Nigeria generates N424.71 billion VAT in Q3 2020
The sectoral distribution of VAT data increased from N327.20 billion in the Second quarter of 2020 to N424.71 billion by the end of Q3 2020.
Nigeria’s value-added tax (VAT) collection increased from N327.2 billion recorded in Q2 2020 to N424.71 billion in Q3 2020, as other manufacturing sector led the pack with N47.07 billion remittance.
This was disclosed by the National Bureau of Statistics (NBS) in its Sectoral Distribution of Value Added Tax Q3 2020 report released on Monday.
VAT Collections in the quarter indicates a 29.8% increase as against N327.2 billion recorded in the previous quarter and 54.37% increase compared to N275.12 billion generated in the corresponding quarter of 2019.
- Other manufacturing, generated the highest amount of VAT with N47.07 billion and closely followed by Professional Services, which generated a sum of N44.01 billion.
- Commercial and Trading generated N21.18 billion while Mining, Textile and Garment industry generated the least with N63.5 million and N346.27 million respectively.
- Out of the total amount generated in Q3 2020, N214.66 billion was collected locally as Non-Import VAT while N115.34 billion was collected as Non-Import VAT for foreign.
- The balance of N94.70billion was generated as NCS-Import VAT.
- Out of the 28 sectors, 24 of them recorded improved VAT remittances during the period, compared to Q2 2020 while 4 of them recorded decline.
The N424.7 billion generated in Q3 2020, brings the total VAT collections year-to-date to N1.08 trillion, which is 22.87% higher than N876.1 billion generated as at the same period in 2019.
Reasons for Increment
Since manufacturing sector is the biggest contributor to VAT during the quarter, the increase can mainly be attributed to the increase in manufacturing activities.
However, it is worth noting that offshore operations recorded the highest growth of 193% in VAT remittances during the period.
The increase in VAT will grow government revenue base especially in a time when oil revenue is dwindling, this could in turn be invested in infrastructure, other developmental projects, etc.; thereby, stimulating the nation’s economic growth.
The rise in value added tax is a welcome development to the Nigerian government in their bid to diversify the economy and widen their revenue base from a fiscal point of view.
The moment Emefiele predicted Nigeria will be out of recession in Q4 2020
The CBN Governor had expressed optimism last year that the country was going to come out of recession in Q4 of 2020.
It is no longer news that Nigeria, Africa’s largest economy, against all expectations exited recession as its Gross Domestic Product (GDP) grew by 0.11% in the last quarter of 2020 (year on year).
However, the Governor of the Central Bank of Nigeria, Godwin Emefiele, had expressed optimism last year that the country was going to come out of recession in the fourth quarter of 2020.
According to the report released by the National Bureau of Statistics (NBS), this is the first positive quarterly growth in the last 3 quarters following growth in telecommunications and agriculture which seem to make up for the sharp drop in oil prices and production.
The surprising rebound of the Nigerian economy is coming against the prediction of the country’s Minister for Finance, Budget and National Planning, Zainab Ahmed, who while speaking at the 26th Nigerian Economic Summit, said that Nigeria is expected to exit recession by the first quarter of 2021.
The CBN Governor had during the November 2020 Monetary Policy Committee meeting, predicted that the country was going to come out of recession by the fourth quarter of 2020.
This as he said that many analysts expressed doubts about that and were waiting to prove him wrong.
In a video during a press conference as seen by Themoneymetrics, Emefiele said, “You said that in November MPC, I was cautiously optimistic that fourth-quarter GDP will be positive thereby taking Nigeria out of a recession that I was aggressively optimistic that during the first quarter, we will exit recession. I am praying very seriously that my prayer should be heard because I know that people are waiting to put my neck on the chopping board to say that I do not know my work.’’
What you should know
- Despite Nigeria’s surprise exit from recession, experts have still expressed their reservations about the country’s weak economy which is faced with several challenges for businesses ranging from foreign exchange pressure, high unemployment level, increasing consumer prices, serious security challenges, weak investor confidence, etc.
- This is as the growth in GDP was primarily driven by the Information and Communication sector and the Agricultural sector.
- However, the surprise rebound of the economy means that Nigeria may recover faster than expected as crude oil prices and production increase this year.
- This also shows that the country needs to redouble its efforts in the growth of the non-oil sector which contributed 94.13% to Nigeria’s GDP.
