Macroeconomic Report & Economic Updates

Nigeria Economic Update (Issue 18)

Recently released Budget Implementation Report shows that gross total revenue generated in the third quarter of 2020 (Q3 2020) declined by 3.07 percent relative to the previous quarter. Specifically, gross total revenue fell to N1.88 trillion in Q3 2020 from N1.94 trillion in the preceding quarter.1 Further disaggregation shows that gross oil revenue fell to N813.59 billion in Q3 2020 from N1.02 trillion in the previous quarter while gross non-oil revenue grew to N1.07 trillion in Q3 2020 from N921.53 billion2. The decline in total gross revenue was driven by a 20 percent fall in gross oil revenue which outweighed a 15.7 percent increase in gross non-oil revenue. Going forward, government revenue is expected to recover by 2022 as the oil market stabilizes and tax receipts from non-oil sectors increase with improved economic activities. However, a large share of the economy remains informal with implications on the size of tax revenue raised. Even for businesses in the formal economy, a sizeable number of businesses continue to evade tax, leading to leakages in the system. Consequently, informality and tax evasion will have to be addressed using technology to improve data collection and monitoring of firms.

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