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FGN Budget – an Expansionary Stance in 2022



2018 budget

The 2022 FGN budget titled Economic Growth and Sustainability was signed by President Buhari on 31 December ’21. The aggregate expenditure is estimated at N17.1trn, which is 18% higher than the 2021 FGN aggregate expenditure of N14.6trn.

The aggregate amount allocated for capital expenditure in the 2022 budget is N5.96trn. This represents 35% of total expenditure (above the 30% target set by the current administration) and is 14% higher than the 2021 provision of N5.23trn. The budget has an estimated deficit of N6.39trn, approximately 4.1% of total GDP (in 2020) and is slightly above the 3% ceiling set by the fiscal responsibility Act 2007 (FRA).

The fiscal expenditure also comprises of statutory transfer of N869.7bn, debt service of N3.6trn, sinking fund of N270.7bn, recurrent (non-debt) expenditure of N6.9trn, and special interventions (recurrent) of N350.0bn.

The assumptions for the 2022 national budget include an oil price benchmark of USD62/b, 1.9mbpd in oil production, an exchange rate of N410.15/USD, GDP growth rate of 4.2% y/y and an inflation rate of 13%.

Furthermore, the budget deficit is expected to be financed by foreign borrowings of N2.6trn and domestic borrowings of N2.6trn, privatisation proceeds of N90.7bn, and multilateral/bi-lateral loan drawdowns of N1.2trn.

Regarding debt sustainability, Nigeria’s debt-to-GDP ratio stood at 30% at end-September’21. It is relatively low when compared with other African economies such as Kenya (65%), South Africa (80%) and Egypt (90%). However, the country’s debt service-to-revenue ratio stood at 76% as at November ’21, one of the highest among African economies.

The aggregate revenue available to fund the 2022 national budget is projected at N10.7trn. The projected revenue is 32.3% higher than the previous year and comprises of an estimated oil revenue of N3.4trn (31.3% of total revenue) and non-oil revenue of N7.3trn (68.7% of total revenue).

Turning to revenue mobilisation, the FGN plans to grow the revenue-to-GDP ratio from about 8% to 15% by 2025. In line with the 2022 budget’s priorities, some critical policies in the Finance Act 2021 that could assist with achieving this include the imposition of excise duty on non-alcoholic, carbonated and sweetened beverages as well as the technology reforms by the Federal Inland Revenue Service (FIRS) to enhance tax administration and increase revenue.

Based on our estimates, between January to November ‘21, the FGN’s expenditure is 5.9% lower than the prorated budget of N13.4trn while the revenue is 25.9% less than the prorated budget of N7.4trn. Additionally, we note that debt servicing is 38% higher than the prorated budget of N3.0trn.

The FGN aims to further strengthen frameworks for concessions and public-private partnerships (PPP) as well as explore opportunities in green finance, such as implementing the sovereign green bond programme and debt-for-climate swap mechanisms. The national budget is expected to target the financing of critical development projects and programmes which should improve the economic and business environment.

Proper fiscal housekeeping is required to keep the economy afloat in the near-term and drive it towards double digit growth in the medium-to-long term. Capital expenditure should be maximised to raise the potential of revenue generation and growth in the non-oil economy. Although there are existing PPP initiatives by the FGN, increased private sector participation is still required.

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Vice President, Yemi Osinbajo Seeks Collaboration With Vietnam on Agriculture and Technology




Nigeria’s Vice President, Prof Yemi Osinbajo has sought collaboration with Vietnam in the areas of agriculture and technology. The vice president spoke in Vietnam at a bilateral meeting on Monday. 

During the meeting with his Vietnamese counterpart, Võ Thị Ánh Xuân, Osinbajo acknowledged both countries’ market potentials in the digital economy, telecommunications, and agriculture. 

Speaking at the Presidential Palace in Hanoi, Vice President Yemi Osinbajo noted that telecommunication penetration in Nigeria is one of the deepest in any developing country, stating that about 120 million Nigerians now use one telecom service or the other.

Calling for collaboration on digital economy, Osinbajo said “We have close to 120 million of our citizens who have put to use telecom equipment or devices. And also, broadband connectivity is vastly improved. We hope that by 2025, we will have broadband connectivity for all of our over 200 million people”. 

On the call for collaboration in the area of agriculture, the vice president noted that cashew production is an important area in which both counties can partner. 

