Between January and November last year, the Federal Government made about N5.04 trillion from the sale of oil, figures obtained from the Central Bank of Nigeria (CBN) have revealed.
The oil revenue, according to the CBN economic report for November, was lower than the N8.77trillion revenue target provided for in the 2019 budget for the 11-month period.
A breakdown of the N5.04 tillion oil revenue showed that the sum of N363.9 billion was generated from crude oil and gas exports, while the sum of N2.94 trillion was generated from Petroleum Profit Tax and Royalties.
A monthly breakdown of the oil revenue showed that N417.3billion was earned in January, while February, March, April, May and June had N479.5billion, N516.9billion, N472.4billion, N410.2billion and N336.6billion, respectively.
For the month of June, the country through the Nigeria National Petroleum Corporation (NNPC) made the sum of N336.6billion; July had N387.7billion; August, N484.8billion while September, October and November had N467.6billion, N577.3billion and N489.1billion respectively.
The decrease in oil revenue, relative to the monthly budget estimate, was attributed to shut-ins and shut-downs at some NNPC terminals.
The shutdown, according to findings, was due to pipeline leakages and maintenance activities.
The report read in part, “Oil receipt, at N489.08billion or 56.9 per cent of total revenue, was below both the monthly budget of N798.83billion and the preceding month’s receipt of N577.30billion by 38.8 per cent and 15.3 per cent respectively.”
Experts have said there is a need for government to broaden its revenue sources in order to raise adequate revenue to finance its expenditure.
The Lead Director, Centre for Social Justice, Eze Onyekpere, said that a good part of the revenue projections of government was not done in line with current economic realities.
He said: “Generally, our revenue projections have severally missed the mark over the years. The projections and forecasts suffer from lack of realism. In 2016, revenue projections fell short by 23 per cent; in 2017, it fell short by 47.73 per cent and in 2018 by 45 per cent.
“This indicates that overall, a good part of our revenue projections has not been based on empirical evidence. Further, if projected revenue in 2018 was N7.1trillion and we missed the mark by 45 per cent and have also missed the mark by 30 per cent in the half year of 2019, the further increase in projected revenue to N8.15trillion in 2020 seems to be hanging in the air.”
Nigeria’s Economy Still Vulnerable To Shocks – LCCI
The Lagos Chamber of Commerce and Industry (LCCI) has said that Nigeria’s economy is still vulnerable to external shocks due to fluctuations in global oil prices.
LCCI President, Mrs Toki Mobogunje, said this at a press conference on “State of the Nigerian Economy” held in Lagos, on Wednesday.
She said the mono-product nature of the economy would continue to expose the nation to volatility in the global oil market with its attendant consequences on the economy.
Mabogunje called on the Federal Government to intensify diversification efforts and embrace structural reforms to attract private investment and stimulate economic growth.
According to her, businesses still struggle to survive owing to multiplicity of levies, infrastructure challenges, sluggish growth, excessive regulation, high cost of credit and unfavourable government policies.
She said the challenges confronting growth of businesses had remained in spite of the country’s upward movement by 15 places in the ease of doing business ranking.
The LCCI president advised government to vigorously implement friendly policies to support expansion of businesses.
Speaking on inflation, Mabogunje advised the government to stem rising consumer prices through increased investment in infrastructure, especially power and transportation.
“The inflation rate, at 11.98 per cent in December, was the fourth consecutive month of rising inflation. Rising inflation has a profound welfare effect on citizens as it weakens purchasing power, as heightened food inflation naturally escalates poverty conditions.
“Policy makers need to worry about the increasingly intense inflationary conditions, especially the food component of inflation,” she said.
This, Mabogunje said, would help bridge the supply gaps and reduce transportation costs.
On foreign exchange and external reserves, she said the approach of supporting the reserves with foreign portfolio investment was unsustainable.
The LCCI president said there will be problems if portfolio investors develope apathy for Nigerian assets.
She also noted that the current security situation in the country had devastating implications for business activities, economic growth, food production and investment.
Mabogunje urged government to ensure a concrete and sustainable means of reducing youth unemployment by stimulating investment across all sectors of the economy.
AfDB Moves To Invest $600m In Alternative Energy
The African Development Bank (AfDB) says it has freed up $600 MILLION for investment in renewable energy in Africa.
The President, AfDB, Dr Akinwumi Adesina, who disclosed this in his keynote speech at the UK-Africa Investment Summit, said, “Huge opportunities exist for investment in renewable energy, especially for hydropower, wind, solar, thermal and geothermal.
“But many of these opportunities can’t be realised unless we invest a lot more in project preparation to make the projects bankable. The African Development Bank through its NEPAD infrastructure project preparation facility has helped to mobilise financing for $8.5 billion of infrastructure projects.”
The AfDB said the Sustainable Energy Fund for Africa, based at the bank, had supported investments in excess of $800m in renewable energy.
He said, “With global climate change, and increasing frequency and intensity of extreme weather events, there is an urgent need to climate proof infrastructure investments.
“The devastating cyclones in Mozambique, Malawi and Zimbabwe led to massive destruction of critical infrastructure. The same applies to coastal states, which are more vulnerable to coastal erosion and floods. Infrastructure investment must now be climate-resilient.”
According to Adesina, the bank used a partial risk guarantee to support the Lake Turkana wind power project in Kenya, the largest wind power generation project in Africa, which will produce 300 megawatts of electricity.
“The African Development Bank’s €20 million Partial Risk Guarantee essentially backstopped the government of Kenya’s obligations to developers against delays in the construction of transmission lines,” he said.
