Sirbeina Consult LTD

17/12/2024

24/10/2022

Depression, The Great

The Great Depression was the world-wide economic slump which began in the US following the Wall Street Crash of October 1929, and put hundreds of millions out of work across the capitalist world throughout the 1930s.

After a decade of unprecedented boom in the U.S., known as the “Roaring Twenties”, the US economy had run out of steam. Despite an exceptional level of productivity, US workers could no longer support the enormous mass of fictitious capital created by speculation on the share market and unsecured bank loans. At that time, there was very little government regulation and no practice of government intervention in finance. Share prices began to slip as profitability declined and on 29 October 1929 share prices on Wall Street collapsed catastrophically, setting off a chain of bankruptcies and defaults which spread across the world. Factories and businesses closed, workers plunged into poverty in millions, houses and farms were repossessed, crops which could not be sold were dumped into the sea. By late 1932, share prices had fallen to 20 percent of their 1929 value and 11,000 of the United States’ 25,000 banks had collapsed, manufacturing output had fallen to half its 1929 level, and 25 to 30% of workers throughout the world were unemployed and with no means of support, roamed the country in search of work. In the US, the uncontrolled development of the early 1920s had reduced vast tracts of land to a dust bowl, and farmers unable to sell their produce, unable to repay their bank loans were evicted and with their families joined the human flood of misery.

The Great Depression spread rapidly from the US to Europe and the rest of the world as a result of the close interconnection between the United States and European economies after World War I. The United States had emerged from the war as the major creditor of postwar Europe, whose national economies had been greatly weakened by the war itself, by war debts, and, in the case of Germany by the need to pay war reparations. So when the US economy slumped, credits and loans were called in and whole national economies were thrown immediately into bankruptcy. Germany and Great Britain, which were the most deeply in debt to the US were hardest hit: nearly 40 percent of the German workforce was unemployed by 1932. Britain was less severely affected due to the continuing benefits of its Empire, but its industrial and export sectors remained seriously depressed until the beginning of the War.

There had been plenty of economic slumps before the 1930s, in fact economies rose and fell on a roughly ten year “business cycle”, but the Great Depression was so much worse than anything that had come before precisely because it was world-wide; previously one or another country had been affected by slump but in other parts of the world the economy would be OK, so countries could always pull themselves up again once the “business cycle” was completed –speculative value had been wiped out and stocks had been exhausted, and demand picked up again. By the 1920s, particularly as a result of American loans to Europe after World War One, the world had begun to develop towards a single market, and the “ when America sneezed, the world caught a cold”.

With domestic markets obliterated, countries wanted to dump their produce onto markets in other countries, to make a profit however small or at least recover some of their costs. To defend their own markets against saturation by this practice of dumping, every country in the world put up tariff barriers and quotas to block foreign imports. With widespread bank failures and bankruptcies, international trade was possible exclusively on the basis of gold. The US dollar was fixed at US$35/oz., but other countries such as Germany suffered hyper-inflation and their currency was worthless. By 1932, the total value of world trade had halved. With no possibility for export, no chance of credit, there was no way out.

The suffering and senseless wastage of human life –dumping of food in the sea, closure of factories while millions were left rotting in idleness -turned large numbers of workers to communism; in Europe huge street battles were being fought between million-strong fascist and communist parties. Unemployment was unknown in the USSR, a fact which was made widely known to the workers of the West. With unemployment so high and workers terrified for their jobs, Communists oriented their work to the unemployed, but the unemployed were a very fluid and mobile population, and while some very large movements were built, it was difficult to build an organised party. This was the period which Stalin had characterised as the “Third Period”, a period of intense class struggle, and Communist Parties appealed to the unemployed with slogans for uncompromising revolutionary struggle.

In late 1932, Franklin D. Roosevelt was elected US President with widespread popular support for the New Deal – to introduce universal welfare, protect workers’ rights, and for the government to take a leading role in the economy and clamp down on destructive business practices.

