Economy

FG Cuts Customs Projected Revenue by N49bn

Published

8 years ago

December 9, 2016

FG Cuts Customs Projected Revenue by N49bn

The ban on vehicle importation through the land borders as well as the review of other fiscal items may have forced the Federal Government to reduce the projected revenue from the Nigeria Customs Service by N48.8bn in the 2017 fiscal period.

The N48.8bn cut in projected revenue from the NCS is part of the proposals to be made by President Muhammadu Buhari when he submits the 2017 budget proposals to the National Assembly on Wednesday.

Top officials in the Budget Office confided in our correspondent that based on the revenue projections of the Federal Government for next year, the NCS was expected to generate a total sum of N277.56bn.

In the 2016 fiscal period, the service was given a revenue target of N326.4bn.

One of the officials said the drop in projected revenue of the Customs by the Federal Government was necessitated by the fact that less emphasis was being placed on importation.

For instance, he said while the revenue from the Customs was predicated on the cost insurance and freight value of imports, as well as other applicable tariffs, the current economic climate had necessitated a review of some of the policies affecting these fiscal items.

He listed some of the policies that would affect Customs revenue to include effects of the Central Bank of Nigeria’s recent monetary policies; reduction in levies due to the introduction of Common External Tariff from 2017-2019; and gradual removal of the Import Adjustment Tax.

He gave other factors that would affect the Customs revenue next year as the expected decrease in the annual average duty rate; expected increase in import CIF as a result of new strategic plans in the NCS; and lower receipts from import duty on vehicles following the ban in importation of vehicles through the land borders.

Import duty from vehicles is one of the highest tariff line in terms of revenue generation by the Customs

The source said with the strategies of the Federal Government in reducing the level of rice imports, coupled with the foreign exchange restriction placed on the importation of some other items, it would not be fair to still retain the revenue projections of the service.

The official said the government would continue to promote policies that would deliver a more diversified economy, and work at strengthening the linkages in the productive sectors of the economy.

The objective, according to him, is to increase the value-addition in the non-oil sectors, as well as promote exports capable of generating substantial foreign exchange.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Ubeta Project to Produce 350 Million Standard Cubic Feet of Gas Per Day Once Operational – FG

Published

4 hours ago

September 18, 2024

Ugwoke Ogbodo

The Federal Government of Nigeria has said that once the Ubeta gas field is fully operational, it will produce 350 million standard cubic feet of gas per day.

With this dream realised, the Federal Government said the anticipated achievement would enhance energy security, attract investments, and strengthen collaboration with key partners.

This was made known by the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, at the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.

Recall that the Nigerian National Petroleum Corporation (NNPC) Limited, in partnership with French energy giant TotalEnergies, had in July planned to invest a significant $550 million to develop gas facilities in oil-rich Rivers State.

Verheijen had announced the kickoff of a $550 million upstream gas project between Nigerian National Petroleum Corporation Ltd. (NNPCL) and TotalEnergies for the development of the Ubeta field.

At a luncheon during the dialogue, Verheijen mentioned that the upstream gas project would produce 350 million standard cubic feet of gas per day once operational.

A statement from Morenike Adewunmi, Stakeholder Manager, Office of the Special Adviser to the President on Energy, quoted Ms. Verheijen as informing the gathering that President Bola Tinubu’s major energy reforms since June 2023 have been aimed at enhancing energy security, attracting investments, and strengthening collaboration with key partners, including the US government.

According to her, the reforms have significantly improved the viability of Nigeria’s gas-to-power value chain.

She explained that in support of the reform efforts, the President issued five new executive orders designed to offer fiscal incentives for investment and reduce the cost and time required to finalize and implement contracts for developing and expanding gas infrastructure.

Verheijen said that the directives aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.

She acknowledged the valuable support of financing and technical partners, including the US government, the World Bank, and the African Development Bank, in efforts to expand electricity access and reliability through both grid and off-grid solutions.

Economy

Nigeria’s Trade Surplus Hits N6.95 Trillion in Q2 2024, Marking a 33.63% Increase

Published

6 days ago

September 13, 2024

Investors King

Nigeria’s trade surplus, the difference between exports and imports, rose to N6.95 trillion in the second quarter of 2024, according to the latest foreign trade statistics report released by the National Bureau of Statistics (NBS) on Wednesday.

