Economy

Long-Term Tax Incentives to Firms for Projects Dangerous—CISLAC

Published

9 years ago

13/10/2017

By Modupe Gbadeyanka

Federal Government has been warned to avoid institutionalising a policy of the granting of long-term tax incentives to corporate businesses to achieve project implementation.

According to the Civil Society Legislative Advocacy (CISLAC), this has the tendency to create a distorted fiscal picture necessary for sustainable revenue and expenditure planning for infrastructural development.

In a statement signed by the Executive Director of CISLAC, Mr Auwal Ibrahim Musa (Rafsanjani), it was also noted that granting long-term tax incentives to firms for project implementation was susceptible to abuse and could create complex tax administration frameworks that would result in long term revenue loss to the nation.

“We are worried that the failure of government to deliver on its promise to Nigerians on infrastructure development, after over two years in office, due to the financial challenges because of dwindling revenues from oil, is driving her into panic mode and making her resort to desperate measures, including falling back on discredited and obsolete approach of handing out tax incentives to show results, probably for electioneering campaign prelude to 2019,” Mr Musa said.

The Executive Director pointed out that, “This must however not be done at the expense of long term national interest and development.”

He said CISLAC finds it disturbing that a country that is posting a debt to GDP Ratio of 16 percent and a budget deficit of about 31 percent of her annual budget in 2017, planning to borrow another $5.5 billion (about N1.9 trillion) to fund the 2017 budget, while already spending about 36 percent of scarce revenues to service debts and is in danger of losing international funding to provide social services, still finds it convenient to concede revenues through the use of incentives.

That this is done in exchange for road construction is quite embarrassing and an indictment of the government, he said.

“We remind the government that in the era of falling prices of commodities, including oil, dipping national oil reserves and waning demand for fossil fuels, countries are seeking alternative sources of revenues through domestic resource mobilization with emphasis of maximizing tax revenues to finance development and meet SDG goals.

“They are blocking tax loopholes, addressing illicit financial flows, tackling tax evasion and avoidance, re-negotiating fiscal regimes in contracts and doing away with granting of tax incentives.

“CISLAC understands that the arrangement reached with the Dangote Group to offer tax incentive in exchange for road construction falls within the purview of the CITA (Exemption of Profits Order 2012).

“However, the new National Tax Policy envisages that tax incentives are sector based and not directed at entities or persons that should provide a net benefit to the country, and equally available to all persons in the same class and be very clear and avoid ambiguity.

“We find no evidence that these principles have been followed in this case. The fact that the design and cost of the proposed road project is unknown, reveal the quality of thinking that went into this decision.

“We also find the review of the Order to extend from five years to ten curious. We are aware that this tendency for hasty and discretionary award of tax incentives is what makes it prone to abuse and corruption as has been with previous arrangements such as the Pioneer Status Incentives which this administration have had to cancel and review.

“For instance, have other cement companies being offered the opportunity to construct roads in exchange for tax incentives? How many of such is government willing to grant and what will be the cost? Is such concession exclusive to some entities? How many micro, small and medium enterprises businesses that have funded road rehabilitation, sunken boreholes and provided other public benefits to which the CITA (Exemption of Profits Order 2012) also applies have benefited from the order?

“CISLAC observes that the process leading up to this has lacked clarity and transparency as a cost-benefit analysis and report has not been publicly disclosed; there are no indications that similar corporate entities were offered equal opportunity.

“We find the very idea of offering firm tax incentives to build a road from which it directly benefits undesirable.

“We therefore call on the Minister of Finance to review this decision and ensure that this practice is stopped to avoid setting a dangerous trend that would hurt the nation in the long run. The actual revenue forgone should be computed and announced for all Nigerian to know by January 2017, as envisaged by the National Tax Policy.

“The process should be open to all potential beneficiaries in the sector, if it must proceed for fairness and equity.

“The FIRS should undertake a thorough audit at the appropriate time and publicly declare the implication to revenue to the Nigerian people.

“We call on the National Assembly Committees on Finance to interrogate this decision to ensure that it passes the tests of transparency and equity and is truly in the national interest. The relevant Committees must carry out effective oversight to ensure value for money, especially since any such incentive is meant to take effect only after the road project is completed.

“We call on the federal government to be mindful of the widening fiscal deficit, increasing national debt and wide infrastructural gap and bleak oil revenues and address these through better tax administration, tackling tax evasion and avoidance and illicit financial flows and ensure that all citizens and corporate businesses pay their fair share of tax.

“Government should adhere strictly to the implementation of the National Tax Policy and follow through her commitments in the OGP national Action Plan This is the only way for sustainable revenues to finance development for our people.”

Economy

Four Securities Erase N51.17bn from NASD Exchange

Published

22 hours ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

Four securities weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.95 per cent on Friday, erasing N41.17 billion from the bourse, which had its market capitalisation at N2.567 trillion compared with the previous session’s N2.618 trillion.

In the same vein, the NASD Unlisted Security Index (NSI) decreased at the close of business by 85.28 points to 4,277.07 points from 4,362.32 points.