To millions of workers queuing at soup kitchens or labouring for near-starvation wages, the USSR was looking very much like a workers’ paradise. By the late 1930s, as the job market began to pick up with the beginning of recovery in the U.S., mainly as a result of the New Deal measures, partly through the normal processes of the business cycle, and especially the escalating war-spending in Europe, the organised workers’ movement began to show real signs of readiness to overthrow the institutions which had overseen all this misery. Unemployment was still at 15% at the beginning of World War Two and only the urgent need to crush Fascism in Germany and Japan postponed a worldwide revolutionary upsurge.

The war brought an immediate end to unemployment as factories fired up for the weapons trade and business flourished again as the remaining unemployed were sent off to war. Never again however could the laissez faire doctrine of leaving everything to the market be taken seriously. The name of John Maynard Keynes would be associated with the new economic doctrine which emphasised the role of government in regulating demand and containing unemployment with public works programs.

Keynes proved that market forces would continue to throw the world into deeper and deeper crises unless the government used its power to stabilise demand by controlled public spending. Keynes famously said that there was no wage low enough that a starving person would not be prepared to work for it. Consequently, unless the government provided a “safety net” and regulated employer practices, there would always be extreme poverty and misery. Further, Keynes showed that the market was by itself unable to provide the expensive infrastructure needed for economic growth and the government had to play a role in infrastructure development.

By the end of the war, in most of the industrialised countries of the Allied powers, workers were organised into unions and these unions were mainly led by Communists.

23/10/2022

Taylor, Frederick Winslow (1856-1915)

etching of Frederick Winslow TaylorU.S. engineer and management consultant, originator of the concept of "scientific management" to increase worker output. Taylor grabbed public attention in the 1880s when he reduced the number of workers shovelling coal at the Bethlehem Steel Works from 500 to 140 without loss of production.

According to Taylor, industrial productivity was lower than it ought to be due to two factors: deliberate malingering by workers and unscientific design of work practices by management. He held that workers could be forced to put the maximum effort into work by a combination of motivating them with higher wages, financed on the basis of higher productivity, and most significantly, by closely monitoring the worker’s every movement so that it was impossible to go slow without detection. In order to achieve the maximum productivity, Taylor proposed that instead of reducing the number of "unproductive" workers to a minimum, about 25% of all employees should be dedicated to supervising, monitoring, measuring and accounting. This was the beginning of the stratification of the working class into more and more layers of supervisory, administrative and technical workers, enjoying privieleges over and above the "blue-collar" trades they supervised.

The symbol of Taylor’s management methods was the stop-watch, ever-present as supervisors conducted "Time and Motion Studies", timing every hand-movement, every step, every breath a worker made. Hatred against the stop watch built up to such a pitch that by 1912 laws were passed in the U.S. banning the use of stop-watches in the civil service.

Lenin studied "Taylorism" with a view to applying the progressive and genuinely scientific aspects of his theory to Soviet inudstry.

Further Reading: Principles of Scientific Management.

16/10/2022

SUCCESSION PLANNING.

Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions. Taking a holistic view of current and future goals, this type of preparation ensures that you have the right people in the right jobs today and in the years to come.

In the long term, succession planning strengthens the overall capability of the organization by:

Identifying critical positions and highlighting potential vacancies;
Selecting key competencies and skills necessary for business continuity;
Focusing development of individuals to meet future business needs.
A succession plan identifies future staffing needs and the people with the skills and potential to perform in these future roles. Professional & Organizational Development’s Succession Planning Toolkit will help guide you, though we strongly suggest you involve your assigned HR consultant and/or HR administrator in this process as well.

Toolkit
We’ve broken succession planning down into three phases with clear steps, and the Succession Planning Toolkit (PDF) comprises a series of worksheets that move you through the succession planning process. Within this document, you’ll find templates and tips for:

Ensuring succession planning is closely tied to business strategy and goals;
Understanding the importance of engaging executive and senior leaders in the process;
Clearly defining the development of key talent; and
Ensuring staff understand their role in the process and know what is expected of them.
Assessment phase
Step 1: Identify significant business challenges in the next 1–5 years.

Step 2: Identify critical positions that will be needed to support business continuity.

Step 3: Identify competencies, skills, and institutional knowledge that are critical success factors.

Evaluation phase
Step 4: Consider high potential employees.

Step 5: Select the competencies individuals will need to be successful in positions and to meet identified business challenges.

