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Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

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  • Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

The Minister of Budget and National Planning, Senator Udo Udoma, explained why the Federal Government could not achieve its 2018 revenue target, stating that some one-off items listed for implementation in the fiscal year could not be actualised.

He gave the one-off items to include the N710bn from Oil Joint Venture Asset Restructuring and N320bn from the revision of the Oil Production Sharing Contract Legislation.

The minister said the one-off financing items had already been rolled over to the 2019 budget.

The 2018 budget, signed by President Muhammadu Buhari on June 20 last year, had total spending of N9.1tn.

The capital expenditure was to gulp 31.5 per cent of the total expenditure at N2.87tn, while recurrent non-debt spending was put at N3.51tn in 2018.

There was also a provision of N2.01tn for debt servicing, which is 21 per cent of the total budget while a provision of N177bn to retire maturing bond to local contractors was made by the government.

The N9.1tn budget was expected to be financed from N2.99tn to be generated from oil revenue, N31.25bn from Nigeria Liquefied Natural Gas dividend while N1.17bn was expected to be realised through revenue from minerals and mining.

To fund the budget, the Federal Government had planned to generate N658.55bn from Companies Income Tax and N207.51bn from Value Added Tax and N324.86bn from Customs while N57.87bn was expected to come from federation account levies.

In the same vein, the government was expected to raise N847.95bn through independent revenue from its agencies, while tax amnesty income, signature bonus and unspent balance from previous years were to provide N87.84bn, N114.3bn and N250bn, respectively.

Speaking during a meeting with the House of Representatives Joint Committee on Finance, Appropriation, Planning and Economic Development on the 2019 revenue and expenditure projections as contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper 2019-2021, the minister stated that the Federal Government was determined to improve its revenue generation this year.

Details of the fiscal operations of the Federal Government as contained in the Central Bank of Nigeria’s economic report for the fourth quarter of 2018 showed that the government had not been able to generate adequate revenue to meet its expenditure.

For example, in the first quarter of last year, the Federal Government’s retained revenue was put at N884.88bn while its expenditure was N2.01tn. This resulted in a fiscal deficit of about N1.13tn.

In the second quarter of last year, the Federal Government earned N1.12tn while its expenditure was N1.63tn, resulting in a deficit of N504.8bn.

For the third quarter, the revenue of the Federal Government was put at N1.03tn with the expenditure of N1.89tn, leading to a deficit of N855.09bn.

For the fourth quarter, the fiscal deficit widened to N910.4bn as the government was only able to generate N916.44bn to take care of its total expenditure of N1.82tn

But the minister said the government was already taking a number of steps to shore up revenue to fund the 2019 budget.

Among other initiatives aimed at expanding the fiscal space, the minister stated that the Federal Government would intensify efforts to improve public financial management through the comprehensive implementation of the Treasury Single Account, the Government Integrated Financial Management Information System and the Integrated Payroll and Personnel Information System.

Also, he said the Department of Petroleum Resources had been directed to, within three months, complete the collection of past dues on oil licence and royalty charges, including those due from the Nigerian Petroleum Development Company which it had agreed to pay since 2017.

Udoma also said the Ministry of Finance, working with all the relevant agencies, had been authorised to take action to liquidate all recovered, unencumbered assets within six months.

Among other revenue generating initiatives, he said the President had directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance customs collections efficiency from the current 64 per cent to up to 90 per cent over the next few years.

He indicated that in spite of the challenges that militated against the realisation of targeted revenues, the revenues generated in 2018 showed a significant improvement over that of 2017.

The minister said he expected further improvement this year with the sustained implementation of the Economic Recovery and Growth Plan.

The minister explained that the ERGP guided allocations in the Federal Government budget because it sets out the key execution priorities of the government for the growth and development of the economy.

The government, he added, was encouraged by the results so far attained after implementing the plan for about two years.

He said the economy had exited recession and was on the path of growth, even though it took time for the impact to be fully felt by a significant number of people.

“It takes time, and will take some more efforts but we will keep working on it so as to fully realise the objectives of the ERGP. The implementation of the ERGP will create growth and jobs and reduce poverty,” he said.

Explaining the basis for some of the assumptions in the MTEF/FSP, the minister said the oil price benchmark was arrived at after extensive consultations with industry experts and consultants.

He expressed optimism that the $60 per barrel crude oil benchmark projected for 2019 was achievable as oil was currently trading at about $67 per barrel.

On the limitation imposed by OPEC production quota, the minister explained that there was no quota set for condensates by OPEC.

Nigeria, he said, could use condensate production to augment its production.

“Mr President has directed the NNPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day,” he added.

He explained that in allocating funds in the 2019 budget proposals, priority was given to critical infrastructure projects.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Federal Government Appeals to Electricity Union Amid Tariff Hike Tensions

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The Federal Government has made a direct appeal to the National Union of Electricity Employees (NUEE) amidst rising tensions over the recent hike in electricity tariffs.

The plea comes as the union continues to voice its dissatisfaction with the government’s decision to remove the subsidy on the tariff payable by Band A customers, warning of potential service withdrawal if the decision is not reversed.

In an interview with our correspondent, Adebiyi Adeyeye, the National President of the NUEE, reiterated the union’s stance against the increase, citing the impracticality of expecting their members to collect higher tariffs from customers without a proportional improvement in service.

