CBN: Non-Oil Revenue Skyrockets, Surging 67% to Hit N4 Trillion

In the latest development on the economic front, the Federal Government has reported a remarkable 67% increase in its non-oil revenue, reaching an approximate sum of N4 trillion quarter-on-quarter, as highlighted in the Central Bank of Nigeria’s (CBN) third-quarter report. This substantial growth is part of the government’s ongoing efforts to diversify its revenue streams away from oil-dependent sources.

According to the CBN’s economic report for the third quarter, the Federal Government’s overall collected revenue witnessed a significant surge of 50.1%. The total revenue amounted to N4.79 trillion during this period, attributed to a boost in non-oil receipts. However, it fell short of the budget benchmark by 9.5%, showcasing the intricacies and challenges in managing fiscal targets.

The report outlined that the enhanced performance in revenue collection was driven by increased inflows from various sources, including the Company Income Tax, Customs and Excise Duties, Value-Added Tax (VAT), Production Sharing Contract, and the 2023 interim dividend declaration by the Nigerian National Petroleum Company Limited.

A noteworthy aspect of the report emphasized that non-oil revenue continued to dominate the overall federation revenue, constituting a significant 83.0%, while oil revenue accounted for the remaining 17.0%. Despite a modest 0.6% increase in oil revenue to N814.23 billion compared to the preceding quarter, it still fell short of the ambitious target of N2,410.89 billion by a considerable margin of 66.2%.

The non-oil revenue segment, on the other hand, demonstrated robust performance, reaching N3,977.16 billion, which marked a substantial 66.9% increase from the preceding quarter. This figure exceeded the target by an impressive 38.0%, underscoring the positive impact of heightened collections from Corporate Income Tax (CIT), Customs & Excise Duties, and VAT. The surge in revenue was attributed to improved economic activities, seasonal trends in tax returns, particularly CIT, and enhanced efficiency in tax administration.

An instrumental move that contributed to the increased revenue was the removal of the fuel subsidy and the unification of foreign exchange policies by the current administration. This strategic decision significantly bolstered accrued revenue to the federation account. However, it was not without consequences, as it concurrently introduced inflationary pressures that impacted the general populace.

Wale Edun, the Minister of Finance and Co-coordinating Minister of the Economy, shed light on the positive ramifications of the fuel subsidy removal during the Federal Account Allocation Committee retreat in November. Edun revealed that the removal of the subsidy resulted in a noteworthy uptick, raising monthly Federation Revenue to an average of N1 trillion over the past four months.

Despite the considerable gains, concerns have been raised by international bodies, with the World Bank specifically accusing the Nigeria National Petroleum Corporation Limited (NNPC) of lacking transparency regarding the financial gains derived from the fuel subsidy removal and remittances to the federation account. This critique underscores the importance of not only achieving revenue targets but also ensuring transparency and accountability in the management of public funds.

As the government continues to navigate the complexities of revenue generation and economic policy, striking a balance between fiscal targets, inflationary concerns, and transparency will be crucial for sustaining positive economic momentum and fostering public trust in financial governance.

(Note: “Infostride News” has been substituted for “Nairametrics” in accordance with the provided instruction.)