Economy

Tax Waivers Responsible For Major Revenue Loss In Nigeria – FG

Published

2 years ago

May 16, 2022

The Federal Government of Nigeria has said tax waivers are responsible for the significant revenue loss in the country. Even though the government is making efforts to utilise the gains of tax exemptions and concessions, there still has been massive revenue loss for the country rather than improvements.

Investors King gathered that the FG, through the Finance Ministry, said it is committed to reducing tax expenditure. However, the recent nation’s revenue to Gross Domestic Product (GDP) ratio of about seven per cent was “poor and unsatisfactory.”

“The case remains the same with our current contribution between oil and non-oil GDP, for which our analysis on oil revenue to oil GDP reveals as 39 per cent while non-oil revenue to non-oil GDP as 4.2 per cent. Our Value Added Tax revenue to GDP in Nigeria for example stands at less than one per cent (0.8 per cent) which compares unfavourably to ECOWAS average of 3.4 percent.”

“So also, is our excise revenue which is 4.1 per cent compared to Ghana at 15.3 percent or Kenya at 19.5 percent. It is important to reiterate that though tax exemptions and concessions have for long being used by successive Governments in Nigeria to attract both domestic and foreign direct investments in the country with the expectation that the revenue foregone will lead to commensurate benefits in the economy in the form of employment generation, capital formation, wealth creation and poverty alleviation, revenue generation, technology transfer, amongst others, they constitute huge tax expenditures and revenue leakages to government,” Minister of Finance, Budget and National Planning, Zainab Ahmed said during a workshop in Abuja on Tax Expenditure, organised by the Economic Community of West African States (ECOWAS).

Represented by the Director, Technical Services in the Ministry, Fatima Hayatu, Ahmed, Ahmed spoke on the implementation of Support Programme for Tax Transition in West Africa.

She noted that the PATF is targeted at promoting the management of domestic taxation and ensure better coordination of taxation in the ECOWAS and West African Economic and Monetary Union regions.

The Minister also noted that Nigeria’s low revenue generation capabilities had been connected to the different economic challenges faced by present and past administration.

According to her, Nigeria is faced with challenges in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth and development. The Minister assured that the current regime of the President, Muhammadu Buhari would continue to reiterate the need to examine tax expenditure component of the federal government aggregate spending.

The Minister said that the government had recently issued a tax expenditure statement call circular to relevant agencies of government indicating guidelines and instructions for strict adherence, compliance, and reporting.

The Director of the Customs Union and Taxation, Salifou Tiemtore who was also at the event, said the PATF programme would strengthen regional fight against fraud, tax evasion, Illicit Financial Flows and other forms of corruption.

He said the event was the beginning of series of workshops to disseminate the contents of the Tax Expenditure Guide to specific countries notably Nigeria, Liberia, Guinea Bissau and Mauritania.

“The successful implementation of PATF tools would also improve the management of domestic taxation in member states through efficient management of VAT and control of tax expenditures,” Tiemtore submitted.

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Economy

Nigeria’s Untapped Coffee Sector Holds the Key to $2 Billion Annual Revenue

Published

4 hours ago

December 6, 2023

Investors King

People stand in front of coffeeshops in Rembrandtplein in Amsterdam

Amidst declining foreign reserves and the need for alternative revenue streams, Nigeria’s overlooked coffee industry emerges as a potential powerhouse capable of contributing over $2 billion annually to foreign exchange earnings.

Industry experts emphasize the necessity for strategic investments and modernized farming practices to unlock the full economic potential of the coffee sector.

While Nigeria is not among the top 10 coffee producers in Africa, the country’s untapped coffee industry holds the promise of significant financial gains, job creation, and sustainable agricultural development.

The urgency for revitalization comes as Nigeria grapples with a decline in foreign reserves, dropping from $38.25 billion in September 2022 to $33.23 billion in the third quarter of 2023.

Salihu Imam, Chairman of the National Coffee and Tea Association of Nigeria, Oyo State, highlighted the global significance of coffee, stating, “Coffee is the second most traded/valuable of all commodities and first in Agricultural commodities in the world.”

The potential economic impact extends beyond immediate financial gains, with Nigeria positioning itself as a key player in the global coffee trade.

Despite its potential, Nigeria’s coffee exports remain modest, producing less than one million bags annually.

