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Economy

FG’s Non-oil Revenue Rises by 28.7% to N322.93bn

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Zambian economy
  • FG’s Non-oil Revenue Rises by 28.7% to N322.93bn

The federal government’s non-oil revenue increased by 28.7 per cent to N322.93 billion in April, higher than the N251.01 billion recorded the previous month.

But at N322.93 billion or 40.6 per cent of total revenue, the non-oil revenue was below the provisional monthly budget estimate of N466.91 billion by 30.8 per cent.

The Central Bank of Nigeria (CBN) disclosed this in its monthly economic report for April 2019, posted on its website.

But it explained that the lower collection relative to the provisional monthly budget estimate was due to the shortfalls in corporate tax, VAT, Federal Government of Nigeria Independent Revenue and Education Tax.

According to the report, at N795.31 billion, the estimated federally-collected revenue (gross) in April 2019, fell below the provisional monthly budget estimate of N1.107 trillion by 28.2 per cent.

However, it exceeded the receipt of N767.90 billion in the preceding month by 3.6 per cent. The decrease, relative to the provisional monthly budget estimate, was attributed to a shortfall in both oil and non-oil revenue.

Also, oil receipts, at N472.38 billion or 59.4 per cent of total revenue, was below both the provisional monthly budget estimate and the preceding month’s receipt of N516.88 by 26.2 per cent and 8.6 per cent, respectively.

The fall in oil revenue relative to the provisional monthly budget estimate was attributed to the shut-ins and short-downs at some NNPC terminals due to technical issues, leakages and maintenance.
“Of the total N616.21 billion retained revenue in the Federation Account, the sums of N88.49 billion, N67.82 billion and N24.72 billion were transferred to the VAT Pool Account, the federal government independent revenue and ‘Others’ respectively, leaving a balance of N435.18 billion for distribution to the three tiers of government,” the report said.

Of this amount, the federal government received N208.39 billion, while the state and local governments got N105.70 billion and N81.49 billion, respectively.
The balance of N39.59 billion was shared among the oil producing states as 13 per cent Derivation Fund.

Similarly, from the N88.49 billion transferred to the VAT Pool Account, the federal government received N13.27 billion, while the state and local governments received N44.25 billion and N30.97 billion, respectively.

“The external sector performance remained stable in the review month. The average price of crude oil rose from $68.11 per barrel in March 2019 to US$73.08 per barrel in April 2019 due to OPEC-led supply cuts, geopolitical tensions in Libya and Venezuela, and the US sanctions on Iran.

“Notwithstanding, aggregate foreign exchange inflow into the CBN, at $5.25 billion, showed a decline of 32.4 per cent below the level in the preceding period of 2019, but contrasted with the growth of 23.8 per cent at the end of the corresponding period of 2018. The fall in aggregate foreign exchange inflow into the CBN, relative to the preceding month’s level, was attributed, largely, to the decrease in non- oil receipts.

“Aggregate outflow of foreign exchange from the Bank fell by 6.7 per cent below the level at the end of the preceding month to $4.90 billion in April 2019. It, however, indicated 42.5 per cent increase over the level at the end of the corresponding period of 2018. The development, relative to end-April 2019, reflected, mainly, the 13.2 per cent decline in ‘Interbank Utilisation,” the report stated.

Furthermore, the overall, foreign exchange flows through the Bank in the month of April 2019, resulted in a net inflow of $0.35 billion, compared with $2.51 billion and $0.80 billion in the preceding month and the corresponding period of 2018, respectively.

According to the report, at N31.696 trillion, aggregate credit to the domestic economy, on month-on-month basis, grew by 3.9 per cent at the end of the review month, compared with the increase of 6.5 per cent and 0.7 per cent at the end of the preceding month and the corresponding period of 2018, respectively.

The development reflected, mainly, the 11.4 per cent rise in net claims on the federal government. Over the level at end- December 2018, net domestic credit grew by 15 per cent at the end of the review period, compared with the growth of 10.7 per cent and 5.3 per cent at the end of the preceding month and the corresponding period of 2018, respectively. The development was due to the increase of 59.1 per cent and 5.5 per cent in net claims on the federal government and claims on the private sector, respectively.

“Net claims on the federal government, on month-on-month basis, rose by 21.8 per cent to N7,741.3 billion at end-March 2019, compared with the increase of 11.4 per cent and 7.3 per cent at the end of February 2019 and March 2018, respectively.

