The Federal High Court in Abuja has delivered a landmark ruling in a case involving Kasmal International Services Limited, the Central Bank of Nigeria (CBN), and the Attorney General of the Federation (AGF).

The judgment, issued on Friday, October 11, 2024, by Justice Inyang Ekwo, mandates the CBN to pay Kasmal the sum of N579,130,698,440, alongside a 10% interest per annum on the judgment sum. This interest is to be applied from January 1, 2015, to January 31, 2020, due to the bank’s role in the collection of stamp duties during this period.

Stamp duty is an indirect tax imposed on various financial transactions, including bank deposits and electronic transfers. In a previous disclosure, former CBN Governor Godwin Emefiele revealed that the total revenue collected as stamp duty on behalf of the Federal Government between 2016 and 2022 amounted to N370.686 billion.

Background of the Case

The dispute arose from a contract agreement between Kasmal International Services Limited and the Nigerian Postal Service (NIPOST), which authorized Kasmal to collect N50 stamp duties on all receipts issued by financial institutions for electronic transfers and teller deposits of N1,000 and above. This arrangement was in line with the Stamp Duties Act and Nigeria’s Financial Regulations 2009. Under the terms of the agreement, Kasmal was entitled to a remuneration of N7.50 from every N50 stamp duty deducted.

However, Kasmal argued that it was not paid its full percentage as stipulated by the agreement. The company contended that if the disbursement of stamp duty proceeds were carried out without considering its share, it would suffer significant financial losses.

Kasmal’s legal counsel, Dr. Alex Izinyon SAN, further noted that the company had initially received N10.367 billion from the CBN but alleged that this payment did not cover the full amount accrued during the stipulated period.

According to court documents presented by Kasmal’s lawyer, the plaintiff had “become aware through public disclosures by the Governor of the CBN that after the initial payment of N10.367 billion to the plaintiff, which did not reflect the total value of all accrued deposits that ought to have been paid into the 1st Defendant NIPOST Stamp Duty Collection Account No. 3000047517 from January 1, 2015, to January 31, 2020, further remittances were made from the DMBs’ NIPOST STAMP DUTIES ACCOUNTS to the 1st Defendant NIPOST Stamp Duty Collection Account No. 3000047517 in the tune of over N370.7 billion, which were amounts that accrued within the period from January 1, 2015, to January 31, 2020.”

The company insisted that a total of N3.8 trillion stood in the Stamp Duty Collection Account, which was meant for distribution to various government bodies, including the Federal Government, State Governments, Local Governments, the Federal Inland Revenue Service (FIRS), coordinating consultants, and other entities. Of this amount, Kasmal claimed that its entitled share of 15%, amounting to N579.13 billion, was yet to be paid.

Kasmal’s Requests to the Court

Kasmal sought several reliefs from the court, including:

Payment of N579.13 billion: Kasmal requested the court to direct the CBN and AGF to pay it the sum of N579,130,698,440, representing 15% of all accrued deposits paid into or that should have been paid into the CBN NIPOST Stamp Duty Collection Account by Deposit Money Banks (DMBs) from January 1, 2015, to January 31, 2020.

Interest on the Judgment Sum: The plaintiff also sought an order for the payment of 10% interest per annum on the N579 billion until the entire amount is fully paid.

Restraint from Disbursement: The company had previously requested that the CBN and AGF be restrained from disbursing, distributing, or transferring any of the N3.8 trillion in the Stamp Duty Collection Account until the case was determined.

Counterarguments by the CBN and AGF

The CBN and the Attorney General of the Federation, represented by Chief Adeniyi Akintola SAN, opposed the claims made by Kasmal. They argued that the purported appointment of Kasmal by NIPOST to collect stamp duties on its behalf was void from the outset. According to Akintola, stamp duties on bank transactions constitute a form of taxation that is administered solely by the Federal Government, through the Federal Inland Revenue Service (FIRS), not NIPOST.

“The purported agency contract between NIPOST and the plaintiff, which is the basis for the plaintiff’s authority, is not placed before the court; hence the court cannot give effect to the said agency contract merely because it was mentioned in passing,” stated Akintola.

He contended that only federal, state, and local governments were entitled to the revenue generated from stamp duties, as specified by the Nigerian Constitution. The defense argued that NIPOST did not have the legal mandate to act as a revenue collection agency for stamp duties, nor did it possess the authority to appoint Kasmal as a collection agent.