He said ” Given the food crisis that the world faces today, and is likely to continue facing even in the coming years, I like to say that the way forward is for our countries to collaborate. For instance, establishing cashew processing plants in Nigeria”. 

Investors King understands that Vietnam is the world’s second-largest cashew processor with an annual processing capacity of 1.2 million tons representing up to 40 percent of the world’s total capacity. 

Speaking at the event, the Vietnamese Vice President commended Nigeria’s leadership role in the ECOWAS sub-region and Africa generally, especially in the peaceful resolution of disputes. 

She also commended Nigeria’s handling of the Covid 19 pandemic while reposing confidence in Nigeria’s ability to resolve challenges confronting the African continent and the West African region in particular. 

Conclusively, she added that her country would continue to work with Africa to meet its aspirations in agriculture, clean energy and digital penetration.

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Togo, Benin, and Niger Republic Owe Nigeria N4.1 Trillion in Electricity Debts

Nigeria currently supplies electricity to the Republic of Benin, Togo, and Niger through the Nigeria Bulk Electricity Trading, NBET Plc



Electricity - Investors King

The House of Representatives on Public Account has disclosed that Nigeria’s neighbouring countries, Togo, Benin, and Niger Republic owe the country about N4.1 trillion in electricity bills.

The revelation was contained in a letter sent by the committee to the Managing Director of Nigeria Bulk Electricity Trading, NBET Plc, Dr. Nnaemeka Eweluka.

According to the letter which was signed by the Chairman of the Committee, Hon. Oluwole Oke, the Managing Director of NBET is expected to appear alongside Dr. Marilyn Amobi, who served as MD/CEO from 2016 to 2020. 

The house committee has accused the former MD, Amobi of non-rendition of the Audited Accounts for the years 2014, 2015, 2016, 2017, 2018, and 2019.

Investors King understands that Nigeria currently supplies electricity to the Republic of Benin, Togo, and Niger through the Nigeria Bulk Electricity Trading, NBET Plc. About 6 percent of the electricity generated in the country is sold to the neighboring countries. 

Meanwhile, according to the managing director of NBET, the federal government is working on structures that will enhance power distribution in the country, stating that most of the power-generating companies are currently located in the southern part of the country. 

“Most of the power generation companies are located within the south-south and south-west largely because of gas with one in the south-east, of course, we have the hydros in Niger state,” he said.

The MD added that Nigeria could generate up to a capacity of about 14,000 megawatts. He however noted that the distribution capacity is only between 4,000 to 5,000 megawatts per day.

Eweluka nonetheless sounded a note of hope, making references to the intervention projects that are currently ongoing such as the partnership with Simens.

“To address this gap between what is available and what the system can currently carry; there are a number of intervention projects that the government is currently pursuing, that include the presidential power initiatives in partnership with Siemens,” he concluded.

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No Plan to Increase Fuel Price; Says FG



NNPC - Investors King

The Federal Government has stated that it has no plan to increase fuel price during the yuletide period.

This assurance is coming amid the nationwide fuel scarcity which has pushed the price of petrol above N250 in many retail stations.

Investors King learnt that fuel is being held for N250 per litre in Abuja and several other cities across the country while black marketers are charging between N400 and N450 per litre.

The scarcity and the high price of fuel are however becoming unbearable for many Nigerians, especially those who have reasons to embark on business travel for the December festivals.

According to the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, most of the association members, who owned the bulk of the filling stations across the country, were now subjected to purchasing PMS at about N220/litre, which was why many outlets currently dispensed at about N250/litre and above.

He noted that the cost of the commodity has been on the rise due to its unavailability and other concerns in the sector. 

He added that the price of fuel could be sold from N350/litre to N400/litre before the end of the year. 

Meanwhile, a number of senior officials at the NNPC had stated that the subsidy was becoming too burdensome on the national oil company, as this was another reason for the scarcity of PMS.

According to a source who is familiar with the development as reported by Punch News, “How can we continue to import 60 million litres of petrol daily and keep subsidising it, while millions of litres are either diverted or cannot be accounted for? The burden is too much, as you rightly captured in that story”. 

Investors King understands that NNPC is the sole importer of petroleum into the country and it pays billions of naira every month to subsidise the product to N147 per litre. 

Reuters News reported that in August 2022, NNPC paid more than $1 billion as fuel subsidy while the federal government earmarked N3.6 trillion as fuel subsidy in the 2023 budget proposal. 

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