“The development was due to the increase of 74.0 per cent in the banking systems holding of government securities in the review month. Relative to the level at end- December 2018, net claims on the federal government grew by 59.1 per cent at the end of the review period, compared with the increase of 30.6 per cent and 35.5 per cent at end of February 2019 and March 2018, respectively,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

More Stimulus is Welcomed – But What’s Needed is Smarter Stimulus

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UK EConomy contracts

Stock markets are cautiously upbeat that a stimulus package can be agreed in the U.S. before the November 3 election – but even if it does happen, it’s likely to be a “short-lived sticking plaster” that masks the major long-term issue: unemployment.

This is the warning from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organizations.

It comes as House Speaker Nancy Pelosi and Secretary Steven Mnuchin spoke again on Tuesday – the deadline imposed by the Speaker – as the two sides try and strike a deal over another significant fiscal stimulus package ahead of the election.

Earlier this month, Republican senators slammed a $1.8 trillion offer made by the Trump administration to the Democrats as too big, an offer Ms Pelosi dismissed as “insufficient.”

Discussions are due to continue on Wednesday upon the Secretary’s return to Washington.

Nigel Green warns: “No doubt, a breakthrough of the deadlock that would allow for more stimulus would provide a lifeline to millions and millions of Americans.

“U.S. and global markets are, generally, cautiously optimistic that a deal can be agreed by the two sides.

“There’s a sentiment that something will have to materialize – and this is fueling markets.

“However, the window of opportunity is closing and it is not yet a done deal.

“If talks collapse, the markets will inevitably be disappointed and there’s likely to be a short-lived sell-off.”

He continues: “Even if Pelosi and Mnuchin can get another massive stimulus package agreed, and U.S. and global markets rise, this is likely to serve only as a sticking plaster.

“A market rally is going to be difficult to be sustained due to the enormous uncertainty created by other factors including the presidential election, a possible looming constitutional crisis in the world’s largest economy, and the growing Covid-19 infections in America and other major economies.”

The deVere CEO goes on to add: “Getting over the political impasse would help boost the economy and deliver much-needed money to Americans, but the major, lasting issue triggered by the pandemic remains: mass unemployment, which will hit demand, growth and investment.

“As such, a swift rebound for the U.S. economy is doubtful as unemployment claims continue to rise.

“That V-shaped recovery talked about by so many? That will be impossible with so many millions facing long-term unemployment.”

Whilst it is certainly positive that unemployment has fallen from 15% in the U.S. to 11% in recent weeks, it should be remembered that this is still at the same rate of the 2008 crash.

In addition, a second wave of soaring unemployment could hit imminently as some support measures wind-down and business’ and households’ savings and resources have been already run-down.

Mr Green concludes: “Near-term support for sure, but a long-term strategy – a multi-year vision – for growth and investment is essential.

“What’s needed is not just more stimulus, but smarter stimulus.”

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Business

The Highest Corporation Taxes Around the World and the Main Drivers Behind them

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tax relief

Taxes Pay by Corporation Around the World and the Main Drivers Behind them

While corporation tax rates are influenced by the country’s definition, there’s clearly a pattern with developing countries and emerging economies paying higher rates to sustain the country.

The top five richest countries in the world’s corporation tax are relatively varied, with Luxemburg standing at 27.08%, Norway at 22%, Iceland at 20%, Switzerland at 18% and Ireland at 12.5%. It would appear that some countries’ cultures factor into how much tax they pay. For example, Scandinavian countries are proud to pay higher taxes to contribute to social welfare.

On average, Africa has the highest corporation tax rate throughout the world’s continents at 28.45% and South America, the second highest with an average rate of 27.63%. However, Europe stands at the lowest rate of 20.27%. Does this contradict the claim that developed countries pay higher tax?

OECD explained that corporation tax plays a key part in government revenue. This is particularly true in developing countries, despite the global trend of falling rates since the 1980s. Let’s take a closer look at two continents, South America and Africa, paying the highest corporation tax rates in the world.

South America has most countries in highest corporation tax top 10

According to data analysed, Brazil and Venezuela have the highest corporation tax at 34%, followed closely by Colombia at 33%, and Argentina at 30%, making South America the continent with the most countries in the top 10 who pay the highest corporation tax.

It is unclear whether South America, as an emerging continent, is charging higher taxes in order to raise government revenue or to benefit from businesses that are looking to expand internationally and enter new markets. According to research, South America is becoming a popular choice for business to enter, with strong trade links and an advantageous geographic location. Indeed, South America is a large continent where some countries are business friendly and others are harder to penetrate.

Africa: the continent with the highest average corporation tax

Being the poorest continent in the world, Africa unsurprisingly has the highest average corporation tax at 28.45%. With the highest in this data being Zambia at 35% and the lowest being Libya and Madagascar at 20%, South Africa stands roughly in the middle at 28%, slightly above average for Africa overall. Does this mean that South Africa is the safest bet for business?

