- Nigeria’s FX Inflow Rose to $33.02bn in Second Half of 2016
The provisional cumulative inflow of foreign exchange (FX) into the Nigerian economy rose to US$33.02 billion as of December 2016, representing a 13.3 percent increase above the level in the first half of last year.
Of this amount, inflow through autonomous sources accounted for 62.3 percent, while inflow through the Central Bank of Nigerian (CBN) accounted for 37.7 percent.
The CBN disclosed this in its Financial Stability Report as of December 2016, obtained on its website Thursday.
According to the report, total FX outflow from the economy rose by 14.8 per cent to US$13.64 billion from the level in the first half of 2016. The rise in outflow was mainly attributed to the increase in the interbank forwards settled in the second half of 2016. The economy recorded a net FX inflow of US$19.38 billion, representing 12.21 per cent rise above the level in the first half of 2016.
The total autonomous inflow rose by 0.7 per cent to US$20.58 billion, compared to the level in the first half of 2016 due mainly to rise in invisibles by 2.5 per cent, of which 62.3 per cent was accounted for by ordinary domiciliary accounts. FX inflow through the CBN rose by 42.9 per cent above the level in the first half of 2016 to US$12.45 billion, due to increases in crude oil and non-oil export earnings. Receipts from crude oil sales rose by 22.7 per cent to US$5.66 billion, in the first half of 2016. This was attributed to the gradual increase in domestic production and international crude oil prices. The non-oil receipts rose by 65.5 per cent to US$6.79 billion in the second half of 2016, due mainly to increase in other official receipts.
“Foreign exchange outflow through the CBN rose by 15.5 per cent to US$12.39 billion, above the level in the first half of 2016. Of this amount, interbank utiliation accounted for US$7.99 billion, of which inter-bank forwards, inter-bank sales and others stood at US$4.17 billion (52.14 per cent), US$0.72 billion (8.92 per cent) and US$3.11 billion (38.9 per cent), respectively.
“Overall, the total foreign exchange transactions through the Bank resulted in a net inflow of US$0.58 billion in the second half of 2016, compared with a net inflow of US$0.96 billion in the corresponding half of 2015. This is, however, in contrast to a net outflow of US$2.03 billion in the first half of 2016,” it added.
Also, the report showed that the federal government retained revenue for the second half of 2016 increased to N2.558 trillion, above the levels of N1.898 trillion recorded in the first half of 2016 and the half- year budget estimate of N2.025 trillion for 2016. The increase in the retained revenue relative to the first half was mainly attributed to increase in non-oil receipts.
The breakdown of the retained revenue showed that the federal government share of the federation account was N1.26 trillion (49.4 per cent); the VAT Pool Account, N90.7 billion (3.5 per cent); the federal government Independent Revenue, N267.8 billion (10.5 per cent); share of excess crude Account, N141.4 billion (5.5 per cent); Exchange Gain, N316.4 billion (12.4 per cent) while others (including NNPC Refund) accounted for the balance of N479.3 billion (18.7 per cent).
“The fiscal stance of increased spending to address the challenges of the negative growth (recession) led to higher government expenditure in the second half of 2016. Consequently, federal government expenditure grew by 10.3 per cent to N4,024.8 billion, above N3,650.33 billion in the first half of 2016.
“It was, also higher than the budgeted expenditure of N3,127.27 billion for the second half of 2016. Recurrent expenditure component of the total expenditure accounted for N3,496.5 billion (86.9 per cent) while capital and statutory transfers components accounted for N264.9 billion (6.6 per cent) and N263.4 billion (6.5 per cent), respectively,” it added.
The fiscal operations of the federal government in the second half of 2016 resulted in an overall deficit of N1.467 trillion, compared with the N1.752 trillion recorded in the first half of 2016 and the budgeted deficit of N1.102 trillion for the second half of 2016.
Nigeria Records Trade Deficit of 8.9 Trillion in Nine Months
The National Bureau of Statistics (NBS) released a report that showed that Nigeria recorded a trade deficit of 8.9 Trillion Naira between January and September 2021.
A trade deficit occurs when a country’s imports exceed its exports over a period. Within the period, foreign trade was 35.09 Trillion Naira which comprised imports of 22 Trillion Naira and exports of 13.1 Trillion which led to an 8.9 Trillion trade deficit.
A breakdown of the data by quarters shows that trade stood at 9.76 Trillion Naira in the first quarter, which represented imports of 6.85 Trillion Naira and exports of 2.91 Trillion Naira, this resulted in a trade deficit of 3.94 Trillion during the period.
The data went on to show that the majority of the goods imported in the first quarter were from China (valued at 2 Trillion), the Netherlands (valued at 726.09 Billion) the United States (valued at 608.12 Billion), India (valued at 589.1 Billion), and Belgium (valued at 238.5 Billion) while the majority of exports were to India (valued at 488.1 Billion), Spain (valued at 287.2 Billion), China (190.1 Billion), the Netherlands (160.0 Billion) and France (133 Billion).
In the third quarter, Crude oil dominated exports with 78.47% of exports, this was followed by natural gas with 9.5%. Imports were mainly motor spirit with 12.91% of imports, Durum wheat with 3.87%, gas oil with 2.77%, and used vehicles with 2.27%.
A renowned economist, Pat Utomi said the country’s huge appetite for imports was because of insufficient domestic production which is driven by worsening insecurity and stringent government regulations. He went on to say that although there were interventions introduced by the Government and the Central Bank of Nigeria to reduce imports and increase exports, the initiatives are fraught with inconsistencies and corrupt practices that prevent any real impact.
He went on to say that it was scandalous that Nigeria’s top imports were food products and motor spirits as those are products the country should be exporting because Nigeria is a food-producing nation and has oil in abundance.
World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco
The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.
Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.
Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.
The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.
The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.
Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.
Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead
In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.
This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.
In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.
That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.
To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.
In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).
Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.
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