The price decliners were led by 11 Plc, which gave up N20.50 to sell at N200.50 per share compared with the preceding day’s N221.00 per share, FrieslandCampina Wamco Nigeria Plc dropped N16.94 to close at N155.20 per unit versus Thursday’s closing price of N172.14 per unit, Central Securities Clearing System (CSCS) Plc went down by N2.11 to N84.68 per share from N86.79 per share, and Afriland Properties Plc lost 11 Kobo to end at N16.74 per unit, in contrast to the N16.85 per unit it closed a day earlier.

During the trading day, the value of transactions jumped by 172.1 per cent to N29.9 million from the preceding session’s N10.9 million, and the volume of trades soared by 136.5 per cent to 955,096 units from the previous 403,901 units, while the number of deals went down by 11.4 per cent to 31 deals from 35 deals.

Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units worth N6.5 billion, and CSCS Plc with 68.6 million units sold for N4.7 billion.

GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, trailed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.

Economy

Cautious Trading, Profit-taking Weaken Nigeria’s Stock Exchange by 0.66%

Published

23 hours ago

27/06/2026

Dipo Olowookere

By Dipo Olowookere

The last trading session of this week on the floor of the Nigerian Exchange (NGX) Limited ended on a negative note, with a 0.66 per cent loss on Friday.

This was influenced by sustained selling pressure and cautious trading, which forced investors into profit-taking.

Data obtained by Business Post showed that the energy sector fell by 4.66 per cent, the insurance counter dipped by 2.23 per cent, the consumer goods index depreciated by 0.96 per cent, and the banking segment shed 0.28 per cent, while the industrial goods space remained unchanged.

At the close of business, the All-Share Index (ASI) of Nigeria’s stock exchange went down by 1,531.81 points to 232,049.02 points from 233,580.83 points, and the market capitalisation dropped N983 billion to settle at N148.905 trillion compared with Thursday’s N149.888 trillion.

Aradel was the worst-performing equity after it lost 10.00 per cent to close at N1,417.50. International Energy Insurance slipped by 9.95 per cent to N5.79, Trans-Nationwide Express depreciated by 9.89 per cent to N3.28, eTranzact crashed by 9.79 per cent to N14.75, and UPDC slumped by 9.72 per cent to N28.12.

The best-performing equity for the day was Universal Insurance, which gained 6.32 per cent to close at N1.01, McNichols grew by 5.52 per cent to N8.60, Linkage Assurance expanded by 4.67 per cent to N1.57, NGX Group appreciated by 4.35 per cent to N120.00, and Transcorp increased by 3.62 per cent to N41.50.

As look at the activity level indicated that investors traded 388.7 million stocks worth N18.4 billion in 44,631 deals compared with the 393.7 million stocks valued at N19.2 billion executed in 45,813 deals a day earlier, representing a decline in the trading volume, value, and number of deals by 1.27 per cent, 4.17 per cent, and 2.58 per cent, respectively.

Economy

Official FX Market Sees Naira Dip to N1,380.93/$1

Published

23 hours ago

27/06/2026

Adedapo Adesanya

By Adedapo Adesanya

The Naira recorded a loss of 82 Kobo or 0.06 per cent against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, June 26, exchanging at N1,380.93/$1, in contrast to the previous day’s rate of N1,380.11/$1.

Equally, the domestic currency further weakened against the Pound Sterling in the official FX market yesterday by N6.06 to settle at N1,824.90/£1 versus the preceding session’s N1,818.84/£1, and lost N10.74 on the Euro to sell at N1,577 .58/€1 versus N1,566.84/€1.

At the GTBank forex counter, the Naira depreciated against the greenback during the session by N4 to close at N1,387/$1, in contrast to Thursday’s value of N1,383/$1, and at the parallel market, it was unchanged at N1,395/$1.

Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the Central Bank of Nigeria (CBN), as it allows demand and supply to move the market.

Also, a stronger greenback has generally put significant pressure on emerging-market currencies.

Nigeria has accessed the first tranche of a proposed $5 billion derivatives financing arrangement with First Abu Dhabi Bank PJSC, the largest lender in the United Arab Emirates (UAE).

The $5 billion facility, approved by the National Assembly earlier this year, is part of the federal government’s plan to diversify external financing sources and reduce borrowing costs. Structured as a Total Return Swap with First Abu Dhabi Bank, proceeds are earmarked for refinancing debt and supporting infrastructure financing.

If the proceeds are brought into the country through the official FX market, the transaction will increase the currency reserves or Dollar liquidity.

At the cryptocurrency market, Solana (SOL) grew by 2.2 per cent to $71.92, Cardano (ADA) gained 1.1 per cent to trade at $0.1474, Ripple (XRP) also appreciated by 1.1 per cent to $1.05, Dogecoin (DOGE) expanded by 0.9 per cent to $0.0755, and Ethereum (ETH) improved by 0.4 per cent to $1,578.84.

On the flip side, TRON (TRX) slid 0.6 per cent to $0.3203, Binance Coin (BNB) slumped by 0.3 per cent to $564.33, and Bitcoin fell by 0.2 per cent to $60,219.37, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.