Nigeria’s non-oil earnings, which headed north between Q3’20 and Q3’21, fell by 13.4 per cent to N473.59 billion in October, latest data released by the Central Bank of Nigeria (CBN) shows. The apex bank, which stated this in its monthly economic report for October 2021 released last week, attributed the decline in non-oil revenue to a drop in Company Income Tax (CIT), customs and excise duties, Value Added Tax (VAT) and Federal Government independent revenue. Also, the report shows that in contrast to the drop in non-oil revenue, improved oil revenue inflow led to federally-collected revenue rising to N942.31 billion in October 2021 from N854.31 billion in the previous month. The report said: “Federation revenue rose to N942.31 billion from N854.31 billion in September, representing a 10.3 per cent increase, but fell short of the proportionate benchmark of N1.024 billion by 8.0 per cent. In terms of share, nonoil revenue accounted for 50.3 per cent of total federation revenue, while oil revenue made up the balance of 49.7 per cent.
“This closely compares with the 50.6:49.4 non-oil-oil revenue mix envisaged in the 2021 Appropriation Act. At N468.72 billion, earnings from oil sources jumped by 52.5 per cent, in October 2021 relative to September 2021 but fell short of the monthly target by 7.4 per cent (or N37.21 billion). “The oil revenue increase was due largely to the N15.68 billion receipts from crude oil and gas exports and the doubling of earnings from petroleum profit tax and royalties (N167.56 billion). The positive outcomes underscored the rebound in crude oil prices.
“In contrast, non-oil receipts, at N473.59 billion, were below both the level in September and the budget target by 13.4 per cent and 8.7 per cent, respectively. The decline in non-oil revenue was attributed to a drop in major components; company income tax, customs and excise duties, value-added tax, and FGN independent revenue, with the largest decline in customs and exercise duties and FGN independent revenue sources.” However, in its economic report for Q3’21 also released last week, CBN had stated that “total federation receipts in the third quarter of 2021 at N2.848 billion exceeded the level in the second quarter of 2021 by 11.5 per cent. Non-oil receipts continued to dominate the fiscal space for the fifth consecutive quarter, constituting 59.9 per cent of total revenue, while oil revenue made up the balance of 40.1 per cent.” The apex bank said that nonoil receipts’ sustained dominance of the fiscal space was “an indication that the initiatives to diversify the revenue base of the government are yielding result.” It noted that at N1.71 trillion, non-oil earnings “exceeded the level in the second quarter of 2021 and the quarterly target of N1.556 billion by 7.4 per cent and 9.6 per cent, respectively.
“Collections from Corporate Income Tax (CIT) and Customs & Excise Duties drove non-oil revenue performance, growing by 28.3 per cent and 29.3 per cent 28.3 per cent and 29.3 per cent in the period. The performance was due to the response of companies to the July 31, 2021 deadline for filing CIT returns, as requested by the Federal Inland Revenue Service and the relative rebound in ports activities,” the bank added. New Telegraph reports that the Minister of State for Industry, Trade and Investment, Mariam Yalwaji Katagum, in February last year, disclosed that the Federal Government was pursuing an aggressive strategy to increase foreign exchange earnings on non-oil export trade to $150 billion.
She explained that the strategy, which hinged on government’s zero oil plan strategy, was being planned for 10 years. According to the minister, government was capitalising on non-oil sector to exploit abundant deposit resources, while discouraging over dependence on oil. Introduced by the Nigeria Export Promotion Council (NEPC) in the fourth quarter 2016, the zero oil plan -a core component of the Federal Government’s Economic Recovery and Growth Plan (ERGP)- was developed to increase the contribution of non-oil exports to the country’s Gross Domestic Product(GDP) by 20 per cent.
Specifically, NEPC, in its 2016 annual report, stated that the focus of the plan was to “generate at least a minimum of 40 – 50 per cent of Nigeria earnings from non-oil export.” At the Institute of Directors (IoD) 2021 Annual Directors Conference held in November, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed that the country’s non-oil revenue had risen 15.7 per cent above the Federal Government’s targets to N1.15 trillion, stating that this was a testament to the Fedaral Government’s efforts in diversifying the economy. “Nigeria was quickly able to exit recession and is on her way to path of sustainable growth and we are intensifying efforts to grow and diversify our revenue sources to grow revenue from the current eight per cent. Our non-oil revenues have grown to N1.15 trillion, representing 15.7 per cent above set target,” the minister said.