Nigeria’s Federation Account increased by 7.48% to N6.86 trillion in the third quarter (Q3) of 2024, according to the latest Economic Report from the Central Bank of Nigeria (CBN).
Most of the growth was attributed to non-oil revenue like company taxes and value-added tax (VAT).
The CBN report revealed that non-oil revenue, which accounted for the lion’s share of the total earnings, surged to N5.56 trillion.
This figure was 19.48% higher than the previous quarter and 50.36% above the set targets for the period as collection of both corporate taxes and VAT improved across the board.
“Gross federation account earnings improved, occasioned by higher receipts from non-oil revenue. At N6.86tn, the provisional gross federation account receipt was 7.48 percent above the level in the preceding quarter but 23.71 percent short of the benchmark,” the report stated.
Despite the strong performance of non-oil revenue, oil revenue dipped by 24.72% compared to the previous quarter to N1.30 trillion in the quarter under review.
This drop was attributed to ongoing challenges with old oil pipelines and outdated equipment, which hampered production and revenue generation.
The report further revealed the composition of the gross federation revenue.
“The increase was due largely to higher receipts from corporate tax and value-added tax. The composition of gross federation revenue showed that non-oil revenue remained dominant, accounting for 81.00 percent, while oil revenue constituted the balance,” it explained.
The substantial increase in non-oil revenue has helped to offset the decline in oil earnings. It also validates Nigeria’s efforts at diversify its revenue base away from reliance on crude oil exports.
The Nigerian government has been striving to increase its tax collection efficiency and improve VAT compliance, two areas that have shown positive results in the latest report.
From the total N6.86 trillion collected, the Nigerian government shared N3.92 trillion across various levels of government.
The federal government received N1.27 trillion, state governments shared N1.36 trillion, and local governments were allocated N0.99 trillion.
Also, oil-producing states received N0.30 trillion through the 13 percent Derivation Fund, a significant boost to the regions most affected by oil revenue fluctuations.
While the drop in oil revenue is a concern for Nigeria, the country’s increasing reliance on non-oil revenue offers hope for greater fiscal stability in the future.
