FEC ratifies $3.1bn Customs Modernization Project
Zainab Ahmed

…How African countries are preparing for vaccine roll-out

…Owners of dormant accounts, unclaimed dividends have nothing to fear

…Debt Service gulps N3. 3trn

…N4.691trn lost to tax waivers

…No more fuel subsidy

By Emma Ujah, Abuja Bureau Chief &  Sola Ogundipe, Health Editor

The Federal Government said yesterday it was still working on the type and and quantity of COVID-19 vaccines to procure when some other countries on the continent are already placing orders on the product.

For instance, countries such as South Africa, Senegal, Kenya and Egypt, among others, are expecting delivery of the vaccines in a few weeks.

However, the Finance Minister, Mrs. Zainab Ahmed, who disclosed this yesterday at the 2021 budget ministerial briefing, said the federal government would seek

supplementary budget for 2021 fiscal year to fund Coronavirus (COVID-19) vaccination program.

She said already, a combined team of the relevant authorities, including the Ministry Finance, Ministry of Health and the Budget Office of the Federation, was currently working on the cost of the program.

Mrs. Ahmed said the Minister of Health and his team were still working on the details of what it would cost the nation.

She stated: “We agreed that more efforts is needed to have clarity as to whether the provisions in the budget will be adequate or we have to make additional provisions by way of a special supplementary budget to make more provisions for COVID-19 vaccinations”.

According to her, once the executive arm is sure of what it would cost to buy the vaccines, with the necessary logistics, a supplementary budget would be presented to the National Assembly.

The D-G Budget, Ben Akabueze, who gave further explanation said that the vaccination of 20 per cent of the population would be covered by donations but that given the standard practice of having to vaccinate at least 70 per cent, the nation has to pay for the cost of vaccines for the balance of 50 per cent of the population.

How African countries are preparing for vaccine roll-out

However, as COVID-19 vaccines are being rolled out globally, African nations are putting finishing touches to their preparations to purchase them and begin their vaccination campaigns.

The World Health Organisation, WHO, wants pharmaceutical companies to use the COVAX mechanism it set up along with the international vaccine organisation Gavi to distribute jabs to under-developed countries.

COVAX has agreements to support 92 low- and middle-income countries, more than half of them in Africa. It has struck deals to procure two billion vaccine doses, the first doses to be delivered by the end of January.

But COVAX has indicated that deliveries will only start in the second quarter of 2021, so to avoid being totally excluded from advance access to vaccines, most african countries are eyeing supplies of Chinese and Russian vaccines, which may have not been tested as extensively as the Pfizer-BioNTech, Oxford-AstraZeneca and Moderna vaccines, but are most likely cheaper and easier to store.

Nigeria is expecting its first shipment of 100,000 doses of the Pfizer-BioNTech vaccine by the end of January. It is not clear which of the vaccines brands the country plans to purchase eventually, but negotiations are ongoing according to the Minister of Health, Dr, Osagie Ehanire.

Nigeria plans to vaccinate 40 percent of the population in 2021 and another 30 percent by the end of 2022. The government is expecting 20 million doses of the COVID-19 vaccine.

The Seychelles became the first African country to start inoculating its population on January 10, utilising the Chinese Sinopharm vaccine

South Africa has ordered 1.5 million doses of the Oxford university/AstraZeneca vaccine from the Serum Institute of India. One million doses will be delivered in January followed by 500,000 in February.

South Africa has also secured 20 million doses through another arrangement, and signed up to receive vaccines for six million from COVAX, the international facility set up to pool orders for countries.

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Kenya has ordered 24 million doses of the COVID-19 vaccine developed by AstraZeneca and expects them to start arriving in the second week of February.

Senegal is expecting its first doses of the vaccines in March 2021 through a partnership with WHO, UNICEF, World Bank and the European Union.

The Democratic Republic of Congo and Botswana are negotiating for access to China for unspecified doses of its Sinopharm vaccine.

Morocco is in position to get priority access to 10 million doses of the Sinopharm vaccine in exchange for its participation in Stage 3 trials. Vaccination campaign is expected to begin by early February.

Egypt plans to provide 20 million doses of the COVID-19 vaccine after signing an official agreement with Gavi which is entrusted with distributing vaccines worldwide and approving vaccines with the WHO.

Guinea ordered 55 doses of the Russian Sputnik vaccine in December for some of its government officials.

Acquiring sufficient vaccines is a financial challenge for Africa as only a few of the  countries have adequate plans for funding vaccination programmes, according to the World Health Organisation, WHO, which expects that  3 percent of Africans will be vaccinated by March 2021 and 20 percent by the end of 2022.

Besides getting adequate vaccine supplies, African countries face storage challenges.  The Pfizer-BioNTech and Moderna vaccines require storage at -70 and -20 degrees respectively, making their distribution and storage cumbersome.

