Nigeria’s gross revenues gained N135.55 billion, as it rose from N517.8 billion in May 2020 to N653.35 billion by June 2020. The increase in government revenues is attributed to increased crude oil sales, higher tax receipts and a revaluation of foreign exchange gain.
This Accountant General of the Federation, Ahmed Idris, disclosed this over the weekend. The news comes as a massive boost for the Nigerian government after it reported total FG revenue of N1.4 trillion between January and May 2020.
Breakdown of revenue
The N653 billion earned is for both the states, LG and the Federal Government, and was largely driven by vat receipts and sale of crude oil. Nigeria increased its VAT rate from 5% to 7.5% this year increasing revenue accruable to the federation account. The accountant-general also revealed the government earned about N42.83 billion from exchange rate gains following the devaluation of the naira from N306 to N360/$1.
The government is likely to generate more if it proceeds with the unification of the naira, a demand highly favoured by the Minister of Finance Zainab Ahmed. Nigeria’s central bank governor, Godwin Emefiele, confirmed some weeks back that they were considering devaluing the naira around the NAFEX rate which is currently around N388/$1.
The coronavirus outbreak early this year prompted a sharp fall in oil prices, which is the nation’s main export, slashing government revenues, weakening its currency, and creating a large financing gap for the country. The global benchmark Brent has since recovered to about $43 a barrel from a 21-year low below $16 in April.
According to the information contained in the government’s MTEF, as at end of May 2020, FGN’s retained revenue was N1.48 trillion, 56% of target:
- FGN share of oil revenues was N701.6 billion while non-oil tax revenues totaled N439.32 bn(65% of revised target).
- Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N213.24 billion and N68.09 billion, representing 62% and 58% respectively of the prorata revised targets for the period.
- Customs collections was N158 billion (73% of revised target).
What it means: Government revenues are in dire straits as evidenced by the 56% drop against budget. The government will rely more on taxes, increase in oil prices, and a more than likely second round of devaluation if it is to fund its recurrent and capital expenditures. A $3.5 billion world bank loan is expected in September to help augment government revenues generation drives.
How partnerships with telcos, fintechs and banks can support Nigeria’s cashless economy
Partnerships by stakeholders will accelerate financial inclusion and drive economic growth across multiple sectors.
The drive towards a cashless society has been a topic of debate in the global financial economy. Cashless societies have slowly gained recognition and application in most developing and underdeveloped countries in the world, largely due to their significant relevance in some advanced countries of the world.
COVID-19 brought a public health challenge to Nigeria, but it also resulted in an economic downturn on the back of a pandemic-induced recession.
The pandemic highlighted the need to diversify the economy to develop a wide range of growth industries and sectors in addition to the more traditional ones such as oil and gas.
The growth of the digital technology sector in Nigeria is an indication that the sector can serve as a catalyst for advancing the digital economy while enabling economic recovery and growth.
According to a report by NBS, the ICT sector played a major role as it was the leading driver in the non-oil sector that led to GDP growth and economic recovery in 2020.
The World Bank’s Nigeria Digital Economy Diagnostic Report highlights that Nigeria is uniquely positioned to reap the benefits of the digital economy as the country accounts for 47% of West Africa’s population, and half of the country’s 200 million people are under the age of 30.
This report goes on to acknowledge Nigeria as the largest mobile market in Sub-Saharan Africa, supported by a strong mobile broadband infrastructure.
At the same time, minimal fixed infrastructure and connectivity in rural areas can leave the most marginalized people behind.
Partnerships with government, fintech players, telecom companies, and other strategic partners to provide digital solutions and support the cashless economy, offer the greatest potential to overcome infrastructure barriers to accelerate financial inclusion and drive economic growth across multiple sectors.
Digital innovations are key to advancing financial inclusion. They are the big equalizers, enabling and spearheading financial inclusion for people and small businesses alike. The foundation to enable payment technologies for a robust digital economy is being laid one regulation at a time.
Recent frameworks issued by the Central Bank of Nigeria on Sandbox, QR, Open Banking and others, are expected to galvanize and accelerate the digital economy agenda by allowing more innovation. Creating certainty in other areas such as contactless payments can energize the industry even further.
Some companies have been providing digital payments to foster a cashless economy like Mastercard.
Mastercard, a leader in global payments is driving growth in digital financial services by making it easier for people to accept electronic payments, along with greater access to credit to grow and scale.