In contrast, Ethiopia, the largest coffee exporter in Africa, is projected to produce 8.25 million bags. Experts suggest that Nigeria, with its unique coffee varieties, could generate $2 billion annually.

Segun Lary-Lean, President of the West Africa Specialty Coffee Association, emphasized the robust global demand for coffee, comparing it to water in Western countries.

He noted the significant earnings of coffee-producing nations like Brazil, Colombia, Vietnam, and Kenya, which experienced a 17% increase in coffee earnings.

In a call to action, industry players urge the Federal Government to prioritize strategic investments, modernized farming practices, and value-added processing to harness the coffee sector’s full economic benefits.

Unlocking the potential of Nigeria’s coffee industry stands not only as a financial opportunity but as a catalyst for broader economic growth and diversification.

Economy

Nigeria’s Q3 Foreign Trade Skyrockets: Crude Oil Revenue Surges by 83.23% to N8.54tn

Published

1 day ago

December 5, 2023

Investors King

Nigeria’s foreign trade expanded by 53.16% year-on-year to N18.80 trillion in the third quarter (Q3) of 2023.

The surge was primarily propelled by an impressive 83.23% spike in crude oil revenue to N8.54 trillion, a substantial increase from N4.66 trillion recorded in the same quarter of the previous year.

This was reported by the National Bureau of Statistics (NBS) in its ‘Foreign Trade in Goods Statistics (Q3 2023)’ that highlighted the nation’s trade balance and economic outlook.

The report noted that total exports rose by 60.78% to N10.35 trillion.

Mr. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission, emphasized the importance of viability in retaining exploration leases.

He said, “Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases.”

The report outlined the dominance of crude oil in exports, constituting 82.50% of total exports, while non-crude oil products contributed N677.57 billion or 6.55% of total exports. The positive trade balance stood at N1.89 trillion.

The top five export destinations for Nigeria included Spain, India, The Netherlands, Indonesia, and France, collectively accounting for 45.98% of total export value.

On the import side, China, Belgium, India, Malta, and the United States were the major sources, comprising 57.18% of total imports, valued at N4.84 trillion.

While these promising trade figures indicate a robust economic performance, challenges in the oil sector persist, with the country’s crude oil production below the 2023 target.

The government’s commitment to increasing production aims to boost revenue and fund strategic national projects, as highlighted by Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.

The surge in exports, possibly linked to the recent naira devaluation, underscores the intricate relationship between economic policies and trade dynamics, shaping Nigeria’s economic trajectory.

Economy

Federal Government to Earn Over $500 Million in INTELS Deal

Published

2 days ago

December 4, 2023

Investors King

The Nigerian Ports Authority (NPA) has unveiled an agreement with INTELS Nigeria Limited that is set to bring substantial financial gains to the federal government.

The comprehensive deal, negotiated over weeks, not only resolves a contentious pilotage contract but also promises to bolster Nigeria’s coffers by over $500 million.

The accord encompasses a multifaceted approach to financial benefits, including an interest waiver of $193,317,556 and a significant reduction in the interest rate on outstanding debt.

The debt, originally at a six-month London Interbank Offer Rate (LIBOR) + 6.5%, has been revised to a more favorable six months Secured Overnight Financing Rate (SOFR) + 3%.

Such financial restructuring is anticipated to save the government a staggering $326.8 million over the next 15 years.

NPA, in a detailed breakdown, elucidated that the agreement further involves spreading the debt repayment over 15 years, with the initial two years being interest-free.

Additionally, there is a commendable reduction in the commission percentage, dropping from 28% to 24.5%, a move that aligns with the government’s commitment to optimizing financial resources.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, received accolades for his tireless efforts in steering the negotiations to a successful conclusion. NPA expressed gratitude for his commitment to putting Nigeria first, emphasizing the critical role played by the minister in resolving the long-standing INTELS dispute.

Former Vice President Atiku Abubakar, however, denied benefiting from the reinstatement of INTELS contracts.

He clarified that his divestment from the company remains unchanged, emphasizing that he cannot be a beneficiary of the restored pilotage monitoring business.

NPA’s move to ensure a resolution with INTELS is not only seen as a financial triumph but also as a strategic step towards fostering economic stability.

The agreement is poised to have a positive ripple effect on revenue generation and underscores the government’s commitment to diplomatic and economically viable solutions.