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Nigeria returns to crude Oil to fund budget as non-oil revenue falters

By Mathias Okwe (Assistant Business Editor, Abuja)   |   01 January 2017   |   4:15 am

crude oil

crude oil

•Crude Oil Contribution Moves From 19 To 40 Per Cent In 2017 Proposal
•FIRS Fails To Deliver On N5 trillion Revenue Haul
•Collects Only N500b Non–Oil Tax In Three Quarters

Following the dismal performance of non–oil mineral revenue in 2016, Nigeria has again turned attention to crude oil to fund the 2017 fiscal plan, as can be gleaned from the proposed plan before the National Assembly, where oil mineral resources are projected to provide the bulk of the revenue.

They have now moved from the 19 per cent they were projected to fund the plan, to 40 per cent, and non-oil revenue, which this year was projected to play the lead role, is now to take the back seat.

The projection for its revenue has cascaded down, with expectation from independently generated revenue cut down from N1.506 trillion in 2016, to N808 billion; taxes from companies income taxes from N867 billion to N808 billion, while only Value Added Tax (VAT), which is a consumption tax, has been slightly moved up from N198 billion to N242 billion.

Accordingly, the 2017 proposal based on the key assumptions and budgetary reform initiatives now envisages the total Federal Government revenue of N4.94 trillion, which will exceed the 2016 projection by 28 per cent.

In the projected revenue, receipt from oil now is N1.985 trillion and that of non-oil is N1.373 trillion. The contribution of oil revenue is 40.2 per cent compared to 19 per cent in 2016, driven mainly by JVC cost reduction, higher price, exchange rate and additional oil-related revenues.

The implication of a resort to the dependency on crude oil by the Nigerian economy is that the GDP will continue to contract as oil mineral resources contribute a negligible percentage to the country’s growth, both in terms of inclusiveness, revenue earnings, employment and local self–sufficiency in most of the items the country spends billion of dollars importing from other countries.

Late last year, as part of a deliberate policy of diversifying the country’s sources of revenue, and insulating the economy from depending largely on crude oil, which fortune is uncertain due to price volatility and quantity shock, managers of the country’s economy toyed with the idea of largely depending on non-oil revenues, largely from non–oil taxes and customs duties as the focal point of dependency to finance the 2016 plan.

Unfortunately, this hope has come crashing as the experiment with non-oil resources as a major funding source of this year’s budget has left a sour taste in the mouth of both policy makers and citizens alike, following the gross underperformance of the non–oil revenue stream of income.

A recent report of the revenue performance by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the non–oil revenue stream of income left much to be desired and negatively affected the 2016 budget implementation.

According to him: “The projected independent revenue was N1.1 trillion as against N0.2 trillion realised during the period.  The projected revenue from the Nigeria Customs Service was N0.3 trillion as against N0.2 trillion realised, while the projected non-oil tax receipts for the first quarter of 2016 was N0.8 trillion as against N0.5 trillion realised during the period.”

The information above shows that the N500 billion revenue generated by the FIRS from taxes in nine months is nowhere near the N4.9 trillion promised by the helmsman of the tax agency, Mr. Babatunde Fowler, and may eventually turn out to be the worst collection figure in six to seven years.

Mr. Fowler, who made the promise at different fora after assumption of duties including at the opening of the 134th Joint Tax Board meeting in Kano had gone ahead to   promise that 80 per cent of the targeted amount would be collected before the end of 2016.

The annual summary of tax collection from year 2000 to last year indicates that the highest collection was recorded during the tenure of Ifueko Omoigui Okauru, with N5.007 trillion in year 2012, following hi-tech and revolutionary reforms introduced by her administration.




  • ukoette ibekwe

    Government crushed businesses but fat FIRS head promised to generate 5 T in taxes?
    Nigeria is really led by find and numbskulls.

  • OJAY

    PMB, Since you discredited the achievement of the immediate past administration brandishing them as corrupt and called it a bluff to oil revenue which you thought you can do without now that you have failed you’re falling back to this revenue. I bet you the NDA will frustrate you from exploiting their resources that is skewed to the even development of this country. You will also be discredited soon.

  • Tunde

    PMB and team, now that reality has set in, you need to move precisely and fast! You cannot afford further mistakes! We believe you can succeed. Too many of us who voted you in and believe in your government feel that you now cannot have silo mentality policies, this is team work! Too much suffering plus it doesn’t help that you have not sacked the bad eggs in the midst! Kyari and Lawal to start with! You will be making a fatal mistake if after the probe you so not sack them! This may sound presumptuous but it’s critical they are out!

  • Stella Dominic

    BREAKING NEWS !!!! BREAKING NEWS !!! THE NIGERIA CUSTOM ARE AUCTIONING DIFFERENT TYPES OF CARS OUT, 2016 IMPOUNDED VEHICLES IS ON AGAIN ”’ YOU MAY CONTACT OUR OFFICE LINE CUSTOM STELLA ON ( 07035322790

  • vic

    IT IS ALL BECAUSE OF CONTINUED CORRUPTION AND LOOTINGS GOING ON IN THE NON-OIL SECTOR.

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