The Federal Government’s oil revenue target for May dropped from N804bn to N223bn, representing about 72 per cent reduction in federal earnings; statistics from the Central Bank of Nigeria’s Monthly Economic Report for May 2023 seen by The PUNCH on Wednesday has shown.
According to the report; “oil revenue at N223bn for May was 36 per cent below receipts in the preceding month and below the monthly target of N804bn”.
The observed shortfall in oil revenue, according to CBN; was driven mainly by lower receipts from Petroleum Profit Tax and Royalties.
Gross federation earnings dropped as a result of lower oil and non-oil receipts, the report added.
At a total of N837bn, federation revenue was lower than the level in April by 16 per cent, and the budget by 53 per cent.
In terms of contribution, the report said non-oil revenue sources continued to dominate, accounting for 73.4 per cent of federation revenue in the review period.
At N614bn, non-oil receipt was 5.4 per cent less than the level in April, and 36 per cent below target.
The shortfall was largely attributed to lower collections from Company Income Tax, Value Added Tax, and Customs & Excise Duties, reflecting seasonality in the filing of tax returns by businesses in Nigeria.
The CBN report comes on the heels of a similar report by Reuters; that the United States waterborne imports of crude from the Organization of the Petroleum Exporting Countries and its non-OPEC partners, dropped steadily over the last year, further tightening supplies in the U.S. while supporting other markets including Europe.
Total U.S. crude waterborne imports averaged 2.47 million barrels per day in October, down from 2.92 million bpd in September according to figures from data intelligence firm Kpler, with shipments falling from OPEC+ producers including Nigeria, Algeria and Saudi Arabia, the report said.
Furthermore, the CBN stated that earnings from crude oil weakened, due to a decline in the prices of crude oil, exacerbated by the United States’ debt situation.
It said: “Consequently, provisional data shows that crude oil and gas export receipts fell by 3.8 per cent to $4.06 billion, from $4.22 billion in April. A breakdown reveals that crude oil export receipts declined by 4.2 per cent to $3.58 billion, from S$3.73 billion in the preceding month. Similarly, gas export receipts fell by 2.1 per cent to $0.49 billion, from $0.50 billion in April.” Particularly, the bank noted that the average spot price of Nigeria’s reference crude oil, the Bonny Light (34.9° API), dipped by 11.16 per cent to $76.91 per barrel, from US$86.57 pb in the preceding month.
It added that a decline was also recorded in the prices of UK Brent at $76.95 pb, Forcados at $77.24 pb, WTI at $72.34 pb, and OPEC Reference Basket at $75.70 pb.
The bank also reported that domestic crude oil production rose to 1.18 million barrels per day, while crude oil export rose to 0.73 mbpd mainly due to the lifting of a force majeure by Exxon Mobil, following the suspension of industrial action by the workers’ union.
It said: “Data from the Nigerian Upstream Petroleum Regulatory Commission showed that Nigeria’s crude oil production rose by 19.2 per cent to 1.18 mbpd in May, from 0.99 mbpd in the preceding month.
“Of the 1.18 mbpd produced, 0.45 mbpd was allocated for domestic consumption, while 0.73 mbpd was exported. Nigeria’s production level remained below the OPEC monthly quota of 1.742 mbpd by 0.562 mbpd.”
The country has continued to experience low crude oil exploration after the COVID 19, President, Nigerian Association of Petroleum Explorationists, Elliot Ibie told The PUNCH during a chat.
According to him; challenges of “security challenges, pipeline vandalism, oil theft and slowness in the implementation of the Petroleum Industry Act” need to be addressed for the country to witness an increase in investment in crude oil exploration which would in turn; increase export and federal revenue.
Why We Seek Inclusion In Conditional Cash Transfer –Obiora Oti
THE National Vice President of Mobile Money and Bank Association of Nigeria (MMBAN), Obiora Oti, said money wallet bankers would improve their capitalisation and liquidity if the government included them as facilitators in the conditional cash transfer scheme.
Oti told The ICIR exclusively on Wednesday, November 8, that many young people involved in the money wallet business could be supported with a seed capital of about N50,000 and become part of the Federal Government’s cash transfer scheme.
This development, he said, would ensure enough liquidity for them to stay in business since many of them have undergone financial inclusion training under the Central Bank of Nigeria (CBN) policy guidelines.