This marks a 33.63 percent increase from the N5.19 trillion recorded between January to March 2024, bringing the total value at N12.14 trillion in the first half of 2024.

This is however higher than N154.12 billion recorded in the first six months of 2023, the NBS data revealed.

The report showed that the country recorded a positive trade balance for the sixth straight quarter in Q2, signifying key economic development.

A trade surplus occurs when a country’s exports exceed its imports.

Total merchandise trade in Africa’s most populous nation stood at N31.8 trillion in Q2, a decline of 3.76 percent compared to the preceding quarter and a 150.39 percent jump compared to a year ago.

“Exports accounted for 60.89% of total trade with a value of N19,418.93 trillion, showing a marginal increase of 1.31% compared to the value recorded in Q1 2024 (N19,167.36) and a 201.76% rise over the value recorded in the second quarter of 2023 (N6,435.13),” NBS said.

Analysts attributed the surge in exports to the exchange rate depreciation caused by the foreign exchange reform implemented last June.

Tobi Ehinmosan, a fixed income and macroeconomic analyst at Lagos-based FBNQuest Capital, said the major factor for this significant trade surplus numbers is the decline in import trade.

“No doubt, our export performance has been on the rise but then the main driver is the drop in import trade, especially from June 2023 when the exchange rate was floated,” he said.

“A reasonable explanation for the lower import figure is the challenges traders face in sourcing for FX,” Ehinmosan noted, adding that the scarcity of FX has led to lower import of commodities into the country.

Echoing the same sentiment, Michael Adeyemi, an economics lecturer said the surplus suggests a reduction in imports, caused by such factors like currency devaluation or high import costs.

“A trade surplus strengthens the balance of payments, which can help stabilize Nigeria’s currency, the naira,” Adeyemi said.

“It also allows the country to build foreign reserves and pay off international debt obligations more comfortably,” the university lecturer explained.

The naira has tumbled by over 70 percent this year following a two-time devaluation last year. The official exchange rate increased from N463.38/$ on June 9, 2023, to N1.558.7/$ as of September 12, 2024.

At the parallel market, the naira depreciated to over N1,600/$ from 762/$.

Recent data from the International Monetary Fund highlighted that Nigeria’s current account balance, a measure of its net trade in goods, services, and transfers with the rest of the world, rose to $1.43 billion this year from $1.21 billion surplus in 2023.

“A growing current account surplus can be a sign of economic strength, indicating that the country’s industries are competitive internationally and that its exports are in demand,” Ibrahim Bakare, a professor of Economics said.

“It may also lead to an appreciation of the country’s currency, as increased demand for its goods and services boosts the value of its currency relative to others,” he added.

Economy

FIRS VAT Revenue Surges to N1.56 Trillion in Q2 2024 Amid Economic Struggles

Published

1 week ago

September 10, 2024

Samed Olukoya

The Federal Inland Revenue Service (FIRS) generated N1.56 trillion in Value Added Tax (VAT) in the second quarter (Q2) of 2024, according to the latest report from the National Bureau of Statistics (NBS).

This represents an increase of 9.11% compared to the N1.43 trillion reported in the first quarter of 2024.

A breakdown of the report showed that local VAT payments accounted for N792.58 billion of the total amount generated, while foreign VAT payments stood at N395.74 billion, and import VAT contributed N372.95 billion.

A quarterly analysis of the report revealed that human health and social work activities recorded the highest growth rate with 98.44%. This was followed by agriculture, forestry, and fishing with 70.26%, and water supply, sewerage, waste management, and remediation activities with 59.75%.

On the other hand, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use had the lowest growth rate with –46.84%, followed by real estate activities with –42.59%.

Sectoral analysis showed that the manufacturing sector contributed the most at 11.78%. Information and communication and mining and quarrying contributed 9.02% and 8.79%, respectively.

Nevertheless, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.00%, followed by activities of extraterritorial organizations and bodies with 0.01%, and water supply, sewerage, waste management, and remediation activities and real estate services with 0.04% each.

On a year-on-year basis, VAT collections grew by 99.82% from Q2 2023 despite ongoing economic challenges.

Nigeria’s inflation rate remains well above 30 percent, while new job creation is almost nonexistent.

Other key economic factors, such as investor sentiment, the purchasing managers’ index, and consumer spending, remain weak amid intermittent protests by citizens demanding improvements in quality of life.