Development phase
Step 6: Capture the knowledge that individuals possess before departing the organization.

Step 7: Develop a pool of talent to step into critical positions through targeted career development strategies.

Access and print the entire Succession Planning Toolkit (PDF).

Additional resources
Employee development and coaching
Performance management supervisor guide

Related documents
Guide to Workplace Competencies

30/07/2022

Reallocation of treasury loot.

RMAFC group got N18.8b
AGF group got N18.01b
Comm for finance group got N21.4b
Yari's group got N17.15b
Akindele group got N8.9b

This stolen money's were converted to dollar before they were handed over to the beneficiaries of the loots.

Tell me how do you expect our naira to survive this kind of unproductive conversation to dollar.

N109 less N84.26
N24.74b begging for an answer

23/03/2022

Nigeria's poverty profile is grim. It's time to move beyond handouts
Stephen Onyeiwu, Allegheny College
Published: June 27, 2021 10.47am SAST

Nigerians have been justifiably confused by conflicting poverty data presented by the Muhammadu Buhari administration and the World Bank. According to Buhari, his administration has lifted 10.5 million Nigerians out of poverty within the past two years. But no sooner had he made the statement than the World Bank asserted that inflation has plunged seven million Nigerians into poverty.

These statements might seem to be contradictory to non-economists. But closer analysis suggests that Buhari and the World Bank are right – depending on how poverty is measured.

The first is income or monetary measure of poverty, what economists refer to as the ‘headcount index’. It measures the proportion of the population that is poor based on a minimum personal income - for example $1.90 per day. This minimum amount is deemed adequate to maintain an acceptable living standard, given the cost of living in a given country.

Based on this measure, Buhari is right to claim that – by transferring cash to 12 million households during the past five years – a majority of these Nigerians have exceeded the income threshold. Therefore, they have escaped poverty.

The other measure is known as the multidimensional poverty measure. It measures poverty by income, and by the access people have to health, education and living standard indicators. These include sanitation, drinking water, electricity, and housing. It is therefore possible for someone to be regarded as non-poor under Buhari’s calculations, but poor when this measure is used.

This is the measure the World Bank appears to be applying. By this measure 47.3% Nigerians, or 98 million people, live in multidimensional poverty. Most of them are located in northern Nigeria. This poverty rate does not include Borno State, where insurgency has prevented data collection.

Aware of this, the Buhari administration has set the very ambitious goal of lifting 100 million Nigerians out of poverty by 2030. This is a tall order, considering that another five million more Nigerians are expected to become poor as a result of COVID-19 in 2020.

The administration’s cash transfer programme is commendable. But Buhari should turn his focus more on promoting structural transformation. This would move millions of poor Nigerians from low-productivity agricultural and informal-sector activities to high-productivity sectors such as manufacturing, agro-processing, as well as information and communication technologies.

What is poverty?
Poverty is an amorphous and subjective concept, which is influenced by what people consider to be more valuable in life. Those who value more money in their pocket would prefer a monetary measure of poverty. But Nigerians who care more about the healthcare, food, education, electricity, transportation, and security their money can buy would regard the World Bank’s figures as a more useful indicator.

Some economists have proposed the notion of a ’Happy Planet Index’ as a better measure of poverty. It measures poverty based on three indicators. These are average subjective life satisfaction, life-expectancy at birth, and ecological footprint.

An illiterate 80-year-old woman who lives on less than $1.90 per day but reports she has been happy all her life; lives in a small hut with no access to electricity; has never visited a hospital or seen a doctor, and consumes mainly organic products grown on her farm, would not be regarded as poor under the Happy Planet Index definition. But she would be poor under the headcount index and multidimension poverty measure. This means poverty is in the eye of the beholder.

Some analysts perceive the stylised conceptualisations of poverty as Eurocentric. They claim that such reflect Western values and marginalise non-Western conceptions of a ‘good life’.

High food prices
One reason for the World Bank’s assertion that seven million Nigerians have been driven into poverty is the 22% increase in the price of food. Food prices contributed about 60% to Nigeria’s inflation rate of 18%. Rising food prices exacerbate poverty because it reduces the real purchasing power of households, and shifts expenditures away from essential items such as health, education and housing.

