…targets mopping up N850bn unclaimed dividends, dormant accounts
The Federal Government expended a total of N3.10 trillion on debt servicing from January- November 2020, out of its N3.48 trillion retained revenue for the same period.
This puts Nigeria’s debt-to-revenue ratio, a key measure of debt sustainability, at 89 per cent for the period under review, a far cry from the World Bank’s recommended 22.5 per cent for low-income countries.
By implication, for every N100 generated, N89 was expended on debt servicing, leaving the government with little to spend on infrastructure, a pointer to gaps in revenue generation and high government spending. Speaking at the virtual presentation of the 2021 approved budget in Abuja, Minister of Finance,
Budget and National Planning Zainab Ahmed said the Federal Government’s share of oil revenues generated in 2020 was N1.46 trillion — representing 157 per cent performance, over and above the prorated sum in the revised 2020 budget, Non-oil tax revenues stood at N1.14 trillion — 77 per cent of revised target.
Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N591.80 billion and N172.25 billion, representing 79 per cent and 66 per cent respectively of the prorate revised targets for the period.
On the expenditure side, the minister said as at end of November 2020, N1.22 trillion had been released for capital expenditure, out of which, up to N118.37 billion was released for COVID-19 capital expenditure.
On funding sources for the 2021 budget, Ahmed said 30 per cent of projected revenues are to come from oil-related sources while 70 per cent is to be earned from nonoil sources.
“This, therefore, shows that the Nigerian economy is gradually becoming less dependent on oil. Overall, the size of the budget has been constrained by our relatively low revenues,” she said. She stated that overall budget deficit for the 2021 budget is N5.6 trillion, representing 3.39 per cent of the country’s Gross Domestic Product.
The minister further explained that the budget deficit would be financed mainly by borrowings, as N2.34 trillion would be borrowed from domestic and foreign sources each, N709.69 billion from multilateral and bilateral loan drawdowns, while privatisation proceeds would provide N205.15 billion.
The minister said several measures are being instituted to improve government revenue and entrench a regime of pru dence with emphasis on achieving value for money.
“Government will aim to optimize the operational and collection efficiencies of GOEs, with a view to their generating significantly higher revenues and controlling expenditures more tightly,” she said “The cost-to-revenue ratio of government operated enterprise (GOEs) has by Finance Act, 2020 been limited to a maximum of 50 per cent, while regular monitoring and reporting of revenue and expenditure performance of GOEs will be undertaken by both the Budget Office of the Federation and the Office of the Accountant General of the Federation.”
According to Ahmed, the Federal Government will have access to as much as N850 billion from the special trust fund of unclaimed dividends and dormant account balances, saying the funds will be released to the owners when they are identified.
“On the issue of unclaimed dividends and government’s accounts and projections, there would be as much as N850 billion to be realised into the special trust fund of unclaimed dividends.
“The government is keeping the money in trust for the beneficiaries. At any time, a registrar or a bank confirms that this is the true and bonafide beneficiary of this fund, then the government will release from that trust fund to the investor who has it
“They have nothing to lose as they would be paid their entitlements from the special trust fund to be set up by the Federal Government once they are properly identified.”
The 2020 finance act signed into law by President Muhammadu Buhari on December 31, 2020, states that: “Any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the trust fund”.
The act also exempts micro and small companies earning N25 million or less as annual turnover from paying the tertiary education tax.