Economy

Addressing Problem of Weak Revenue Generation in Nigeria

Published

9 years ago

31/10/2017

The 2018-2020 Medium-Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) that the Federal Government of Nigeria (FGN) released on 20 October, 2017 will focus on some areas which we think are critical in raising the revenue generating capacity of the Nigerian economy.

The MTEF/FSP forms the basis on which the FGN’s yearly budget is developed. The focus of the 2018-2020 MTEF/FSP is to achieve the following: broaden revenue receipts by identifying and plugging revenue leakages; improve the efficiency and quality of capital spending; place greater emphasis on critical infrastructure; rationalise recurrent expenditure; and fiscal consolidation to maintain the fiscal deficit below 3% of the Gross Domestic Product (GDP).

FSDH Research’s analysis of the data that the International Monetary Fund (IMF) released shows that Nigeria recorded the lowest revenue to GDP ratio (at 11%) between 2010 and 2016 among some selected countries.

Some of the reasons for the low performance are: revenue leakages; weak infrastructure and institutions; inadequate structures to unlock revenue from agriculture, which is the largest contributor to the country’s GDP; and overreliance on one product (oil) as the source of revenue.

Some of the effects of this situation are widespread poverty and income inequality; and unsustainably high debt service to revenue.

Thus, concerted polices and efforts are required to address these challenges in order to develop the Nigerian economy.

The MTEF projects a benchmark crude oil price of US$45 per barrel for 2018 (US$44.5 in 2017 budget); oil production estimate of 2.3mbd (2.2mbd in 2017); and an average exchange rate of N305/US$ same as in 2017.

It projects a GDP growth rate at 3.5% in 2018 in line with the projection of FSDH Research but higher than the projection of IMF at 1.9%.

The MTEF expects inflation rate to end the year 2018 at 12.42% lower than 15.74% for 2017. Based on these assumptions, estimated aggregate revenue for the FGN for 2018 is N5.65trn, 11% higher than N5.08trn approved in the 2017 budget.

The oil revenue is projected to contribute N2.44trn. Non-oil revenues (Companies Income Tax, Value Added Tax, Customs and Excise duties, and Federation Account Levies) are estimated at N1.39trn; Independent Revenue: N847.95bn; Recoveries: N512.44bn; and Others (including mining): N459.66bn.

The proposed expenditure for 2018 is N8.60trn, 15.59% increase over 2017 of N7.44trn. Adjusting the proposed expenditure by the projected inflation rate to end the year, it represents a marginal growth in real term.

The aggregate expenditure comprises: Statutory Transfers: N451.46bn; Debt Service: N2.03trn; Sinking Fund: N220bn; Recurrent Expenditure: N3.17trn; Special Intervention Programme: N350bn and Capital Expenditure of N2.28trn.

This fiscal plan will result in a deficit of N2.95trn for 2018, which is about 2.61% of GDP.

FSDH Research notes that the expected average oil production is aggressive, while the expected average exchange rate is conservative.

In addition, the expected capital expenditure of about N7.22trn between 2018 and 2020 is not sufficient to lift the economy from the current infrastructure deficiency.

FSDH Research reiterates that a well functional infrastructure is critical for the economy to generate revenue and since government is constrained by funds to address this, it is imperative to develop other constructive and innovative ways to fund the infrastructure. The rough estimate of the infrastructure expenditure gap in Nigeria at the moment is about N30trn.

Economy

OTC Securities Exchange Falls 1.31% as Key Stocks Decline

Published

1 hour ago

19/05/2026

Adedapo Adesanya

By Adedapo Adesanya

Three bellwether stocks weakened the NASD Over-the-Counter (OTC) Securities Exchange by 1.31 per cent on Monday, May 18.

This brought the NASD Unlisted Security Index (NSI) by 54.71 points to 4,133.70 points from 4,188.41 points, and shrank the market capitalisation by N32.73 billion to N2.473 trillion from N2.506 trillion.

Yesterday, FrieslandCampina Wamco Plc contracted by N12.45 to sell at N146.55 per share compared with last Friday’s closing price of N159.00 per share, Central Securities and Clearing System (CSCS) Plc declined by N2.34 to N70.00 per unit from N72.34 per unit, and NASD Plc lost 50 Kobo to trade at N34.50 per share versus N35.00 per share.

The trio overpowered the N5.56 gained Newrest Asl Plc. This stock ended the trading session at N61.15 per unit, in contrast to the previous session’s N55.59 per unit.

During the trading day, the volume of securities traded by investors slid by 56.1 per cent to 514,142 units from 1.2 million units, and the value of securities dropped 29.8 per cent to close at N17.4 million versus N29.8 million, while the number of deals jumped 12.5 per cent to 27 deals from 24 deals.

Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units traded for N1.9 billion.

GNI Plc also ended the day as the most traded stock by volume on a year-to-date basis with 3.4 billion units worth N8.4 billion, trailed by Resourcery Plc with 1.1 billion units valued at N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.