An average Nigerian household spends about 56% of income on food, the highest in the world. Countries like US, UK, Canada, and Australia spend 6.4%, 8.2%, 9.1%, and 9.8%. Nigeria’s high expenditure on food implies that a slight increase in food prices would push more people into multidimensional poverty.

Food prices have been rising in Nigeria and pushing more people into poverty for a few reasons. First, the depreciation in the value of the Naira has resulted in steep increases in the prices of imported food items, such as rice, sugar, milk, beverages, and frozen food. The Naira has depreciated by about 13% during the past year.

Second, because of Nigeria’s rapid population growth, food supply in the country may be lagging demand. Nigeria’s population has been growing by about 2.6% per annum, while agriculture value added has been growing at 2%.

This means that agricultural output is barely keeping pace with consumption. Supply shortfalls have been exacerbated by instability, banditry, terrorist attacks, poor infrastructure and climate change. Also, the exodus of farmers to urban centres in search of illusive opportunities.

Regardless of who is right, Nigeria’s poverty profile is grim and embarrassing for a country endowed with humongous human and natural resources. The Nigerian National Bureau of Statistics said in 2020 that 40% or 83 million Nigerians live in poverty. Although Nigeria’s poverty profile for 2021 has not yet been released, it is estimated that the number of poor people will increase to 90 million, or 45% of the population, in 2022.

If the World Bank’s income poverty threshold of $3.20 per day is used, Nigeria’s poverty rate is 71%. Compared to lower rates for some oil-producing developing countries like Brazil (9.1%), Mexico (6.5%), Ecuador (9.7%) and Iran (3.1%), this is grim.

The Nigerian National Bureau of Statistics data suggest that the number of poor Nigerians exceeds the total population of South Africa, Namibia, Botswana, Lesotho, Mauritius and Eswatini combined.

What Nigeria needs
Nigeria needs more industrial production, foreign and domestic investment, not just handouts.

There has been too much emphasis on cash transfers, and less on building the capacities of Nigerians to transition into the sectors and jobs of the future.

Cash transfers alone are inadequate and not pervasive enough for extricating a significant number of Nigerians from extreme poverty. Those who received cash payments under the national social investment programme risk falling back into poverty at the end of the programme. But structural transformation is more enduring, as it enables Nigerians to acquire and utilise productive capacities for permanently escaping poverty.

20/01/2022

The Finance Act and You: Five Quick things to note in 2022
January 15, 2022

Abel Akeni. Vahyala Kwaga

Congratulations! You made it into 2022 and have survived multiple straight weeks in Nigeria’s wobbly economy, afflicted with the dreaded double-digit inflation, making it one of the worst 20 economies (out of 196) in the world. So, congrats —you get a survival certificate and another one for kindness, too! Americans are not so nice; with an inflation rate of 7%, they are dragging President Joe Biden by his pants with the hashtag . Comparatively, with an inflation rate of 15.4% in Nigeria, which is twice as worse as the United States, President Muhammadu Buhari is living “the baby boy lifestyle”, seeing as there is no commensurate outrage at him for the soaring prices of food and other consumer goods. No be juju be that?

Anyway, away from the inflation news we bring you new year tidings (both good and bad) depending on where you sit on the tax-payer/tax-collector spectrum. In an effort to boost non-oil revenue by raising an estimated N10.71trillion to finance part of the 2022 N17.12trillion budget, the FG has made certain amendments to the Finance Act signed into law in December 2021 for implementation this year. Here are some key takeaways and how this law will affect Nigerians or business owners, or both

Surprise! RCCG, Christ Embassy, Winners Chapel, NASFAT, Ansar ul-Deen and over 16,300 faith-based organisations may now pay taxes.
According to Section 7 of the 2021 Finance Act passed, the Trade and Business of Friendly Societies, Cooperative Societies, Ecclesiastical Companies, Sporting Societies, etc., that are registered as companies, are now subject to Tax — an amendment and substitution of the Companies Income Tax Act, in s.23(1) of a new subsection. There are long-standing ethical and perhaps moral reasons why these public activities have not been brought under scrutiny for taxation by governments in Nigeria, but that position seems to be changing; as many engage in business activities directly or indirectly. All other faith-based organisations that are registered as not-for-profit may enjoy tax exemptions as provided by the law.

