Nigeria experienced fluctuating but improved economic growth indices over the last 12 months.
While Gross Domestic Product (GDP) grew by 2.38% in the fourth quarter of 2018, it was followed by a 2.10%, 1.94% and 2.28% growth in the first, second and third quarters of 2019 respectively. However, this represents an improved performance compared to prior periods – slow but constant growth in GDP as Nigeria exited economic recession since the second quarter of 2017. Growth in the service-oriented industries, particularly telecoms, stability in oil output and a relatively peaceful general election were the main drivers of growth.
The country has maintained stable oil production levels averaging 1.98 million barrels of crude oil per day (bpd) in 2019. This is as the Federal Government (FG) attempts to raise oil production to over 2 million bpd in 2020. According to the National Bureau of Statistics (NBS), the oil sector, which is only 8% of GDP, contributed 70% to government revenue and 90% to foreign exchange earnings over the years. Contribution of the non-oil sector to GDP remains significant at over 90% in the last two quarters of 2019. Notwithstanding, the economy is still exposed to the risk of oil price shocks.
The purchasing power of Nigerians is constrained by inflation which remains in double digits, at an average of 11% year on year over the last five quarters. However, this rate is a moderation from the recent high of 18.72% in January 2017. As growth of the agricultural sector is yet to reach its full potential, some basic food items were still imported during the year further constraining consumer purchasing power.
A positive development is the steady increase in revenue from taxes in recent years. In 2018, the Federal Inland Revenue Service (FIRS) achieved a record-breaking total revenue collection of N5.32 trillion4. However, this revenue collection is 22% lower than the budgeted revenue. As at September 2019, the FIRS had collected a total revenue of N4.01 trillion against a budget of N6.6 trillion5. We applaud the FIRS’ effort to improve the rate of tax compliance. However, the FIRS should improve on its relationship with taxpayers by reducing the level of incessant demand notices and punitive regulations in its bid for increased revenues. At the same time, taxpayers must ensure that they promptly fulfil their civic obligations by paying the right amount of taxes and complying with all statutory filing requirements.
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