Fiscal Incentives for Nigerian Oil & Gas Sector goes live

Welcome back to the Vault.

This week, we ask you to join us as we take a trip around the continent to highlight key policy-related developments that should interest you. This week’s edition reviews significant fiscal and monetary policy actions in Nigeria, regulatory changes applicable to NGOs in Rwanda, as well as tax developments in Ghana.

Feel free to share your thoughts with us. We would also be pleased if you would visit our website for the latest policy briefs, and policy documents (e.g. laws, regulations, standards, guidelines, circulars, etc.). If you need insight on any key legislation, please do not hesitate to let us know.

NIGERIA

Finance minister approves consolidated guidelines for oil & gas fiscal incentives

Fresh from marathon discussions at the World Bank / IMF Spring Meetings in Washington, Nigeria’s finance minister (and coordinating minister of the economy) on Tuesday, 23rd April, presided over the signing of Consolidated Guidelines for the implementation of Fiscal Incentives for the Oil & Gas Sector (the “Guidelines”). According to the Special Adviser to the President on Energy:

  • the guidelines are designed to enhance the Nigerian oil & gas sector’s global competitiveness while stimulating economic growth;
  • the measures in the Guidelines have been designed to deliver a competitive IRR for oil & gas projects and attract over $10 billion in new investments within the next 12-18 months. They also underscore Nigeria’s commitment to reaching its long-term oil production target of 4 million barrels per day whilst enhancing the reliability of gas supply to boost export earnings and fuel Nigeria’s industrialization; and
  • the guidelines include the NUPRC Guideline on Hydrocarbon Liquids Content in a Non-Associated Gas (NAG) Field, targeted at accurately categorizing and quantifying the hydrocarbon liquid content in the affected fields. Additional guidelines focus on applicability of tax credits and allowances for Non-Associated Gas Greenfield Development, as well as the Midstream Capital and Gas Utilization Allowance, providing taxpayers with clarity on the computation of these benefits.

Nigeria attempts to implement Single Window (again)

The Nigerian government has announced plans to establish its National Single Window Initiative, with the objective of modernizing how trade is conducted by linking the country’s ports, government agencies, and key stakeholders. As envisaged (by the Nigerian government):

  • Nigeria could reap between $2.7 and $4 billion in economic benefits from the paperless trade that the initiative employs;
  • regional integration will be enhanced by links between the system in Nigeria and those of other African countries, as well as expedited cargo movement and general optimization of intra-African trade;
  • data harmonization will be a crucial component of the initiative and would involve enabling efficient capture, definition, analysis, and reconciliation of regulatory trade documents within one unified technological mechanism – leading to reduction of barriers to efficient timing, improvement in economic metrics, increase in transparency, reduction of trade costs, as well as significant revenue boost; and
  • the implementation plan will be split into short-term, medium-term, and long-term phases to ensure a smooth and effective rollout.

Nigeria has launched one form of the Single Window or another within the past 10 years with limited success, largely due to competing interests, discord between government agencies and inadequate buy-in by key players.

RWANDA

New ways of working for NGOs – reforming for good or restriction of liberties?

A law that seeks to regulate the operations of Non-Governmental Organisations (“NGOs”) in Rwanda has scaled through first reading within the Rwandan parliament and is expected to be approved soon. The draft law will repeal the two main laws that presently regulate operations of NGOs in the country. Key highlights of the bill are set out below.

  • NGOs are restricted from spending more than 20% of their operating budget on programs that are ‘not in the interest of its beneficiaries’. The intention here is to ensure that at least 80% of an NGO’s spending is directed towards impactful interventions and support for low-income / vulnerable persons. Any expenditure that could cause the 20% limit to be exceeded must be justified to the authorities.
  • Although the law declares that registered NGOs enjoy administrative, financial and human resources management autonomy, affected organizations are restricted from changing their main objectives/purpose without approval of the Board (the agency that registers, regulates and monitors the activities of NGOs). The law also restricts affected organizations from engaging in fundraising or organizing public rallies with an intention to support any political organization or any independent candidate campaigning for a political office, or to propose or support candidates for public office in any other way.
  • NGOs are required to submit details of their proposed activities for approval by relevant government agencies/officials. An NGO may also be requested to conduct an audit of its operations and financial management within 90 days from the date it receives a letter requesting the audit. The cost of such audit will be borne by the NGO.

The terms of the proposed law vitiate funders’ discretion in terms of use of grants delivered to NGOs in Rwanda. Further, by exercising audit rights, approvals of budget and review of schedule of activities, the Rwandan Government is treating the affairs of affected organisations like those of an agency of Government. Opponents of this proposed law insist that it limits civil liberties in the country and triggers a climate of fear, whilst stifling dissent and freedom of speech.

GHANA

Collection of tax on foreign income of Ghana residents to commence in May

The Commissioner General of Ghana’s Revenue Authority, Julie Essiam, has announced that collection of tax on the foreign income of residents (i.e. defined as persons who have resided in the country for at least 183 days) is set to commence on 2nd May 2024.

This move, as clarified by the Commissioner General, is not on account of a new policy but the implementation of existing policy aimed at increasing government revenue. Persons affected include content creators, influencers on platforms like X, YouTube, and TikTok, as well as freelancers whose foreign incomes were previously excluded from the tax base.

As the government grapples with the difficulties of tracking and verifying the impacted foreign earnings, it has promised tax rebates for persons who voluntarily disclose their earnings by the effective date of 2nd May 2024.

Data Vault:  South Africa Economic Statistics, March 2024

With the South Africa general elections scheduled for 29th May 2024, we present a glimpse into the performance of key indicators of the nation’s economy.

Source: Department of Statistics, South Africa

What we are also following

We’re also tracking some events in the news, and how they may affect the decisions of policymakers.

Nigeria | US launches global food security strategy plan for Nigeria

The United States Agency for International Development (USAID) recently announced that the US has unveiled its new Global Food Security Strategy Country Plan for Nigeria. According to the agency’s director, the strategy aligns with US President’s commitment to enhance food security in Nigeria.

The plan prioritizes the value chains of rice, maize, and horticulture in six states. It also pushes for inclusive participation, value chain development, climate adaptation, and private sector engagement. USAID aims to collaborate with the Nigerian government, particularly the Nigerian Stored Products Research Institute (NSPRI), to enhance technology and infrastructure to reduce post-harvest losses.

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