Friday, July 03, 2015 8:55AM / FBN Capital Research
A pressing challenge for the new administration is to boost its non-oil revenues. The total of N3.5trn (gross) collected in the 12 months to April represented just 3.9% of 2014 GDP. When we add the collection from the oil industry, the ratio stands at 10.5%.
This is exceptionally poor for a middle-income oil producer. One company, albeit the largest in the non-oil economy, has suggested that it accounts for one tenth of all government non-oil revenues. It (MTN Nigeria) drew its figures from all tiers of government. That said, the claim reinforces the feeling that the collection agencies focus their efforts on the large and most visible companies.
Companies’ income tax (CIT) was the largest source of non-oil revenues in the 12-month period. Payments are concentrated in June although some slippage into the following month was evident in 2014.
VAT produced 23% of total revenues. Payments are constant throughout the year although we would expect a steady increase in line with growth. It may be significant that a prominent member of the presidential circle ruled out hikes in direct, but not indirect taxes.
Customs is the underperformer, which we attribute to a combination of import restrictions, waivers, flaws in governance and the slowing economy.
Other revenues were boosted in April by N291bn from unspecified FGN independent sources.
Our suspicion remains that the plugging of leakages will have a more rapid fiscal impact than steps to boost the collection of non-oil revenues. Marked progress in this area would help to allay investor concerns over delays in appointments.
4. Further decline in FAAC distributions – May 19, 2015
5. Picture for debt service less healthy – May 14, 2015
6. A modest decline in reserves – May 07, 2015
7. A further sharp decline in reserves – May 05, 2015