Economy
Nigeria’s Revenue to GDP Ratio Hits 8%, Targets 15% 2023
By Dipo Olowookere
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said at the moment, the revenue to Gross Domestic Product (GDP) of Nigeria stands at 8 percent, promising to increase this ratio to 15 percent by the end of the present administration of President Muhammadu Buhari in 2023.
Mrs Ahmed made this disclosure on Thursday at the International Monetary Fund (IMF)/World Bank annual meeting in Washington DC, in the United States of America (USA).
During her remarks, the Minister said part of ways to meet this target is to increase the revenue streams of the country by introducing taxes and expanding the present tax base.
She said it was necessary for the country, which is Africa’s largest economy, to move away from relying solely on crude oil to generate revenue.
According to her, Nigeria’s economy is too dependent on the oil and gas sector, which accounts for just about 10 percent of GDP and represents 94 percent of export earnings and 62 percent of both federal and state governments’ revenues in 2011-2015. She said the country went into recession because the sector suffered shortfall, which dragged the foreign exchange reserves down to $25 billion in November 2016 from $32 billion in January 2015 from a high of $53 billion in 2008.
The Minister said it was because of this economic crisis government came up with the Economic Recovery and Growth Plan (ERGP) in 2017 to diversify the economy and create an enabling business environment.
She noted that since the launch of the 4-year ERGP, “We have recorded year on year improvement on both revenue outturns and revenue to GDP ratio.
“Our revenue outturn as at December 2019 55 percent while it was 58 percent as at June 2019. Our revenue to GDP ratio on the other hand is 8 percent as at end of June 2019 while it was 5 percent as at December 2017.”
According to her, based on the success made so far, the federal government in 2018 launched the Strategic Revenue Growth Initiatives (SRGI), which provides a turnaround blueprint and mechanism that brings together revenue generating entities to review implementation progress.
The Minister said the SRGI was built on three thematic areas including: (1) to achieve sustainability in revenue generation (2) identify new and enforce existing revenue streams and (3) achieve cohesion through people and tools.
She said the initiative includes some cross-cutting enablers including data and technology, performance management and enabling laws and legislations.
“Although, the SRGI contained a robust set of initiatives that was cascaded down as program portfolios to revenue generating entities, it lacked the opportunity sizing of the incremental revenues to be achieved
practically and realistically, given the current and projected structure of the Nigerian economy. This also made it difficult to in turn cascade down the revenue to GDP target of 15 percent by 2023 that was given by the presidency.
“This time around, there are performance targets with consequences for non-performance including the members of the cabinet. For example, I have signed to deliver the 15 percent revenue to GDP in a performance contract and this will be cascaded down to Heads of revenue generating entities to have them aligned to our mission of turning around revenues,” Mrs Ahmed said.
The Minister assured that government will continue to build on the gradual growth in economy, which has recorded nine consecutive quarters of GDP increase, with the annual growth rising from 0.82 percent in 2017 to 1.93 percent in 2018, and 2.02 percent in the first half of 2019.
She attributed this to “our economy’s resilience and gives credence to the effectiveness of our economic policies thus far.”
“We also succeeded in significantly reducing inflation from a peak of 18.72 percent in January 2017, to 11.02 percent by August 2019. This was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange.
“We have sustained accretion to our external reserves, which have risen from $23 billion in October 2016 to about $42.5 billion by August 2019,” she added.
By Dipo Olowookere
The local stock market firmed up by 1.13 per cent on Friday as appetite for Nigerian stocks remained strong.
Investors reacted well to the 2026 budget presentation of President Bola Tinubu to the National Assembly yesterday, especially because of the more realistic crude oil benchmark of $64 per barrel compared with the ambitious $75 per barrel for 2025. This year, prices have been between $60 and $65 per barrel.
Business Post observed profit-taking in the commodity and energy sectors as they respectively shed 0.14 per cent and 0.03 per cent.
But, bargain-hunting in the others sustained the positive run, with the consumer goods index up by 3.82 per cent.
Further, the industrial goods space appreciated by 1.46 per cent, the banking counter improved by 0.08 per cent, and the insurance industry gained 0.04 per cent.
As a result, the All-Share Index (ASI) increased by 1,694.33 points to 152,057.38 points from 150,363.05 points and the market capitalisation chalked up N1.080 trillion to finish at N96.937 trillion compared with Thursday’s closing value of N95.857 trillion.
A total of 34 shares ended on the advancers’ chart, while 24 were on the laggards’ log, representing a positive market breadth index and bullish investor sentiment.
Austin Laz gained 10.00 per cent to close at N2.42, Union Dicon also jumped 10.00 per cent to N6.60, Tantalizers increased by 9.80 per cent to N2.69, Aluminium Extrusion improved by 9.78 per cent to N12.35, and Champion Breweries grew by 9.71 per cent to N16.95.
Conversely, Sovereign Trust Insurance dipped by 7.42 per cent to N3.87, Royal Exchange lost 6.84 per cent to trade at N1.77, Omatek slipped by 6.84 per cent to N1.09, Eunisell depreciated by 5.88 per cent to N80.00, and Eterna dropped 5.63 per cent to close at N28.50.