This will be achieved through digital partnerships, solutions, and technology, aimed at connecting 1 billion people to the digital economy by 2025, including 50 million micro and small businesses, with a direct focus on 25 million women entrepreneurs.
Mastercard has already started this process, an example of this is its recent partnership with MTN which enables millions of consumers in 16 countries across Africa to make global e-commerce payments safely and securely, with or without a bank account.
Last year, Mastercard launched a Pay-on-Demand mobile platform in Uganda with Samsung, Airtel, and Asante Financial Services Group which provides end consumers and MSMEs with asset financing to access smart handsets at a low upfront cost while making affordable payments over time.
In addition, Mastercard and Airtel’s digital partnership will enable access for over 100 million mobile phone users in 14 African countries to virtual card numbers (VCN) and QR Payment capability – even though they don’t have a bank account.
Mastercard also aims to onboard over 40K SMEs as merchants on QR. The partnership has made Airtel one of the largest offline-to-online digital payment networks in Africa.
Why this matters
- Mastercard solutions have assisted businesses and consumers to thrive in the digital economy by utilizing safe and secure digital payment channels, especially during the pandemic.
- They have also assisted countries and stakeholders to digitize economies and develop successful, interoperable payment ecosystems that can support sustainable growth and wider financial inclusion.
- Cashless policy will significantly improve the payment system in Nigeria by reducing the number of cash-based transactions in the economy
The growing reach of mobile technology creates a tremendous opportunity for the payments and technology industries to bring more people and businesses into the formal economy. Through partnerships, we can achieve a digital payments economy that includes everyone, mitigates the costs of cash, and achieves the sustainable economic growth and inclusive well-being that we want for Nigeria.
ValuAlliance Asset Management appoints two new Directors
ValuAlliance Asset Management has announced the appointment of two persons into its Board as Directors.
ValuAlliance Asset Management, the fund manager of the ValuAlliance Value Fund, has announced the appointment of Messrs Obinnia Abajue and Kofi Kwakwa into its Board as Directors.
This is according to a disclosure sent to the Nigerian Stock Exchange and seen by Nairametrics. In line with statutory requirements, the appointments are subject to confirmation from the Securities and Exchange Commission (SEC) and approval by the shareholders at the company’s next Annual General Meeting (AGM).
According to the notice, Mr Obinnia Abajue was appointed as Independent Non-Executive Director while Mr Kofi Kwakwa was appointed as Non-Executive Director. The profile of the aforementioned experts is succinctly captured below;
Mr Obinnia Abajue
Mr. Abajue has over two decades of experience in banking and financial services. He is the current Chief Executive Officer (CEO) of Hygeia HMO Limited, a position he has held since November 2016. He is an alumnus of the University of Lagos and Imperial College London, where he obtained a Bachelor’s degree in Actuarial Science and an MBA respectively. Mr Abajue is a fellow of numerous professional bodies like; The Chartered Institute of Management Accountants, UK; The Institute of Chartered Accountants of Nigeria; The Chartered Institute of Bankers of Nigeria and the Chartered Institute of Stockbrokers of Nigeria.
Mr. Kwakwa is a Ghanaian and a former CEO of Sagevest Holdings, an investment holding company in Ghana. He has over 25 years of experience in investment banking and consulting, having worked in top firms like Standard Bank, McKinsey & Company among others. He is currently a director at African Capital Alliance Limited (ACA), having joined the Board since 2015. Mr. Kwakwa is an alumnus of Swarthmore College and Harvard Business School, both in the USA, where he obtained a B.A. in Mathematics/Economics and an MBA respectively.
What they are saying
Commenting on the recent development, a part of the press release reads: ‘’The Board of Directors congratulates Mr. Abajue and Mr. Kwakwa on their appointment and is looking forward to tapping into their vast wealth of experience to further accelerate the achievement of its vision, to be the premier investment management fiduciary in the segments we serve.’’
What you should know
- ValuAlliance had earlier posted a Profit After Tax of N237.96 million in its last reported financial statements-Q3, 2020. The PAT figures indicated a surge by over 1,000% YoY.
- ValuAlliance Value Fund formerly known as “SIM Capital Alliance Value Fund”, is a closed-end collective investment scheme, registered and regulated by the Securities and Exchange Commission, whose units are listed on the main board of the Nigerian Stock Exchange (“NSE”).
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