- Govt Records N3tn Revenue Shortfall in Nine Months
The Federal Government recorded a revenue shortfall of N3.04tn from January to September this year, Ifeanyi Onuba reports
From January to September this year, the Federal Government generated a total amount of N6.93tn as revenue from oil and non-oil sources.
The N6.93tn revenue was arrived at based on the analysis of data obtained from the Central Bank of Nigeria.
A breakdown of the revenue showed that the sum of N2.08tn was generated in the first quarter while the second and third quarters recorded N2.31tn and N2.52tn respectively.
The amount generated in each of the quarter was far below the budgeted quarterly estimate of N3.32tn.
When spread over a nine-month period, the budgeted quarterly estimate amounts to about N9.96tn.
This implies that with the total actual revenue of N6.92tn, the government was unable to meet its revenue target which resulted in a revenue shortfall of N3.04tn during the nine-month period.
Out of the actual revenue of N6.93tn, the sum of N4.08tn was earned from oil sources.
This, according to the analysis of the data, is about 58.7 per cent of the total earnings of the country during the nine-month period.
An analysis of oil revenue figure of N4.08tn revealed that Petroleum Profit Tax and royalties accounted for a huge chunk of oil revenue with a total contribution of N2.68tn.
This is followed by other oil revenue with N1.08tn while crude oil and gas sales contributed the balance of N312bn.
For non-oil revenue, a breakdown of the N2.85tn collections showed that the sum of N820.95bn was generated from Value Added Taxes, N1.08trn from Companies Income Taxes while N509.08bn came in from Customs and Excise duties.
The balance of N433.36bn was generated from other non-oil revenue sources.
Speaking on the revenue shortfall, some finance and economic experts said the budgetary spending of the government needed to be reduced in a manner that would reflect the rate of revenue inflow.
The Director-General, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said, “We have so much relied on oil revenue within the last 45 years and with the level of uncertainty in oil revenue, the time has come now for us to review our fiscal position.
“There is a need for reform of the country’s tax administration system to enable the Federal Government to raise more revenue from capital gains tax. Our tax to Gross Domestic Product ratio is one of the lowest in the world and we need to address that.”
In his comment, the Head of Banking and Finance Department, Nasarawa State University, Dr. Uche Uwaleke, said there was a need for the National Assembly to come up with legislation to improve the level of coordination between fiscal and monetary policy authorities.
He said the law would enable both authorities to effectively come up with the right policy mix in addressing the fiscal challenges facing the economy.
He argued that the failure to properly coordinate both fiscal and monetary policies was having negative influences on the economy through deficit financing.
He added that a weak policy stance on one area could burden the other area and would make the economy to suffer in the long run.
He said, “The need for policy coordination arises in the cast of structural reforms and liberalisation of the financial sector.
“Such reforms can only proceed within the framework of a supportive fiscal policy that provides macroeconomic stability, fiscal discipline and avoidance of taxes that discriminate against the financial activity.
“The constitution empowers the legislature with three basic functions of representation, lawmaking and oversight.
“To this end, the National Assembly can facilitate synergy between monetary and fiscal policies towards economic diversification by making laws designed to put an end to budget delays and fiscal deficit.”
The Minister of Finance, Mrs Zainab Ahmed, had said the decline in revenue had made it imperative for state governments to reduce unnecessary overhead costs in order to enthrone fiscal discipline.
She said the move was vital in order to increase the Internally Generated Revenue of states so as to efficiently maximise the scarce resources needed to stimulate the economy.
Ahmed, who spoke at a conference with the theme: ‘Unlocking the potential of the non-oil sector as a sustainable source of government revenue’, maintained that states should look inwards to harness various avenues for revenue.
She said, “It is on record that due to persistent domestic fall in oil revenue over the past years, it became extremely difficult, if not impossible for us to meet duly budgeted obligations.
“This happened because of the age-long over-reliance on oil, even though Nigeria is abundantly endowed with multiple resources, which provide varied sources of revenue.
“There is stupendous potential for diversification of revenue. We can reflect soberly on our national endowments and make conscious efforts to exploit and manage them effectively.
“Let me remind us that we need to develop cost-effective strategies to increase our IGR, reduce unnecessary overhead costs, enthrone fiscal discipline and transparency so as to optimise available limited resources, while efforts are sustained to broaden our revenue base.”
Ahmed said the Federal Government would continue to ensure that all federation revenues were accounted for in the most transparent manner and managed efficiently.
She said, “Let me acknowledge and commend the wisdom behind the development of the new revenue reporting template that was engineered by the Commissioners for Finance.
“It is imperative to mention that its implementation will be one of the key reforms in revenue remittances into the federation account.
“The administration of President Muhammadu Buhari has demonstrated necessary political will and has been very supportive in our drive to explore other relevant revenue sources, so as to be able to turn the tide in favour of the federation account and the nation in general.”
She further urged state governments to develop various sectors in their states to consolidate on the revenue allocation they receive from the federation account.
