According to data released by the National Bureau of Statistics, states generated about N931.2 billion altogether in 2017 fiscal year1, representing 12 percent above the N831.2 billion generated in 2016. Further breakdown shows that 31 states recorded increases, while only about 5 states recorded slight declines in revenue generated internally; Lagos state generated 36 percent of total internally generated revenue (IGR). Notably, with a net FAAC allocation of N1.7 trillion, total revenue available to states stood at approximately N2.7 trillion in 2017. However, the states are still burdened with debts, given the N3.2 trillion and $4.1 billion owed as domestic and foreign debts respectively as at the end of December 2017. Going forward, improvements in tax collection and administrative capacities of revenue-generating agencies of other states, beyond Lagos, can further improve overall IGR.
Macroeconomic Report & Economic Updates
External reserve dropped slightly by 0.6 per cent from $28.35 billion in January 22 to $28.19 billion in January 295. Considering the continuous decline, government has stepped up efforts towards financing the deficit in the proposed budget through borrowing. At the forex market, the official exchange rate remained unchanged at N197/$ while the naira depreciated at the parallel market by 2.36 percent from N297/$ to N304/$ between January 22 and 296. Despite the huge spread between the official and parallel market exchange rates, the monetary authorities maintained its fixed exchange rate regime at the official forex market. It is expected that if the demand pressure for dollar persists, the value of naira may decline in the near term.
The Naira sustained its appreciation trajectory at the parallel market in the review week. Precisely, naira gained 13.3 percent (Week-on-Week) to exchange at N390/$ on March 24, 2017. Reduced pressure on the naira followed moderation in speculative activities as a result of increased forex sales and intervention by the CBN (daily intervention of $1.5 million at the interbank market.) The aim of CBN interventions (narrowing the gap between interbank and parallel market rates) seems to be on course with the continued appreciation of the naira at alternative markets. While current approach of the apex bank proves effective in improving international value of naira in the short term, however, it is expedient that the bank articulates clear and credible flexible exchange rate policy to sustain the momentum and enhance confidence in the forex market in the medium term. Nonetheless, the sustainability of the exchange rate gains is partly dependent on the prospect of crude oil price and production which is outside the purview of the monetary authorities.
This report provides an evidence-based analysis of the state of the Nigerian economy in a bid to inform economic policies in Nigeria. The report presents some analyses of significant economic events in Nigeria within the period, and provides an outlook on what policymakers, businesses, and individuals should expect in subsequent quarters of 2016. It also provides valuable insights into potential drivers of the economic trends and outlines expectations for subsequent quarters of the year. The area of focus are Global Economic Performance, Domestic Economic Performance, External Sector Performance, and Sectoral Performance.