country. Standard Trust Bank, another of the fast growing new generation bank, followed closely with a gross earning of N 13.1 billion. Intercontinental Bank, though its 2003 financials are yet to be released, placed eight with the Nl0.96 billion it generated as gross earnings in 2002. Wema Bank in 2003 had a gross earning of N9.7 billion followed by Citizens Bank which 2002 result put its gross earning at N9.2 billion. Most other banks had gross earnings less than N9 billion.
According to research findings, First Bank had the highest figure ofNl 0.3 billion alter tax profit followed again by Union Bank with a N6.6 billon after tax profit. Zenith ranked third in terms of after tax profit volume with a figure ofN4.420 billion. GTB followed closely with N3.2 1 billionjust as UBA posted N2.989 billion to come next to GTB. Standard Trust was next with an after tax profit ofN2.470 billion.
Oceanic Bank which 2002 results posted an alter tax profit ranked higher than those which 2003 result has been released with its N2. 186 billion record in 2002. Equatorial Trust which posted N2.06 billion in 2003, followed closely. It is followed by Intercontinental with its 2002 result ofNl .88 billion.
But in terms of total assets, Union Bank came top with an asset base ofN329.6 billion, thus beating First Bank to the second position with the latterÃìs N320.6 billion asset base. UBA retained its traditional third position this time with a huge asset base ofN2Ol billion as at March2003. Zenith remained within the five circles with a total asset ofNl 12.5 billion. Standard Trust was next with a total asset base ofN9l .6 billion.
‚Ä¢ Others within the big 10 club include, AfribankN85.5 billion, Guarantee Trust N83 .3billion, Wema Bank N6 1.3 billion. Diamond Bank was next with N59.3 billion while Oceanic Bank with its 2002 result followed with N53 .3 billion. Curiously, only First Bank in the pack of older banks made the first lOin the return on equity measure. The bank recorded a 54 per cent on return on equity. It was followed by Chartered Bank with a return on equity of46 percent. Afribank and Oceanic Bank had a return on equity of 67 per cent and 50 per cent respectivelybut based on their 2002 account. Zenith followed with a 40 per cent return on equity while Equatorial Trust Bank had a 45 per cent record as against FidelityÃìs 39 per cent. Union Merchant Bank and GTB had 36 per cent each.
On capital adequacy, Regent Bank tops the chart with 59 per cent followed by First Atlantic. Gulf Bank was next with 52 per cent as Union Merchant followed with 47 per cent.