2. FIRS has been remodelled after the famous Internal Revenue Service (IRS) of the United States of America.

As a policy thrust of this administration, Section 22 of the Finance Act has now transferred the power for tax & levy collection from virtually all of the 900+ federal Ministries, Departments, Agencies & Administrative units that were previously doing so to a single entity — the Federal Inland Revenue Service, FIRS. Any civil servant who does not comply is now liable to a prison term of not more than 5 years and/or a fine of N10 million naira.

We believe this is targeted at some agencies, like the Niger Delta Development Commission, NDDC. They are notorious for collecting levies without proper accountability while lamenting publicly that oil companies are not complying. In one instance, NDDC awarded a N10bn contract to Starline Consulting to collect levies from oil and gas companies — despite having heavily paid civil servants for the purpose. The money was shared to legislators and other vested interests; na the matter EFCC still dey settle till just now; only N150m has been recovered.

3. Twitter, Facebook, Instagram, and the likes to pay additional tax; famous foreign freelance Instagram influencers, comedians, and skit makers also affected.

In several amendments (amounting to 6 in number), the federal government now brings into its tax net companies that make a profit in the country, even if they have no ‘physical office’.

Where a company does not have a fixed base but habitually transacts business through a person or agent or where it emits or transmits or receives signals as a result of any commercial electronic activity, high-frequency trading, management of an app, electronic data storage, and online adverts, among others; the entity is liable to pay tax.

This tax affects some consulting firms, virtually ALL online companies and firms including Uber, Amazon, Facebook, Twitter, and Nigerians who own firms that advertise online, among others. It also affects foreign freelance comedians, skit makers, influencers on TikTok, Instagram, Twitter if they collect money for online adverts.

The tax rate could be up to 6% of the companies’ turnover in Nigeria as the Act doesn’t mention any specific rate but a “reasonable turnover tax basis”. In effect, the rate will be discretionary.

4. Do you love coca-cola, Mirinda, La casera etc? Brace for impact; your appetite just got taxed!

According to section 17 of the Finance Act, Excise Duty of N10.00k is now Payable on every Litre of non-alcoholic, carbonated and sweetened beverages (an amendment and insertion of a new s.21(3) of the Customs, Excise and Tariffs (Consolidation) Act). This means, for example, that the famous 50CL PET bottle of coke would now attract N5 kobo tax per bottle, 33CL 5-Alive attracts N3.30 kobo, while the 1-litre of any of these drinks would attract N10. Note that soft drinks is only a segment of the non-alcoholic beverage market; non-alcoholic wines are also affected.

Nigeria consumed a total of N551 Billion on non-alcoholic beverages in 2019, according to the National Bureau of Statistics (NBS). Nigeria is projected to consume as many as 21.91billion liters of non-alcoholic beverages per year by 2026 and the Nigerian government wants to “secure the bag” in this market. This new N10/liter tax would mean Nigeria could earn as much as N28.8 billion per year in additional tax revenue. Pretty neat eh? At least the FIRS guys think so, but the Organized Private Sector (OPS) has been kicking and screaming against the tax, while legislators, political appointees, and civil servants are quietly padding the 2022 budget for their personal gains rather than for poverty reduction, wealth creation, employment generation, and economic growth purposes.

5. Sell off your investment in a Nigerian company; you get taxed — except you invest in another Nigerian company during the year.

Nigerian tech Startups alone raked in N592.2billion ($1.41bn) in 2021. With this inflow came an increase in the valuation of some startups with some earlier investors “cashing out” with the sale of some of their shares at a higher value. The Nigerian government wants a share of this pie. It is applying the “Capital Gains Tax” principle, meaning any gain you make on Capital you invested in the shares of a public or private company would now be taxed — provided the investment is N100 million or more. Smaller, investors need not worry; as it seems this tax is aimed at the pockets of those that are chilling with the big boys.

