Chief Executive Officer (CEO) of the Financial Derivatives Company, Bismarck Rewane has differed with comments made by the Minister of Finance, Budget and National Planning, Zainab Ahmed that Nigeria has a revenue problem and not an expenditure problem.
At the public presentation of the approved 2022 budget, Ahmed had decried the falling revenue of the Federal Government which has been compounded by erstwhile declining oil prices at the heights of the Covid-19 pandemic and as a consequence, the eventual shrinking of the Nigerian economy following the 2020 recession.
She followed up earlier forewarnings given to Nigerians to expect to pay more tax with actual amendments made to the Finance Act resulting in changes made to tax laws and in particular the addition of new taxes like the Sugar Tax which imposes a N10 VAT per litre on all consumed non-alcoholic and sweetened beverages even as the focus of the government is now geared towards opening up strata of new revenue generation sources to support the execution of the 2022 budget.
Notwithstanding a 97.5 percent increase in the actual oil price to $79.31 per barrel recorded at the end of 2021 from a $40 oil price benchmark in appropriated 2021 budget, oil revenue fell 47.4 percent from that expected at the start of the year. This accounted for the bulk of the 74 percent decrease in expected Federal Government of Nigeria’s Aggregate revenue which was N5.51 trillion as of November 2021.
The Minister while presenting the budget assented to by President Muhammadu Buhari, barring a pending amendment and/or virement request to be made to the National Assembly, had noted that the Federal Government’s share of oil revenues was N970.3 billion representing a 53 percent performance of the prorated sum in the 2021 budget.
Quite notably, however, of all the Federal government revenue generation sources, only the Minerals and Mining, customs, Companies Income Tax (CIT), and Value Added Tax (VAT) revenue sources that comprised the non-oil revenue were viable. The federal government’s share of this revenue source totalled N1.62 trillion representing a 118.8 percent over and above target.
“Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N718.58 billion and N360.56 billion, representing 115 percent and 165 percent respectively of the prorated targets for the period.” Mrs Ahmed clarified during her presentation. Rewane, therefore, finds it ironical that the federal government will have a revenue generation problem only.
Commenting on the statement of the Minister at the Nigerian-British Chamber of Commerce (NBCC) 2022 Economic Outlook held on Thursday, Rewane stated that “in addition to a revenue generation problem, there is a revenue management problem.” He berated the government for the inability to save for the rainy days, allocate and put into productive uses the extra revenue generated by the economy even in times of wants.
This is as the Minister also disclosed plans to reduce the size of government’s annual recurrent expenditure by cutting down on the workforce with fears in some quarters that this will exacerbate the current unemployment situation in the country which stands at 33 percent as of Quarter 4 2020 according to the Nigerian Bureau of Statistics (NBS)