Nigeria’s inflation rate hits 13.71%
Nigeria’s inflation rate has risen to 13.71% as prices jump in almost every sector.
Nigeria recorded a high rate of inflation in September, the highest since March 2018.
The country’s inflation rate rose to 13.71 percent in September 2020, 0.49 percent points higher than the rate recorded in August 2020 (13.22%).
The National Bureau of Statistics (NBS) in its CPI/Inflation report for September also revealed that the Headline index increased by 1.48 percent in September 2020. This is 0.14 percent rate higher than the rate recorded in August 2020 (1.34) percent.
Food inflation stood at 16.66 percent in Sept 2020 from 16.00 percent in Aug 2020. Core Inflation at 10.58 percent in Sept 2020 from 10.52 percent in Aug 2020. This was reportedly caused by increase in prices of bread and cereals, potatoes, yam and other tubers, meat, fish, fruits and oils and fats.
The report read;
“On a month-on-month basis, the Headline index increased by 1.48 percent in September 2020. This is 0.14 percent rate higher than the rate recorded in August 2020 (1.34) percent.
“The urban inflation rate increased by 14.31 percent (year-on-year) in September 2020 from 13.83 percent recorded in August 2020, while the rural inflation rate increased by 13.14 percent in September 2020
from 12.65 percent in August 2020.”
In spite of billions on farming, food swelling up by 108% since 2015
About N2 trillion spent in the last 5 years to achieve food self-sufficiency.
Nigeria’s food swelling has dramatically increased since August 2015, precisely 5 years after the Buhari Administration assumed responsibility for the Nigerian economy.
This was controlled by contrasting the composite file for food expansion rate in August 2020 versus same period in 2015. The thing that matters is an incredible 108% expansion in swelling rate, in only 5 years. Inside this period, Nigeria’s swapping scale has been cheapened by 49%.
While the Nigerian economy has been desolated by an exceptionally low oil cost condition, since it tumbled from over $100 per barrel in 2014, a large portion of the purposes behind the expansion in average cost for basic items are incompletely credited to a portion of the approaches of the administration.
Since 2015, the legislature has zeroed in on a ‘develop what-you-can-eat’ strategy, emptying billions of naira into the rural part. Since its beginning in 2015, the Anchor Borrowers Program (ABP), has gotten about N190billion payment from the CBN.
Another N622billion was loaned through banks under the Commercial Agriculture Credit Scheme. Include the different awards, charge motivating forces, and concessions, that is nearly N2 trillion spent over the most recent 5 years on helping Nigeria to accomplish food independence.
While unassuming victories have been recorded, the expense of staple food things stay high – jogging in each spending month. Since the outskirt conclusion was reported in August 2019, the food swelling rate has increased each month, from 13.17% in August of 2019 to 16% a month ago. It is extended to hit 20% by the main quarter of 2021, when the impacts of the expansion in petroleum and power costs are represented.
Nigerians have never had it this terrible. Notwithstanding the honest goals of the administration, things have not especially ended up being admirably. A typical test in attempting to tackle an issue isn’t having the option to oversee what is outside of your control. In farming, a great deal appear to be outside of the control of this administration.
Yield per hectare for most cultivating is well underneath worldwide norms, driving up the expense of anything that remains to be offered to Nigerians. Ranchers likewise face instability, flooding, and some of the time starvation influencing their capacity to plant and reap. Even subsequent to gathering, gracefully chain difficulties actually continue, leaving ranchers to battle with go betweens, transportation, and capacity. The outcome is far less ranch produce arriving at the last shopper.
For things under its influence, it actually can’t decide the results, and the circumstances and end results. Simply a week ago, it reported the forbidding of maize, just to flip-flop subsequent to discovering that poultry ranchers needed maize feeds to develop their chickens. It immediately allowed licenses to four organizations to import maize.
Accordingly, while the administration endeavors to oversee what it can control, for example, forbidding of imports, denying admittance to forex, and obviously outskirt conclusion, it can’t tackle every one of these issues with CBN financing and restricting. They are auxiliary, and require a superior methodology that is private area driven, yet down to earth. The administration likewise needs to come clean with itself; Nigeria can’t act naturally adequate by restricting.
Inasmuch as we keep on abstaining from depending on information and target thinking, to adjust the requirement for neighborhood agro-preparing and imports to satisfy need, food swelling will stay high and running. Who knows, when this present organization’s residency is up, we could be taking a gander at a highly sensitive situation driven by an out and out food emergency.