According to a survey by the Centres for Diseases Control and Prevention, CDC, Africa and the London School of Hygiene and Tropical Medicine, 79 percent of people in 15 African countries are ready to be vaccinated if the vaccines are safe and effective.

Owners of dormant accounts, unclaimed dividends have nothing to fear

Meanwhile, Ahmed explained that owners of dormant accounts and unclaimed dividend 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.

She stated:  “The unclaimed dividend and dormant accounts will be pooled into a Special Trust Fund .   At any time that a bank or the registrar confirms that this is the true owner of such funds, the government will release the funds, ”the minister said in response to a question on whether the federal government wanted to use the controversial fund to finance its budget deficit.

On the implementation of the 2020 budget, Mrs. Ahmed disclosed that N1, 8 trillion has been spent on capital budget and that the implementation of the capital budget would continue until March 31, 2021.

She explained that the necessary approval to that effect had been received, indicating that both 2020 and 2021 budgets would run concurrently until the end of the first quarter of the year.

The minister disclosed that debt service gulped N3. 27 trillion in 2020 and that the N4. 8 trillion to be borrowed this year would come from both the domestic capital market and the international sources.

Debt Service gulps N3.3trn

The minister disclosed that the federal government spent N3. 27 trillion and that the N4. 987 trillion to be borrowed this year would come from both the domestic sources and the international sources.

She ruled out the possibility of seeking any funding by the International Monetary Fund (IMF) but added that the government was working with the World Bank on the $1. 5 billion Budget Support Facility, to be sourced from the institution.

On the 2021 Borrowing Plan, the Director-General (D-G) of the Debt Management Office (DMO), Ms. Patience Oniha, explained that the plan was to borrow 50 per cent of the figure from the domestic market and the other half from international sources.

She said, however, that the decision could be reviewed, depending on the situation in the international arena.

According to her, “The funding plans have been laid out clearly. Of the N4. 8 trillion to be borrowed, N2. 4 trillion will be raised from the domestic market.   We will continue raising funds in the domestic market while we keep monitoring the trends in the international market. As conditions are good and pricing is favourable, we will look in that direction.”

N4.691trn lost to tax waivers

While the federal is having revenue difficulties, the minister disclosed that it had to give up N4. 691 trillion in what should have been tax revenue, as part of efforts to assist targeted sectors of the economy.

She said, “We have included a Tax Expenditure Statement (TES) as part of documents accompanying the 2021 Budget to the National Assembly which seeks to dimension the cost of tax waivers/concessions, and evaluate their policy effectiveness.

“Tax expenditures (TEs) are currently estimated to (1) CIT N1.18tr, (2) VAT N3.1tr, (3) Customs Duties N347bn (4) VAT on Imports 64bn. Going forward, we will set annual ceilings on TEs to better manage their impact on already constrained government revenues.”

No more fuel subsidy

The minister also said that subsidy on petroleum product has been eliminated by the present administration and that as such , no provisions were made for it.

She explained that the slight movement in the price of Premium Motor Spirit in December , last year was only to reflect the cost adjustment and that it had nothing to do with subsidy.

However, she said that there had been accumulated subsidies in the electricity sector and that as such, provisions were made for market players in the current budget, adding that it could take up to 2022 to clear.

Akabueze, said that provisions for funding the Niger delta Development Commission (NDDC) were made, despite the on-going probe of the organization by the federal government because it was statutory.

He was responding to queries by some interests who have questioned the propriety of the NDDC budget , given the on-going probe of the commission over financial mismanagement .

Where the money is going

The budget is projected to be N13.08 trillion, which is 21% higher than revised-2020 Budget.

Recurrent (non-debt) spending, estimated to amount to N5.93 trillion, is 43.19% of total expenditure, and 14.32% higher than 2020 revised estimates (reflecting increases in salaries & pensions).

Aggregate Capital Expenditure of N3.85 trillion is 29.43% of total expenditure; and 43.4% higher than the 2020 Revised Budget (inclusive of Capital component of Statutory Transfers, GOEs Capital & Project-tied loans expenditures).

At N3.12 trillion, debt servicing is 23.88% of total expenditure, and is 16.63% higher than 2020 revised Budget.

Provision to retire maturing bonds to local contractors / suppliers of N220 billion is 1.68% of total expenditure. This reflects FGN’s commitment to offset accumulated arrears of contractual obligations dating back over 10 years.

Overall budget deficit is N5.196 trillion   for 2021, representing   3.64% of GDP.   The budget deficit is to be financed mainly by borrowings: Domestic sources: N2.14 trillion ; Foreign sources: N2.14 trillion.   Multi-lateral /bi-lateral loan drawdowns would account for N709.69 billion; while Privatisation Proceeds   is expected to yield N205.15 billion

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