Yesterday, traders transacted 1.5 billion units worth N21.8 billion in 25,667 deals compared with the 839.8 million units sold for N32.8 billion in 23,211 deals in the preceding session, showing a surge in the trading volume by 76.61 per cent, an uptick in the number of deals by 10.58 per cent, and a shrink in the trading value by 33.54 per cent.
By Adedapo Adesanya
Three stocks stretched the bearish run of the NASD Over-the-Counter (OTC) Securities Exchange by 1.21 per cent on Friday, December 19, with the market capitalisation giving up N26.01 billion to close at N2.121 billion compared with the N2.147 trillion it ended a day earlier, and the NASD Unlisted Security Index (NSI) dropping 43.47 points to 3,546.41 points from 3,589.88 points.
The trio of FrieslandCampina Wamco Nigeria Plc, Central Securities Clearing System (CSCS) Plc, and NASD Plc overpowered the gains printed by four other securities.
FrieslandCampina Wamco Nigeria Plc lost N6.00 to sell at N54.00 per unit versus N60.00 per unit, NASD Plc shrank by N3.50 to N58.50 per share from N55.00 per share, and CSCS Plc depleted by N2.91 to N33.87 per unit from N36.78 per unit.
On the flip side, Air Liquide Plc gained N1.01 to close at N13.00 per share versus N11.99 per share, Golden Capital Plc appreciated by 70 Kobo to N7.68 per unit from N6.98 per unit, Geo-Fluids Plc added 39 Kobo to sell at N5.50 per share versus N5.11 per share, and IPWA Plc rose by 8 Kobo to 85 Kobo per unit from 77 Kobo per unit.
During the trading day, market participants traded 1.9 million securities versus the previous day’s 30.5 million securities showing a decline of 49.3 per cent. The value of trades went down by 64.3 per cent to N80.3 million from N225.1 million, but the number of deals jumped by 32.1 per cent to 37 deals from 28 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc finished the session as the most active stock by value on a year-to-date basis with 5.8 billion units valued at N16.4 billion, followed by Okitipupa Plc with 178.9 million units transacted for N9.5 billion, and MRS Oil Plc with 36.1 million units traded for N4.9 billion.
The most active stock by volume on a year-to-date basis was still InfraCredit Plc with 5.8 billion units worth N16.4 billion, trailed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.7 million, and Impresit Bakolori Plc with 536.9 million units traded for N524.9 million.
By Adedapo Adesanya
It was not a good day for the Nigerian Naira at the two major foreign exchange (FX) market on Friday as it suffered a heavy loss against the United States Dollar at the close of transactions.
In the black market segment, the Naira weakened against its American counterpart yesterday by N10 to quote at N1,485/$1, in contrast to the N1,475/$1 it was traded a day earlier, and at the GTBank forex counter, it depreciated by N2 to settle at N1,467/$1 versus Thursday’s closing price of N1,465/$1.
In the Nigerian Autonomous Foreign Exchange Market (NAFEX) window, which is also the official market, the nation’s legal tender crashed against the greenback by N6.65 or 0.46 per cent to close at N1,464.49/$1 compared with the preceding session’s rate of N1,457.84/$1.
In the same vein, the local currency tumbled against the Euro in the spot market by N2.25 to sell for N1,714.63/€1 compared with the previous day’s N1,712.38/€1, but appreciated against the Pound Sterling by 73 Kobo to finish at N1,957.30/£1 compared with the N1,958.03/£1 it was traded in the preceding session.
The market continues to face seasonal pressure even as the Central Bank of Nigeria (CBN) is still conducting FX intervention sales, which have significantly reduced but not remove pressure from the Naira. Also, there seems to be reduced supply from exporters, foreign portfolio investors and non-bank corporate inflows.
President Bola Tinubu on Friday presented the government’s N58.47 trillion budget plan aimed at consolidating economic reforms and boosting growth.
The budget is based on a projected crude oil price of $64.85 a barrel and includes a target oil output of 1.84 million barrels a day. It also projects an exchange rate of N1,400 to the Dollar.
President Tinubu said inflation had plunged to an annual rate of 14.45 per cent in November from 24.23 per cent in March, while foreign reserves had surged to a seven-year high of $47 billion.
Meanwhile, the cryptocurrency market was dominated by the bulls but it continues to face increased pressure after million in liquidations in previous session over accelerating declines, with Dogecoin (DOGE) recovering 4.2 per cent to trade at $0.1309.
Further, Ripple (XRP) appreciated by 3.9 per cent to $1.90, Cardano (ADA) rose by 3.5 per cent to $0.3728, Solana (SOL) jumped by 3.4 per cent to $126.23, Ethereum (ETH) climbed by 2.9 per cent to $2,982.42, Binance Coin (BNB) gained 2.0 per cent to sell for $853.06, Bitcoin (BTC) improved by 1.7 per cent to $88,281.21, and Litecoin (LTC) soared by 1.2 per cent to $76.50, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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