The Federation Account Allocation Committee (FAAC) disbursed the sum of ₦647.35 billion to the federal, state and local of governments in February which is 9.6 percent lower than the ₦716.30 billion disbursed in January1,2. Disaggregated data shows the federal, state, and local governments received ₦267.39 billion, ₦176.92 billion, and ₦132.94 billion respectively. This decline comes as a result of a decline in revenue generated due to the fall in oil prices associated with the coronavirus pandemic. Relatedly, the federal government has revised the 2020 budget in order to account for a decline in oil revenue which includes a 20 percent cut in capital projects. Going forward, there would be a further decline in the federal allocation as the mainstay of the government’s revenue is hit by the pandemic. Sub-national governments should endeavor to generate substantial revenue to free them from the volatilities of oil prices. Aside from tax, the government should leverage on the pandemic by equipping locals to boost the production of domestic commodities in import-substitution sectors.
April 27, 2020
Nigeria Economic Update (Issue 14)
Related
Nigeria Economic Update (Issue 6)
Latest figures of FDI flows to Nigeria show
a decline of 27 per cent from $4.7 billion in 2014 to $3.4 billion in 20152,
representing its lowest value since 2005. This decline is largely attributed to
the oil price slump, which has generally increased uncertainty in the economy,
with adverse effects on investors confidence. The fall in FDI flows was
witnessed in most resource based economies in Africa, as FDI flows to the
continent fell by 31 percent in 2015. The forex controls in place in Nigeria
has also exacerbated the uncertainty in economy, and created obstacles for both
domestic and foreign investors. Thus a review of the forex restrictions could
send positive signals to investors.
Nigeria Economic Update (Issue 42)
Recently
released survey report by the CBN shows an improvement in the availability of
secured and unsecured banks credit and loans to
households, corporate and small businesses in 2017Q3, and an optimistic outlook
in 2017Q4. Among other indices, availability of overall secured and
unsecured lending to households improved from -6.2 and -19.2 to -0.9 and -15.0
index points respectively; although still in the negative territory. Index for
availability of credit to small businesses improved from -20.1 to -6.7. Lenders
and respondents noted that anticipation of a brighter economic outlook,
favorable liquidity positions, market share objectives and higher appetite for
risk were major factors behind the increase.