Ecobank Partners NiDCOM to Mobilise Nigerians Abroad for National Development
In a bid to fulfill it’s objectives and mandate, the Pan African Bank has promised to support Nigerians living and working abroad through it’s partnership with NiDCOM.
The Managing Director, Ecobank Nigeria, Patrick Akinwuntan has stated that the bank is privileged to work closely with the Nigerians in Diaspora Commission, (NiDCOM) and will continue to pursue one of its key mandates of helping to enhance the economic development and integration of Africa through its support to Nigerians living and working abroad.
Speaking at the maiden edition of the Diaspora Quarterly Lecture Series with Ecobank as the sole banking partner which took place on Saturday, 8th May 2021, he noted that Ecobank remains a critical bridge for Nigerians abroad, as it has made huge investments in the necessary platforms to enable them connect with home seamlessly. The event held online and had over 2000 participants from across all the continents in attendance.
“Nigerians in the diaspora play a major role in nation building, their contribution goes a long way to catalyse economic development. For us at Ecobank, we are a pan-African institution positioned to foster the economic growth and integration of our continent, so we are particularly pleased to work closely with the Nigerians in Diaspora Commission (NiDCOM), ably led by the Chairman/CEO, Hon Abike Dabiri-Erewa”.
“We are committed to ensuring that every Nigerian living abroad is able to remit home seamlessly and affordably, access viable investment opportunities and as the financial institution of choice for Nigerians abroad, we have deployed the necessary resources to actualise this.” He stated.
The Minister of Interior, Ogbeni Rauf Aregbesola, who was also present, reiterated the readiness of the government to collaborate with Nigerians in the diaspora, highlighting the new processes put in place to facilitate passport issuance, noting that all backlog of passport applications would be cleared by the end of May 2021.
Also speaking, the Hon. Minister of State, Foreign Affairs Amb. Zubairu Dada said harnessing the human capital and material resources of Nigerians in the diaspora towards the socio-economic, cultural, and political development of Nigeria can no longer be ignored. He pointed out that the Nigerian diaspora community is well educated, resourceful, skilled, and exposed to global best practices.
The NiDCOM Chairman/CEO, Hon. Abike Dabiri- Erewa explained that the Diaspora Quarterly Lecture Series is projected to be a major aspect of national discourse, where Nigerians abroad can be kept abreast of the government’s policies, programmes and projects.
Increase in Price Boosts Revenue of Dangote Sugar by 41.5 Percent in Q1 2021
Revenue of Dangote Sugar Refinery Plc rose by 41.5 percent to N67.394 billion in the first quarter (Q1) of 2021 from N47.643 billion recorded in the same quarter of 2020.
According to the leading sugar manufacturer, the increase in revenue was a result of the increase in the price of sugar in the first quarter. The company claimed price adjustment was necessary to mitigate the negative effect of inflation and depreciation on the company.
Volumes only rose by 5.7 percent during the quarter despite a 41.5 percent increase in revenue, meaning the increase in price was the main sales catalyst.
In the company’s unaudited financial statements, gross profit grew from N12.721 billion in Q1 2020 to N18.044 billion in Q1 2021.
Similarly, operating profit stood at N15.884 billion, up from N10.747 billion posted in Q1 2020.
Finance cost more than double from N1.353 billion in Q1 2020 to N3.412 billion in Q1 2021.
Dangote Sugar’s profit before tax rose from N9.509 billion recorded in the corresponding quarter to N11.949 billion in the quarter under review.
The company paid N3.646 billion in income tax, slightly higher than N3.137 paid in the same quarter of 2020.
Profit for the period grew from N6.372 billion in Q1 2020 to N8.302 billion in Q1 2021.
Commenting on the company’s performance, Dangote Sugar said “EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”
On price increase, the company hinged it on series of devaluation carried out in 2020 by the Central Bank of Nigeria (CBN), escalating inflation, port congestion and rising in price of global sugar. Dangote Sugar said its imported raw sugar from Brazil under Federal Government’s backward integration plan.
“We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.
FBN Holdings Suffers 39 Percent Drop in Profit to N15.6 Billion in Q1 2021
FBN Holdings Plc profit after tax declined by 39 percent from N23.140 billion recorded in the first quarter (Q1) of 2020 to N15.6 billion in the first quarter of 2021.
In the leading financial institution’s unaudited financial statements released through the Nigerian Exchange Limited, gross earnings declined by 14.5 percent to N137 billion in the period under review, down from N160 billion filed in the previous quarter.
Similarly, net interest income declined from N60.253 billion achieved in Q1 2020 to N52.793 billion.
Net interest income after impairment charge for losses also dipped from N50.547 billion in Q1 2020 to N39.619 billion in Q1 20201. While net fee and commission income rose from N20.773 billion in Q1 2020 to N28.427 billion in Q1 2021.
Profit before tax declined by 34 percent to N18.906 billion in the quarter under review, down from N28.680 billion posted in the corresponding quarter of 2020.
FBN Holdings paid N3.285 billion in income tax in the first quarter of 2020.
Therefore, profit for the period stood at N15.621 billion. While Net Assets contracted from N765.2 billion to N764.8 billion.
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