The Nigerian government has failed to meet its revenue projections for three years (2011, 2012, and 2013) in a row. Projected Federal Government revenues in 2014 are estimated at N3.58 trillion a 13 percent decline from 2013 budget estimates.
Data supplied by the Federal Ministry of Finance (FMF) shows that two out of three revenue agencies of the Government: NNPC, and the Nigerian Customs Service (NCS), had budgeted revenue shortfalls of N1.94 trillion and N480.7 billion respectively between January and November 2013.
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Source: Federal Ministry of Finance
The only exception was the Federal Inland Revenue Service (FIRS), which had a surplus of N3.48 billion between January and November 2013.
The same trends are observed for 2011, and 2012.
The NNPC has blamed the revenue shortfall on increased crude oil theft, and a decline in crude oil production as a result of force majeure declared at the Brass and Bonny Terminals, and an increase in pipeline vandalism.
For the Nigeria Customs Service, revenue shortfalls were due mostly to a decrease in imports due to government policies, and also due to revenues forfeited from various concessions and waivers.
We do not believe that waivers and reduced imports alone were responsible for the shortfalls at the Customs Service. The import waivers for 2011, 2012 and 2013 were equivalent to N55.9 billion, N55.3 billion and N59.4 billion, while the budgeted shortfall for the NCS was N20.87 billion (2011), N125.43 billion (2012) and N480.77 billion (2013).
We are also unconvinced that pipeline vandalisation and crude theft alone is responsible for the shortfall in the NNPC.
The FMF has hired consultants McKinsey & Co., to help it plug tax leakages.
Nigeria’s tax revenue to GDP ratio of 7 percent is low compared with other middle-income African countries which are estimated at about 22 percent.
It is striking that of the three agencies only the FIRS which is run quasi- autonomously, professionally and openly is achieving its revenue targets.
Beyond the hiring of tax consultants the Government may wish to overhaul the NNPC and NCS to reduce their opaqueness and inherent corruption, if they are to meet their revenue targets.
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By: PATRICK ATUANYA & BALA AUGIE
