In the 12 months through to May 2017, gross flows into the federation account amounted to N3.01trn from oil revenue and N3.17trn from non-oil revenue. Over the period, oil revenue was the higher of the two in six months, and non-oil revenue the other six. The monthly averages of N251bn (oil) and N264bn (non-oil) compare poorly with what the CBN commentary terms the monthly budgets of N450bn and N445bn respectively. Taken together, this gives a full-year projection of N10.74trn for federally collectible receipts.
These are not to be confused with FGN revenue collection, which the 2017 proposals from the federal budget and national planning ministry set at N4.94trn (N1.99trn from oil and N2.95trn from non-oil).
We have some concerns with the CBN’s monthly budget figure for non-oil collection because it includes N150bn for VAT. Both official briefings and our conversations indicate a determination not to raise the standard 5% rate for the tax with the possible exception of luxury goods. Monthly collection of the tax is running at +/-N80bn.
We should wait to see the size of the seasonal boost to companies’ income tax (CIT) in July and August. The subdued state of household demand is not encouraging. However, we recall that the FAAC payout in July (from June revenue) was the highest for 12 months, and that the accountant-general singled out robust CIT collection (Good Morning Nigeria, 27 July 2017).
The FGN is not pinning its hopes on an oil price recovery anytime soon. Non-oil revenue collection therefore becomes critical for the delivery of the FGN’s capital programmes, its ability to make its promised social interventions, the containment of the mounting debt service burden and the broader agenda of diversification of the economy away from oil.