The first three months of this fiscal year seemed to be gloomy judging from the first quarter economic performance report released by the Central Bank of Nigeria (CBN) and there is the fear that this gloomy situation may continue throughout the year. This fear poses a serious challenge to the economic management team and all tiers of governments in the country.
The CBN report indicates that government earnings at all levels dropped significantly. This situation is definitely not surprising following the fall in oil output as a result of militant activities and the drop in the world oil prices. Receipts from oil sales yielded N842.26 billion which constituted 71 percent of total revenue and suffered a 39.5 percent decline from the oil revenue figure of the preceding quarter. On the whole, the total federally collected revenue for the quarter was N1, 183.72 billion which equally suffered a decline of 31.9 percent from the proceeds in the preceding quarter and was 10.8 percent lower than budget estimate for the period.
Aside from low government earnings, both from oil and non-oil sources, high interest rates, surging inflationary situation and the depreciating value of the naira really give cause for concern. Already, the Federal Government, in realization that the dwindling oil revenue would not permit it to meet its capital and recurrent expenditures, has moved for a review of the budget.
The major economic challenge facing government this current fiscal year and subsequently is the need to shore up its revenue, especially the non-oil revenue as it is given that the volatility of the oil market may not permit any strict planning. Raising more revenue, especially from customs duties and charges judging from the high volume of imports, is one area analysts believe is still under-exploited.
Besides, reports of massive losses of revenue amounting to billions of Naira as a result of fraud perpetrated in the process of e-duty payment dims the hope for an increase in customs revenue. Stakeholders believe that “Nigeria is only getting 40 percent of the total revenue it is supposed to get from import duty”. Over 60 percent of the realizable customs revenue is frittered through varied forms of fraud and economic sabotage by different parties.
It is advised that government must plug all leakages in its expenditure so as to ensure that monies are properly spent and not frittered through waste. The recent introduction of e-payment system in the payment of salaries and pensions of government personnel, while assisting in checkmating the incidence of ghost workers which has saved government at all levels huge sums of expense, must be subjected to periodic monitoring to ensure that the system is not compromised and thus made a conduit for massive undetected fraud. Like in the case of deploying electronic payment for the payment of customs duties, the continued use of manual methods alongside the electronic procedure gives room for manipulation. The on-going efforts to reform the Nigerian Customs Service is timely and must be pursued with due diligence and sense of patriotism.
On the surging inflationary situation, especially as it relates to rising food prices, government should consistently pursue agricultural policies that should ensure that food crops are produced beyond subsistence levels by providing access to appropriate credit and adequate storage facilities. The present high bill on food importation is not a hallmark of good governance, especially in a country with favourable climatic conditions for profitable agricultural activity.
If the much publicized government’s focus on generating power for electricity supply is translated effectively into reality in the course of this year, it may brighten the economic prospects of the year, and the rating of the present government, aside from the fact that it will impact positively on cost-push inflationary condition.
We are however, not pessimistic about the performance of our economy in the coming months ahead, but we are only conscious of the need for government to take with much seriousness all the economic indicators already disclosed in the first quarter performance of the economy and re-strategise as appropriate.
