May 9, 2016

Nigeria Economic Update (Issue 19)

A recent report by the National Bureau of Statistics
(NBS) indicates that Internally Generated Revenue (IGR) at the subnational
level decreased slightly between 2014 and 2015. Specifically, the report shows
that on the average, the IGR of all 36 states declined by 3.6 per cent from
N707.9 billion in 2014 to N683.6 billion in 20157. A further
disaggregation reveals that while IGR in 11 states improved in 2015 compared to
2014, IGR in 24 states were below their 2014 levels. As expected, Lagos state
generated the most IGR during the period. Given that domestic resource mobilization
is the most viable alternative to complement the shortfalls (driven by lower
oil prices) in budgetary allocations to states from the federal government,
state governments need to do more to improve the effectiveness and efficiency
of revenue collection.

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Recently released power sector report by the National Bureau of Statistics records a total average energy generation of 2,548GWH by 25 power stations, from October 2016 to December 2016. Daily Energy generation, attained the 2016Q4 highest level of 3,859.6MW in October 2016, and a lowest level of 2522MW in the same month. On the average, current daily energy generated which is below 3,000MW, prompts system malfunctions. Thus, the irregular power generation and supply experienced in recent times is attributable to shortage of gas owing to non-functional major pipelines, in addition to the inability of GENCOs to make payments for the available gas supply. Given the recent challenges to power supply, efforts should be geared towards the diversification of electricity generation. Government should consider investment in renewable as well as coal energy to complement gas power supply.