Oti recalled how he supported someone with seed money of N20,000 in 2020, during the COVID year, and how the person has become an aggregator and now manages N15,000,000 capital.
“This is how financial inclusion works, and it is one of the fastest ways of removing people from poverty,” he said.
“Typically, you don’t grow the gross domestic product (GDP) by throwing money to people through interventions. When there is a channel for such distribution, it stimulates the economy’s growth,” he added.
He also argued that empowering money wallet agents was a sure way of driving Nigeria’s financial inclusion and economic base.
According to Oti, Nigeria has many lessons from Kenya in its financial inclusion success story because of the Kenyan government’s involvement and facilitation through policy direction and incentives to operatives.
Agency banking allows customers to deposit and withdraw money instead of going to the bank or using automated teller machines (ATMs.)
Currently, there is one agency banking agent for every 80 Nigerians and one bank branch for every 27,000, according to a 2023 report on the Nigerian Financial Services Market.
Naira Falls To N1, 000/$ In Official Market
Despite recent moves by the Central Bank of Nigeria to strengthen the foreign exchange market, the naira closed trading on the Investor & Exporter forex window on Thursday at N996.75/$.
This is a 13.95 per cent decline from the N874.71/$ it closed trading on Wednesday. So far, the naira has lost 27.75 per cent of its value since opening the week at N780.23/$ according to details on FMDQ OTC Securities Exchange.
Since firming up against the dollar last week, after news that the apex bank was clearing some of its backlog broke, the naira has been on a steady decline in both the official and parallel markets.
So far, the naira has lost about 40 per cent of its value in 2023, earning the tag of one of the worst performing African currencies from the World Bank.
In the parallel market, the currency has lost value too, falling from N950/$ as of Friday to close to N1,140/$ as of Thursday according to Bureaux De Change operators who spoke to The PUNCH. This represents a 20 per cent decline.
A trader who only gave his name as Kadri said, “Dollar is N1,100 if you want to sell. It is N1,140 if you want to buy.” Another trader, Awolu, stated that he would buy the dollar at N1,100 from our correspondent.
He said, “Dollar is N1,100 if you want to sell to me.”
Earlier in the week, the President of the Association of Bureaux De Change Operators of Nigeria, Aminu Gwadabe, told The PUNCH that the dollar was gaining against the naira because people who had bought it at a higher price were resisting its fall.
He said, “Speculators are always looking at elements of sustainability. Once they sense that it (the injection) is not continuous, they begin to react. They begin to react. It is the reaction of the market we are witnessing. Also, there is resistance. There are people that bought at a higher price that this does not favour. People are not willing to take further losses.”
Concerned with the fall of the currency, the presidency recently stated that it is planning policies to strengthen the local currency.
A Special Adviser to the President on Economic Matters, Dr Tope Fasua, who was representing the Vice President, Kashim Shettima, at an event, said: “For those who are speculating and praying and wishing that the currency would become nonsense, I believe that the central bank is rolling out the policies and the government that I serve, led by the President, will shock some of them.”
Dangote Repatriates $688m From African Operations
Dangote Industries Limited has revealed that it has so far repatriated over $687.98m through various banks in Nigeria.
In a statement on Sunday, the company said it brought in $576,008,672.41 through various banks in Nigeria, in addition to a $111,968,109.38 cash swap arrangement between Dangote Cement Plc and Ethiopian Airlines.
Dangote re-affirmed its determination and belief in Nigeria, noting that the government of President Bola Ahmed Tinubu had shown the will and resolve to get the economy moving again.
“We are not body-shop investors. We believe in Nigeria, and we believe in Africa. We are genuine and authentic about our investments, and we call on all relevant agencies to investigate our FX transactions in the past 10 years and make public any infraction noticed or discovered.”
Insisting that all forex purchased in respect of its African Project Expansion were genuine and fully utilised for what they were meant for, the firm noted that the projects for which the forex was utilised were visible for everyone to see.
“It is on record that some of these projects were commissioned by Nigerian top-ranking government officials and in attendance were chief executives of various banks, captains of Industries, and the Presidents of the host countries supported by their Senior Government officials.
“The commissioning events of these projects were well documented and covered by both local and international media. There are also print and electronic copies of the commissioning ceremonies as further testimony to the judicious utilisation of the funds.”
Dangote further explained that its massive investments in Africa would lead to the repatriation of forex in the very near future and boost foreign exchange earnings in Nigeria, as well as stabilise the forex market.