Economy

FX Pressure Pushes Naira Lower to N1,373/$1 at Official Market

Published

1 hour ago

19/05/2026

Adedapo Adesanya

By Adedapo Adesanya

It was a horrible day for the Nigerian Naira in the different segments of the foreign exchange (FX) market on Monday, May 15, as its value further weakened against the United States Dollar.

In the black market window, the Naira lost N5 against the Dollar yesterday to sell for N1,390/$1 compared with the previous value of N1,385/$1, but at the GTBank forex counter, it remained unchanged at N1,383/$1.

In the Nigerian Autonomous Foreign Exchange Market (NAFEX), the Nigerian currency depreciated against the greenback by N2.66 or 0.19 per cent to sell for N1,373.70/$1 compared to last Friday’s rate of N1,371.04/$1.

Equally, it fell against the Pound Sterling in the same market segment by N9.05 to trade at N1,839.66/£1 versus N1,830.61/£1, and lost N5.42 on the Euro to close at N1,600.49/€1 versus N1,595.07/€1.

The performance of the local currency during the session indicates early worries despite all signals pointing to stability, amid improved Dollar sales by the Central Bank of Nigeria (CBN), with steady, higher oil receipts to bolster the nation’s reserves.

Activity at the market showed that turnover rose 57.3 per cent to $76.29 million on Monday from $48.49 million posted on Friday.

Over the weekend, S&P raised Nigeria’s credit ratings for the first time since 2012 and highlighted improved FX market liquidity and $10 billion turnover recorded in April 2026 as one of the major gains of the CBN-led FX reforms.

The agency said the liberalisation of the exchange rate has bolstered access to foreign currency and enabled a market-driven exchange-rate environment while supporting investor and consumer confidence.

Meanwhile, the cryptocurrency market was bullish on Monday as investors monitored developments in the Iran conflict and weighed the impact of surging oil prices on inflation and US interest-rate expectations.

Ethereum (ETH) gained 0.7 per cent to trade at $2,134.10, Cardano (ADA) rose by 0.6 per cent to $0.2515, Solana (SOL) expanded by 0.3 per cent to $85.11, Binance Coin (BNB) jumped 0.2 per cent to $643.29, TRON (TRX) increased by 0.03 per cent to $0.3565, and Bitcoin (BTC) advanced by 0.02 per cent to $76,912.12.

On the flip side, Dogecoin (DOGE) slid by 1.5 per cent to $0.1044, and Ripple (XRP) decreased by 0.5 per cent to $1.38, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.

Economy

Customs Street Opens Week Bearish With 0.05% Loss

Published

1 hour ago

19/05/2026

Dipo Olowookere

By Dipo Olowookere

A marginal 0.05 per cent loss was recorded by Customs Street on Monday, as sell-offs by market participants remained.

This was driven by the desire of investors to book profits, having witnessed a significant price appreciation on the stocks in their portfolios.

Yesterday, bargain-hunting in the banking space, which resulted in the sector closing 0.17 per cent higher, could not prevent the Nigerian Exchange (NGX) Limited from going down.

Data showed that the consumer goods segment lost 0.26 per cent, the insurance counter depreciated by 0.20 per cent, the industrial goods index shed 0.09 per cent, and the energy industry retreated by 0.03 per cent.

As a result, the All-Share Index (ASI) eased by 126.09 points to 250,204.83 points from 250,330.92 points, and the market capitalisation contracted by N81 billion to N160.363 trillion from N160.444 trillion.

NCR Nigeria and Zichis declined by 9.99 per cent each to sell for N161.20 and N26.49, respectively, Industrial and Medical Gases shrank by 9.93 per cent to N38.10, Sovereign Trust Insurance depreciated by 9.86 per cent to N2.65, and DAAR Communications slipped by 9.78 per cent to N2.03.

On the flip side, Oando gained 10.00 per cent to finish at N51.70, University Press also rose by 10.00 per cent to N5.50, Deap Capital soared by 9.96 per cent to N5.96, May and Baker expanded by 9.94 per cent to N52.00, and Trans-Nationwide Express grew by 9.92 per cent to N7.76.

Yesterday, 800.5 million equities worth N37.1 billion exchanged hands in 87,096 deals compared with the 1.1 billion equities valued at N44.3 billion traded in 65,744 deals last Friday. This showed that the number of deals went up by 32.48 per cent, while the trading volume and value went down by 27.23 per cent and 16.25 per cent, respectively.

The most active stock on the first trading session of this week was UBA with a turnover of 65.0 million units worth N2.8 billion, Fidelity Bank traded 57.3 million units for N1.3 billion, Access Holdings sold 42.3 million units valued at N1.1 billion, DAAR Communications exchanged 36.7 million units for N81.8 million, and Secure Electronic Technology transacted 36.6 million units worth N33.0 million.