Akintola further noted that the failure of the plaintiff to join NIPOST as a co-defendant in the case deprived the court of the necessary jurisdiction to entertain the suit. He noted that “The revenue being challenged belongs to the entire Federation, the collection and remittance of which goes to the Federation Account, and any amount standing to the credit of the Federation Account can only be distributed among the Federal, State, and Local Government Councils.”

Court’s Decision

In his judgment, Justice Ekwo dismissed the objections raised by the CBN and AGF, stating that their arguments “do not hold water.” The judge pointed out that a prior judgment favoring Kasmal regarding stamp duty collection was still valid and had not been overturned by a higher court. He noted that the CBN had indeed paid Kasmal N10.3 billion, which represented 15% of stamp duties collected by Deposit Money Banks (DMBs) during the specified period, from January 1, 2015, to January 31, 2020.

“It is my opinion that this case is predicated on the fact that the 1st and 2nd Defendants have had transactions with the plaintiff before by paying the plaintiff the sum of N10.3 billion, being 15% of remitted stamp duty,” the judge remarked.

He concluded that the arguments presented by the CBN and AGF were insufficient to refute the claims made by Kasmal.

Justice Ekwo subsequently granted the reliefs sought by the plaintiff, directing the CBN to pay N579.13 billion with associated interest.

“I find at the end that the CBN and AGF have not effectively controverted the case of the plaintiff, and the plaintiff, having made a credible case, ought to succeed on the merit, and I so hold,” he declared.

The judgment directs the CBN to make the payment, recognizing the contractual terms agreed upon by NIPOST and Kasmal, and ordering the interest to be calculated from the period during which the funds should have been duly disbursed.

Avoiding Similar Incidents in the Future: NRS to The Rescue
The case also sheds light on the contentious issue of revenue allocation and the roles of various government bodies in collecting and disbursing public funds. The court’s decision upholds that NIPOST’s arrangement with Kasmal was valid and recognized, despite contrary arguments regarding the federal mandate for tax administration.

Against this backdrop, many believe that the judgment may set a precedent for similar cases involving revenue collection and contractual disputes with government agencies.

However, the federal government’s proposal for a single tax and levy agency, dubbed Nigerian Revenue Service (NRS), is expected to prevent future occurrence of similar incidents.

The CBN is expected to appeal the ruling.

The transportation sector stands as one of the significant contributors to global greenhouse gas emissions, with a substantial portion emanating from internal combustion engine vehicles. As the world grapples with the urgent need to mitigate climate change, electric vehicles (EVs) present a promising pathway towards a more sustainable future. Increasing the adoption of EVs is not just a trend; it is a pivotal move that could drastically reduce harmful emissions worldwide.

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 The Lifecycle Emissions of EVs

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The future looks bright for electric vehicles as advancements in technology and increases in renewable energy sources continue to lower their carbon footprints. FactCheck.org notes that EVs are expected to contribute even fewer emissions than gasoline-powered cars over their lifetimes in the near future. This trend is supported by the European Environment Agency, which reports that EVs’ greenhouse gas emissions are about 17-30% lower than those of petrol and diesel cars with the current EU energy mix.

The Global Push for EV Adoption

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Original Post

“Nasarawa State unemployment rate is 0.5% “ – National Bureau of Statistics (NBS) – Nigeria.  Nasarawa State has a poverty rate of 57.3%, according to NBS.

Who can help me reconcile what is going on here? Is NBS really serving Nigeria well with these useless reports and numbers?

Sure, let me congratulate Nasarawa State for recording 0.5% unemployment rate, one of the best in the world, and better than the US, UK, Japan and indeed anywhere in the world. An unemployment rate of 0.5% is actually a bad thing because it will destroy any economy.

Some Comments on LinkedIn

Comment 1: The biggest challenge with Nigerian economy is DATA. I am not sure why. Is it that the data is not available or No proper method of collecting the data? Or out of laziness or deliberate intent to create a monster out of it, those saddled with responsibility to collect the data, failed and are falling in their role.
That has always been my problem with the kind of ratios and numbers thrown around by NBS and which other government agencies rely on to make pronouncements.

And I am not surprised at this, when as basic as our population figure is based on conjectures.

We have a BIG PROBLEM if NBS indeed put out these figures about Nasarawa.

