Business
Finance Minister Predicts $12bn Revenue Shortfall
The Minister of Finance,
Dr. Ngozi Okonjo-Iweala, has said that the revenue earned by the country this year may be as much as $12 billion short of budget estimates as crude oil theft and output disruptions persist in the oil-rich Niger Delta.
The minister said the government would draw down its oil savings in the Excess Crude Account to compensate for the drop in revenue to keep the budget deficit under control, according to a The Tide’s source.
Savings in the special crude account have dropped by half as President Goodluck Jonathan’s government tries to make up for the drop in oil revenue and fund a deficit that has reached 2.5 per cent, according to the Central Bank of Nigeria.
With the 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, the country expects revenue of almost $80bn from exports.
In the first half of the year, oil receipts amounted to $28.2bn, more than $7bn below the estimate, according to Central Bank figures.
“What is amazing now is that we’ve had this quantity of shock and we were able to weather it. You can say theft, but it’s still a quantity shock,” Okonjo-Iweala said.
Nigeria depends on crude exports for about 80 per cent of government revenue and 95 per cent of export income.
According to Bloomberg, criminal gangs tapping oil from pipelines for illegal sale have posed the biggest threat to output since a government amnesty in 2009 reduced armed attacks led by rebels fighting for greater control of the region’s resources.
The Director of the Budget Office, Mr. Bright Okogu, who sat in on the interview with the minister, said the revenue shortfall due to output disruptions would probably be between $6bn and $12bn.
The government saves the balance of oil revenue above the budgeted price in the Excess Crude Account, which had a balance of just under $5bn, down from about $9bn, at the beginning of the year, according to Okonjo-Iweala.
The country’s vulnerability to shocks is heightened because of lower government revenue from oil, putting pressure on the currency, the CBN Governor, Lamido Sanusi, said in an interview in Oslo.
He said, “The great challenge now is that the fiscal buffers are not as strong as they would be because of the revenue shortfall.
“If there are any adverse external developments, that will feed into this weak revenue profile and put pressure on exchange rates.”
The Central Bank draws down its foreign currency reserves to sell dollars at twice-weekly auctions to keep the currency within a band of three per cent around 155 per dollar.
The naira gained 0.2 per cent to 158.73 against the dollar on the interbank market in Lagos on Friday.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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