The Federal Inland Revenue Service (FIRS), generated a sum of N1.29 trillion tax revenue in Q2 2020, N19.15 billion in excess of a N1.27 trillion target.
This was detailed in the Q2 performance report published by the Federal Inland Revenue Service (FIRS).
According to the report, 34.2% of the tax revenue was petroleum profit taxes (N440.3 billion), while the remaining 65.8% came in as non-oil taxes (848.1 billion).
The total collection in the second quarter of 2020 increased by 8.2% compared to N1.19 trillion generated in the previous quarter, and 8.01% decrease compared to N1.4 trillion generated in the corresponding quarter of 2019.
Data obtained from Nairalytics shows that the last time the agency met its set target was in the second quarter (Q2) of 2015 when it generated the sum of N1.19 trillion as against a target of N1.02 trillion.
More Details: A closer look at the report shows that Company Income Tax stood at N324.3 billion in the second quarter while Gas Income tax was N77.7 billion. Also, import VAT collected by the Nigeria Custom Service (NCS) was N81.62 billion, while Non-import VAT stood at N245.6 billion.
Stamp duty generated during the period was N62.6 billion as against a target of N4.3 billion, while Capital gains tax was N617.4 million.
Earlier in the year, the Federal Government of Nigeria increased the Value Added Tax (VAT) rate from 5% to 7.5% in order to help boost the county’s fiscal revenues amidst global oil crisis.
This move led to VAT revenue of N651.8 billion in the first half of 2020, which indicates an 8.5% increase compared to N600.9 billion generated in the corresponding period of 2019.
However, despite the increase in VAT remittances, major sectors of the economy recorded significant declines in VAT remittances during the period, attributable to the COVID-19 induced lockdown across the country especially in the second quarter of the year.
Upshots: Following the decline in the prices of oil in the global market, which has served as a major source of revenue for Nigeria, the country needs to rely heavily on taxes in order to fund its federal and state government expenditures.
To achieve this objective, it is necessary to broaden its tax base and devise more creative ways of collecting taxes and hope that economic activities pick up to be able to meet set projections.
Nigerians spent N13.9 trillion on household consumption in Q4 2020, an increase of 16.6%
Household consumption expenditure of Nigerians rose by 16.59% in Q4 2020 to stand at N13.92 trillion.
The final consumption expenditure of households in Nigeria hit N13.92 trillion in the fourth quarter of 2020. This is according to the recently published Nigerian Gross Domestic Product report (Expenditure and Income Approach), by the National Bureau of Statistics (NBS).
According to the report, Nigeria’s household consumption rose by 16.59% in Q4 2020 to stand at N13.92 trillion, compared to N11.94 trillion recorded in the corresponding quarter of 2019. It also represents a 20.76% increase compared to N11.52 trillion recorded in the preceding quarter.
- Household consumption expenditure in Q3 and Q4 2020 grew by 6.1% and 16.59% year-on-year in real terms.
- The annual growth rate in real household consumption expenditure stood at 0.81% as against a decline of 1.06% recorded in 2019.
- Government consumption expenditure recorded growth rates of 99.18% and 12.13% in Q3 and Q4 2020 respectively, while the annual growth rate stood at 61.58% in 2020 compared to 8.78% recorded in 2019.
- Although Net Exports recorded positive growth rates in the first two quarters of 2020 but turned negative in the third and fourth quarters of 2020. It dipped by 52.39% and 72.61% in Q3 and Q4 2020 respectively.
- By annual consideration, net export declined by 29.55% in 2020 as against a growth of 7.64% recorded in the previous year.
However, national disposable income grew by 4.44% in the third quarter of 2020 and 3.13% in the fourth quarter of the year, while a 3.34% growth was recorded as the annual growth compared to 0.35% growth recorded in 2019.
Compensation of employees, dipped by 2.32% in Q3 2020, before recording an increase of 6.36% in the fourth quarter of the year. The decline in the third quarter could be largely attributed to the downturn caused by the covid-19 pandemic, forcing many organisations in the country to either downsize their staff strength or embark on a pay cut.
What this means
- Consumption expenditure is an important factor in determining economic growth for any country. Nigeria recorded its worst quarterly consumption expenditure in the second quarter of 2020.
- This was due to the effect of the covid-19 pandemic on the Nigerian economy, which eventually led to a second recession in 5 years as Nigeria’s real GDP contracted by 6.1% and 3.62% in Q2 and Q3 2020 respectively.
- It is, however, important to note that Nigeria recovered from the covid-induced recession in the fourth quarter of the year as the real GDP expanded by 0.11% in Q4 2020.
In the third and fourth quarters of 2020, real exports declined by 42.05% and 57.79%, year on year, resulting in an annual growth rate of -26.96% in 2020. However, on a quarter on quarter basis, real exports remained negative from Q1 2020 to Q4 2020.
Due to declining rates of growth in exports and imports in 2020, the growth in the net balance of trade (or net exports) was negative in Q3 and Q4 2020. On a year-on-year basis, the net trade balance declined by 52.39% in real terms in Q3 and also dipped by 72.61% in Q4.
What you should know
- The Nigerian economy expanded marginally by 0.11% in Q4 2020. It, however, contracted by 1.92% in 2020 to stand at N70.14 trillion in real terms.
- The final consumption expenditure of households in Nigeria stood at N42.81 trillion in 2020.
- Individual consumption expenditure for general government stood at N1.68 trillion while collective consumption stood at N4.98 trillion in the same period.
Foreign trade: Nigeria – French trade drops to $2.3 billion in 2020
The volume of trade between France and Nigeria dropped to $2.3 billion in 2020 compared to $4.5 billion in 2019.
The French Government has disclosed that the volume of trade between France and Nigeria dropped to $2.3 billion in 2020 compared to $4.5 billion in 2019, due to the effects of the COVID-19 pandemic.
This was disclosed by the French Minister in charge of Foreign Trade and Attractiveness, Mr Frank Riester, at a meeting with the Nigeria Governors’ Forum (NGF), in Abuja.
“We are optimistic of the future, when the crisis will be ending because we have many companies that have settled here. We want a win-win partnership between our two countries.
We have 100 companies that are settled in Nigeria, representing 10,000 people working in these companies and we want to increase our investments in Nigeria,” he said.
The Minister added that France wants to cushion processes that will enable more Nigerian companies do business in France.
“Tomorrow, I will meet some Nigerian companies that have already invested in France, as others are willing to invest in the country.
“These companies will be invited to a specific meeting in Paris in June, where President Emmanuel Macron will welcome many companies all over the world, and some of the companies will be from Nigeria because we want more Nigerian investments in France,” he added.
What you should know
Nigeria’s total foreign trade for the fourth quarter (Q4) of 2020 rose to N9.12 trillion, representing an increase of 8.88% compared to N8.38 trillion recorded in the previous quarter. Total imports stood at N5.93 trillion, while total export rose by 6.72% from N2.99 trillion to N3.19 trillion.
Export to Europe was N1.07 trillion representing 33.5% of export volume, while import was N2.16 trillion valued at 36.5% of imports volume.
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