Comment 2: I’m not here to take sides, but rather to explain what many people don’t know about research data. I see many people with various titles commenting, but they don’t understand how this is done. About 3 years ago, NBS changed their methodology for calculating the unemployment rate in Nigeria. The simplest way to explain it is that if you are working, regardless of the number of hours you put into the work, you are considered employed as long as you are not doing anything at all. However, the other countries you’re comparing with are using hours of work as a criterion. That’s the key difference. Before now, NBS also uses the same methodology but it doesn’t fit in to the system because Nigeria is not structured in hourly work. What NBS discovered is that there are people who only work a few hours but make enough money to support their families. For example, would you say a food seller who only sells from 6 pm to 10 pm is unemployed? The dynamics are different, and we need to understand that. Lastly, before commenting on any data, let’s learn to check the methodology so that we don’t appear uninformed.

My Response: “There’s no correlation between poverty and unemployment as a yardstick. ” – If you have no unemployment (0.5% here), you should be in a position to boost earning and wages.  If you boost wages, poverty will go. You cannot tell me that everyone has a job and everyone is poor. I challenge the thesis of your comment because low unemployment should improve wages, and that will reduce poverty.

Follow up after comments

On my question on how we can reconcile National Bureau of Statistics (NBS) data where a state in Nigeria (Nassarawa) has 0.5% unemployment rate, and still have poverty rate of 57%, I have received some responses:

Comment 1: “There’s no correlation between poverty and unemployment as a yardstick. ” 

Comment 2: “ Prof; the fact that you are employed does not translate to riches.“

My Response: The construct that unemployment rate does not correlate with poverty rate is not factual.   If you have no unemployment (0.5% here) in a place, you should be in a position to boost wages of workers because wages will rise due to competition which happens during full employment.  If you boost wages, poverty will reduce since people will have money in their pockets. You cannot tell me that everyone has a job in a place and people are still that poor. 

Low employment MUST increase labour cost, and that will reduce poverty in the land due to market forces. In summary, there is a positive correlation between unemployment and poverty because under FULL employment in Nasarawa State, we cannot expect a 57% poverty rate if market forces are working!

Good People, I am not saying that NBS is wrong, I just want someone to explain in a logical way why a place with FULL employment can have a high poverty rate. Otherwise, NBS may need to revisit its methodology, and then define what is really an “employment”. Get me right, at 0.5%, everyone should be japa’ing to Nasarawa as it has the lowest unemployment rate in the world.

Under Yemi Kale’s tenure, I used NBS’ data in my Harvard Business Review works. I am not saying that NBS is wrong, I just want someone to explain in a logical way.

Comment on Feed

Comment 1: Dear Prof. Anyone arguing that there is no correlation between unemployment rate and poverty really need to step back and go and understand basic economics. A 2019 study in Nigeria found 0.85% correlation coefficient between unemployment and poverty rates.( Journal of Economic and Financial Studies).
Same NBS in 2022 before this their new methodology published Unemployment as 23.1% and Poverty Rate @ 40.1%.
In fact Research also shows that a 1% increase in unemployment rate is associated with 0.5-15% increase in poverty rate( World Bank).

Comment 2: “If majority are employed, say they still earn minimum wage which cannot even buy 30 litters of fuel …it’s possible to have both unemployment rate of 0.5% and still have poverty rate of 57%.”

My Response: That state is not possible unless there is no productivity in that place. If you have FULL employment where everyone earns N70k, to leave that job for another new opening, you need to pay more than N70k. So, for you to keep all at 70k, it means nothing new is happening in that place. Should that be, the state has to bring workers who would like to earn N70k from other states for new projects and positions. I am not aware that people are japa’ing to Nasarawa to earn min wage which will keep the equilibrium of FULL employment at min wage. 

You can be employed and still be poor. It is common in the US fast food sector. However, a state cannot have FULL employment at 0.5% and still keep min wage since that state is still active economically. The  very fact that it is on FULL employment will push employers to improve wages, and that will reduce poverty. So, at a population level, your position does not work. 

Poverty, no matter the multidimensional level you may posit, connects back to “money” which is income. If you have money, education, healthcare, etc poverty will disappear. So, I do not accept the thesis that he is fully employed with good income, but his poverty is coming from healthcare or education poverty as that is not typical.