By way of illustration, if you sell shares for which you initially invested capital of N120 million naira for N200 million naira today and decide not to reinvest the entire N200 million naira, you pay tax on the gain of N80 million naira you made. This means you pay a tax of N8 million naira. If you do not make a profit (or gain), you do not pay any tax. If you reinvest it into another Nigerian company, you also don’t get taxed.
Sales of Nigerian government securities by Nigerians are exempted from this tax, (an amendment of the Capital Gains Tax Act, in s.30(1)).

Curtsey: BudgIT

20/01/2022

Audit in Nigeria: Is The Old Law Tackling The “New” Corruption?
December 16, 2021

Nigeria’s budget performance has never hit a 100% due to different factors that are either man-made (errors in memos raised by MDAs to the Accountant General of the Federation which could lead to delay in the release of funds) or natural occurrence ( dwindling revenue ). However, irrespective of the performance, every penny disbursed should be audited to ascertain value for money and for proper accountability at the national and sub-national levels.

For example, the lapses in Nigeria’s healthcare system was noticed when the pandemic struck due to the weakness of the Primary Healthcare Centres (PHCs) which needed to be strengthened so that PHCs can provide frontline information on prevention through interventions from state actors at the federal level and non-state actors including international development partners and private institutions. To this end, The Federal Government and Nigerian states reviewed their budgets in 2020 to accommodate allocation to COVID-19 response. Though some states have published audit reports with details of how COVID funds were spent, the federal government is yet to publish its audit details..

PUNCH’s latest report revealed that the Federal Government, through the Health Minister received a total of N141.1bn from donors in seven categories. From the United Nations basket fund, it was highlighted that Nigeria received N22.6bn in donations; CACOVID donated N43.2bn, oil and gas industry, N21.4bn; development partners group on health, N42.9bn; and GAVI, N4.5bn. The Federal Government also noted that it received private donations amounting to N2.0bn, while other donations worth N4.04bn were received, making a total of N141.1bn in 2020.

On how it spent the funds, the Federal Government explained, “In December 2020, the Presidential Task Force (PTF) on COVID-19 reported on the resources the country received from donors, private sector and the government’s contributions. These donations, which included technical support, were largely used for the supply of consumables, tests, equipment, logistics management, case management, risk communication, and information management systems for the national response to COVID-19.” The contributions from the government also provided social support, health infrastructure, hazard allowance, and training of health workers. However, this breakdown lacked the exact amount expended on each activity.

The Audit function covers more ground than the work of the Anti-Corruption Agencies (ACAs), given that every financial transaction of the government undergoes an audit. In contrast, ACAs can only cover, at best, a sample (petitioned or detected). The auditor, therefore, has more opportunity and thus, more responsibility for the eradication of corruption in our public finance system. This can stop Nigerians, especially public officers, both past or serving officers to be named in the international leaks such as Pandora, Panama etc. but the current audit law (of 1956) seems to be limiting the powers of the Auditor General of the Federation as they can only bark (raise queries) but can not bite (sanction defaulters). The audit bill that was passed by the 8th Assembly which was not signed by Mr President provided the “teeth” to bite hard.

In 2020, the Office of the Attorney General of the Federation (OAGF) reported that over 65 MDAs have not submitted their financial statements for audit since January 12, 2017. These are some of the challenges faced by the OAGF due to the weak audit law, however, a section of the audit bill 2019 sought out to empower the auditor-general to a surcharge and withhold emoluments of any officer culpable of mismanagement of public treasury and refusal to respond to audit query.

It is important to note that Nigeria is still implementing the 1956 audit law, a law that does not meet the global best practices, and necessary reforms that would empower and enable the office of the Auditor General of the Federation to function optimally and efficiently are imperative. For example, its independence from the government is not established in the 1956 audit law, the OAGF is dependent on the Federal Civil Service for all aspects of its operations, including human and financial resources. International best practises and the standards of the International Organisation of Supreme Audit Institutions require the Supreme Audit Institution (SAI) to be statutorily, operationally and financially independent of government.

The Goodluck Administration gave us the Freedom of Information Act which has enabled Nigerians to demand information from MDAs within a stipulated time. The Buhari Administration has given us an Open Government Partnership, but there can’t be an open government if certain laws like Proceeds of Crime and Audit bills that can curb corruption are not passed and signed into law.

Curtsey: BudgIT