South Africa is one of Africa’s largest economies, with 54 diverse countries in terms of political stability, development, growth, and population. As South Africa has been a relatively slow growth area over the years, corporation tax dropped from 34.55% in 2012 to the current rate — but was this effective? GDP in South Africa has fluctuated quite dramatically since the 1960s. Business favours countries with political stability, which is something South Africa doesn’t currently have. Furthermore, South Africa’s government debt to GDP sits roughly in the middle of the continent’s countries — is this influencing their corporate tax rate?

Country Continent Tax (%)
Puerto Rico North America 37.5
Zambia Africa 35
Brazil South America 34
Venezuela South America 34
France Europe 33.3
Columbia South America 33
Morocco Africa 31
Japan Asia Pacific 30.62
Mexico North America 30
Argentina South America 30
Germany Europe 30
Australia Asia Pacific 30
Philippines Asia Pacific 30
Kenya Africa 30
Nigeria Africa 30
Congo Africa 30
Belgium Europe 29
Pakistan Asia Pacific 29
Sri Lanka Asia Pacific 28
New Zealand Asia Pacific 28
South Africa Africa 28
Luxembourg Europe 27.08
Chile South America 27
Canada North America 26.5
Algeria Africa 26
India Asia Pacific 25.17
Jamaica North America 25
Chile South America 25
Ecuador South America 25
Netherlands Europe 25
Spain Europe 25
Austria Europe 25
South Korea Asia Pacific 25
Bangladesh Asia Pacific 25
China Asia Pacific 25
Indonesia Asia Pacific 25
Zimbabwe Africa 25
Tunisia Africa 25
Greece Europe 24
Italy Europe 24
Malaysia Asia Pacific 24
Israel Middle East 23
Egypt Africa 22.5
Norway Europe 22
Denmark Europe 22
Turkey Europe 22
Sweden Europe 21.4
United States North America 21
Portugal Europe 21
Russia Europe 20
Finland Europe 20
Iceland Europe 20
Afghanistan Asia Pacific 20
Azerbaijan Asia Pacific 20
Kazakhstan Asia Pacific 20
Thailand Asia Pacific 20
Vietnam Asia Pacific 20
Cambodia Asia Pacific 20
Taiwan Asia Pacific 20
Saudi Arabia Middle East 20
Jordan Middle East 20
Yemen Middle East 20
Madagascar Africa 20
Libya Africa 20
Slovenia Europe 19
Czech Republic Europe 19
Poland Europe 19
United Kingdom Europe 19
Belarus Europe 18
Croatia Europe 18
Switzerland Europe 18
Ukraine Europe 18
Singapore Asia Pacific 17
Hong Kong Asia Pacific 16.5
Lithuania Europe 15
Georgia Asia Pacific 15
Maldives Asia Pacific 15
Kuwait Middle East 15
Iraq Middle East 15
Ireland Europe 12.5
Cyprus Europe 12.5
Bulgaria Europe 10
Qatar Middle East 10
Hungary Europe 9
Barbados North America 5.5

 

Lucy Desai is a content writer at QuickBooks, a global company offering the world’s leading accountancy software.

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Economy

Nigeria’s Crude Oil Production Declined to 1.31mbpd in September

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Oil

Nigeria’s Crude Oil Output Declined from 1.37mbpd in August to 1.31mbpd in September

The Organisation of the Petroleum Exporting Countries (OPEC) reported that Nigeria’s crude oil production declined by 58,000 barrels per day in the Month of September when compared to the nation’s oil production of August.

In its latest oil market report, the cartel said Nigeria produced 1.37 million barrels per day in the month of August but that number declined by 58,000 to 1.31 million barrels per day in September. Bringing the total decline for the 30 days of september to 1.74 million barrels.

On oil price movement in September, the organisation said prices settled lower in the month under review after four consecutive months of gains.

OPEC Reference Basket declined by 8.1 percent or $3.65 in September to $41.54 per barrel, while it moderated to $40.62 per barrel from the year-to-date.

Commenting on the recent changed in Nigeria’s monetary policy rate, the oil cartel said “the recent cut is a part of the policy to continue supporting the economy that plunged 6.1 per cent in the second quarter hit by the global pandemic.

“Nevertheless, Nigeria’s annual inflation rate surged to the highest rate since March 2018 in August 2020, as it rose to 13.22 per cent year-on-year from 12.82 per in in July.

Oil prices sustained bullish trend on Thursday after data showed U.S oil inventories declined last week.

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