Analysts say a pressing challenge for the new Muhammadu Buhari administration is to boost its non-oil revenues as oil prices collapse.The total non oil revenues of N3.5trn (gross) collected in the 12 months to April represented just 3.9 percent of 2014 GDP.
According to analysts at FBN Capital when the collection from the oil industry is added, the ratio stands at 10.5 percent.
“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,” said FBN Capital analysts led by Gregory Kronsten.
“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.
Value added Tax (VAT) produced 23 percent of total revenues while customs was the underperformer, which FBN Capital attributes 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,” Kronsten said.
EDOZIE IFEBI
