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Thursday, December
24, 2020 / 09:36 AM / by FBNQuest Research / Header Image Credit: BBC
We
saw the expected small quarterly increase in federal revenue collection in Q3
2020 as the country moved from selective lockdown to an easing of most
restrictions. Gross receipts (ie federation account monies before distribution
to the three tiers) rose by 4.5% q/q, and for non-oil revenue the increase
amounted to 46.2% on the same basis. The total of NGN2.27trn in Q3 was 10.6%
short of the quarterly benchmark of NGN2.54trn, which is based upon the
twice-amended and approved 2020 budget.
The CBN commentary notes the negative
impact of OPEC quota restraint on revenue. Nigeria's quota in Q3 and through to
the end of the year was 1.41mbpd, which, officialdom has reassured us, it has
honoured. This would help to explain the 25.0% reduction in gross oil collection
from the previous quarter (although we note that the crude price moved in
Nigeria's favour in Q3.)
Companies' income tax of NGN586bn in
the quarter surpassed the benchmark of NGN450bn because collections from this
source traditionally peak in the third quarter. However, it fell by 10.0% y/y,
reflecting Nigeria's most recent descent into technical recession.
Collection from both customs and
excise, and VAT were well below the benchmark. Yet there was a welcome rise of
29.2% q/q in VAT as Nigerians were increasingly able to get out of their houses
and spend on goods and services. The increase reached 41.5% y/y, reflecting
both the hike in the standard rate with effect from 01 February and continuing
efforts to improve coverage.
We hark back to this administration's
trend of highly ambitious targets for revenue collection. It dates back to the
first Buhari budget in 2016.
The National Assembly has played its
part in this fiscally expansive stance, having recently passed a NGN13.59trn
appropriation bill for 2021 after adding expenditure of NGN500bn to the total
in the proposals submitted by the FGN. We do not have access to any more detail
but suspect that the trend of aggressive targets will be maintained.
This CBN data series is regularly
revised, and sometimes by a wide margin. More detailed (and solid) data are
provided by the Budget Office of the Federation and the Office of the
Accountant-General of the Federation but with a time lag (its latest report
covering H1).
Federally collected
revenue (gross; NGN bn)
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Sources: CBN; FBNQuest Capital Research |
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