Adeyeye emphasized the union’s concerns over the discrepancy between the promised 20 hours of daily power supply and the actual delivery, which he deemed “not feasible” due to existing infrastructural limitations.

The Federal Government, represented by Minister of Power Adebayo Adelabu, called for understanding and patience from the union. Speaking through his media aide, Bolaji Tunji, Adelabu assured that efforts were being made to improve electricity supply across the nation. He emphasized the necessity of these changes for the country’s long-term economic growth and job creation.

“We just want to appeal to the labor union to understand the context of these changes. It’s about working together to address the underlying issues within the power sector. It is not anybody’s joy that there are blackouts all the time,” Adelabu stated.

He added that the steps being taken would ultimately benefit the economy and urged the union to bear with the government during this transitional phase.

Adeyeye maintained that the union’s primary objective is to safeguard the well-being of its members, who are facing increased threats due to the tariff hike.

He stressed the need for immediate action from the government to resolve the issues, stating that the union would withdraw its services if necessary.

As the standoff continues, the public watches with interest, hoping for a resolution that will avoid disruptions to the country’s power supply and maintain a harmonious relationship between the government and electricity workers.

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Economy

Minister of Power Pledges 6,000 Megawatts Electricity Generation in Six Months

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Adebayo Adelabu has made a bold pledge to ramp up electricity generation to 6,000 megawatts (MW) within the next six months.

This announcement comes amidst ongoing efforts to tackle the longstanding issue of inadequate power supply that has plagued the country for years.

During an appearance on Channel Television’s Politics Today program, Adelabu said the government is committed to resolving the issues hindering the power sector’s efficiency.

He expressed confidence in the administration’s ability to overcome the challenges and deliver tangible results to the Nigerian populace.

Currently, Nigeria generates and transmits over 4,000MW of electricity with distribution bottlenecks being identified as a major obstacle.

Adelabu assured that steps are being taken to address these distribution challenges and ensure that the generated power reaches consumers across the country effectively.

The minister highlighted that the government has been proactive in seeking the expertise of professionals and engaging stakeholders to identify the root causes of the power sector’s problems and devise appropriate solutions.

Adelabu acknowledged the existing gap between Nigeria’s installed capacity of 13,000MW and the actual generation output, attributing it to various factors that have impeded optimal performance.

Despite these challenges, he expressed optimism that the government’s initiatives would lead to a substantial increase in electricity generation, marking a significant milestone in Nigeria’s energy sector.

Addressing concerns about the recent decline in power generation due to low gas supply, Adelabu assured Nigerians that measures are being taken to rectify the situation.

He acknowledged the impact of power outages on citizens’ daily lives and reiterated the government’s commitment to providing stable electricity supply within the stipulated timeframe.

The Minister’s assurance of achieving 6,000MW of electricity generation in the next six months comes as a ray of hope for millions of Nigerians who have long endured the consequences of inadequate power supply.

With ongoing reforms and targeted interventions, there is optimism that Nigeria’s power sector will witness a transformative change, ushering in an era of improved access to electricity for all citizens.

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Economy

Nigeria’s Economic Woes to Drag Down Sub-Saharan Growth, World Bank Forecasts

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The World Bank’s latest report on the economic outlook for Western and Central Africa has highlighted Nigeria’s sluggish economic growth as a significant factor impeding the sub-region’s overall performance.

According to the report, while economic activities in the region are expected to increase, Nigeria’s lower-than-average growth trajectory will act as a hindrance to broader economic expansion.

The report indicates that economic activity in Western and Central Africa is set to rise from 3.2 percent in 2023 to 3.7 percent in 2024 and further accelerate to 4.2 percent in 2025–2026.

However, Nigeria’s growth, projected at 3.3 percent in 2024 and 3.6 percent in 2025–2026, falls below the sub-region’s average.

The World Bank underscores the importance of macroeconomic and fiscal reforms in Nigeria, which it anticipates will gradually yield results.

It expects the oil sector to stabilize with a recovery in production and slightly lower prices, contributing to a more stable macroeconomic environment.

Despite these measures, the report emphasizes the need for structural reforms to foster higher growth rates.

In contrast, economic activities in the West African Economic and Monetary Union are projected to increase significantly, with growth rates of 5.9 percent in 2024 and 6.2 percent in 2025.

Solid performances from countries like Benin, Côte d’Ivoire, Niger, and Senegal are cited as key drivers of growth in the region.

The report also highlights the importance of monetary policy adjustments and reforms in supporting economic growth.

For instance, a more accommodative monetary policy by the Central Bank of West African States is expected to bolster private consumption in Côte d’Ivoire.

Also, investments in sectors such as agriculture, manufacturing, and telecommunications are anticipated to increase due to improvements in the business environment.

However, Nigeria continues to grapple with multidimensional poverty as highlighted by the National Bureau of Statistics.

Over half of Nigeria’s population is considered multidimensionally poor, with rural areas disproportionately affected. The World Bank underscores the need for concerted efforts to address poverty and inequality in the country.

Sub-Saharan Africa as a whole faces challenges in deepening and lengthening economic growth. Despite recent progress, growth remains volatile, and poverty rates remain high.

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