He noted that the bank launched a $1billion synthetic securitisation that it used to transfer risks on its private sector portfolio assets to the private sector.
Adesina said, “We are currently exploring with the DFID the use of synthetic securitisation for the sovereign portfolio of the African Development Bank. This will be used to transfer sovereign risk to the market, working with insurers and reinsurers in the UK. This could be a huge game changer for how governments can transfer their sovereign risks on infrastructure to the market.
“Because the bulk of infrastructure is financed through foreign loans, and the revenue streams are in local currency, it introduces high financial and forex risks to investors. Using swaps and hedging are effective, no doubt, but more can be achieved by focusing on local currency financing. This will also help with debt sustainability as the bulk of Africa’s external debt is on infrastructure.
Why the UK’s Exit from the EU could Represent a Golden Opportunity for Nigeria
Following Boris Johnson’s dominant election victory in December, it appears the UK is edging ever closer to Brexit. One of Johnson’s key campaign promises was to deliver on the results of the referendum in 2016 and allow the nation to “move on” from the chaos that has dominated British politics for more than three years.
Following his election victory, Johnson promised: “We can start a new chapter in the history of our country, in which we come together and move forward united, unleashing the enormous potential of the British people.”
He added that he wanted to make the 2020s a decade of prosperity and opportunity, but where does that leave the UK’s relationship with its other trade partners, and is there an opportunity for Britain to strengthen its ties with Nigeria?
The two nations have a long trade history and the latest data places Nigeria among the largest markets for UK exports. Although, at this moment, there is no existing trade deal between the UK and Nigeria, aside from World Trade Organisation ties and the UK’s status as a ‘most favoured nation’.
Their most favoured nation status means the UK enjoys the lowest tariffs, the fewest trade barriers and the highest import quotas, but could the ties to Nigeria become stronger in the fall-out of Brexit, and against the backdrop of the US-China trade war?
This economic conflict between the world’s biggest markets poses a threat to Nigeria, as Africa’s top oil producer, due to the tariffs being levelled by the two countries on the other’s imports.
Speaking in 2019, Muda Yusuf of the Lagos Chamber of Commerce explained: “The US and China are the two biggest economies in the world, so if they are having issues with respect to trade, it will affect the global economy, it will slow down growth and when we have a slowdown in growth, it will invariably affect commodity prices.
“So, we are likely to see a drop in crude oil price and it will affect Nigeria because we are heavily dependent on oil.”
The recent easing of the trade war between the nations could offer some respite, but could the UK’s severing of trade ties with EU member states offers an opportunity for stronger trading connections with Nigeria?
In May of last year, the UK’s then-Foreign Secretary, Jeremy Hunt, confirmed that Britain would aim to deepen its insurance sector ties to Nigeria through the introduction of Naira-dominated instruments in London’s financial markets.
This is great news for the global strength of the Naira, which has dropped in value against the British Pound by around half since the turn of the century. And the explosion in popularity of forex trading online means that these markets are now being evaluated and discussed more than ever.
The list of forex brokers operating online is growing globally, and Nigeria is no exception to that trend. As a result, more and more citizens are paying attention to the nation’s trade links – and paying closer attention to the Brexit picture unfolding thousands of miles away.
The two countries’ commercial relationship is already underpinned by more than £6.1bn worth of annual trade. UK brands remain in very high demand throughout Nigeria, especially luxury items, while Nigeria’s low-income tax rates make the nation an exciting prospect for British investors.
And as the nation edges ever closer to finally leaving the EU, we could see those ambitions of greater investment finally realized, but the UK isn’t the only country paying closer attention to Nigeria and recognizing its trade potential.
If their trade war with China continues to cool, the USA could further develop its presence in Nigeria beyond its present investment, which was placed at $5.6bn in 2018, and increase its activities to support SMEs in the country.
President Donald Trump emphasised America’s friendship with Nigeria on the occasion of the 59th independence anniversary last year, describing the nation as “our strongest partners in Africa”.
He also affirmed that Vice President Mike Pence and Nigerian Vice President Yemi Osinbajo were working together to build on the two countries’ “long-standing history of co-operation”. Indeed, the pair came together last June to discuss trade reforms, among other topics.
But the slowdown caused by the tensions with China is bad news for countries that are trade partners of the two economic superpowers, and Nigeria’s hopes of capitalizing on additional investment from America, and potentially reducing its debt profile of N26trn, could be dashed.
This perhaps makes the UK a much safer bet for future growth, and Prime Minister Johnson will undoubtedly be eager to promote trade discussions with new partners following his nation’s exit from the EU.
But it falls on Nigeria to make the most of this opportunity, as there will be many other nations seeking to make inroads, and capitalize on the UK’s desire to strengthen its international trade links outside of Europe.
Sports5 days ago
Australian Open: Again, Gauff Beats Venus Williams
Sports5 days ago
2020 NSF: Athletes Arrive For S’West Zonal Elimination, Today
Politics5 days ago
2023: Oshiomhole Plotting To Be VP – APC Chieftain
Politics5 days ago
Democracy: Arewa Youths Want Int’l Community To Beam Searchlight On Nigeria
Politics5 days ago
PDP Women Leader Decries Killings In Kogi
Politics5 days ago
We Closed Border Due To Arms, Drugs Influx – Buhari
Sports5 days ago
‘Ronaldo Solves Problems For Juventus’
Politics5 days ago
My Endorsement Of Obaseki, Personal – PDP BOT Member