Nigeria’s N13.5 trillion 2021 budget – A move in the right direction?

In October 2021, President Buhari presented to the Senate a proposed 2021 budget of N13.082 trillion. Read more on this here. However, on Monday, 21 December 2020 the Senate passed the appropriation bill of N13.588 trillion. This is N505 billion higher than the proposed N13.588 trillion.

Snapshots of Nigeria’s 2021 Approved Budget – Budget of Economic Recovery and Resilience

  • Total budget size – N13.588 trillion
  • Projected revenue – N7.886 trillion
  • Budget deficit – N5 .196 trillion
  • Statutory transfer – N496.528 billion
  • Debt servicing – N3.324 trillion
  • Capital expenditure – N4.125 trillion
  • Recurrent expenditure – N5.641 trillion

Key Budget Assumptions

  • Official exchange rate – $1: N379
  • Inflation Rate: 11.95%
  • GDP Growth Rate: 3%
  • Oil Production: 1.86mpbd
  • Oil Price: $40pd

Funding of N5.196 trillion Budget Deficit?

According the Senate, below are how they plan on financing the budget deficit

  • Sale of Federal Government assets projected at N205.153 billion
  • Debt financing projected to be valued at N4.281 trillion
  • Multilateral and bilateral project-tied loans of N709.685 billion.

According to the Senate, one of the reasons for the increase in the budget is due to the N365 billion spending request for the upscaling of the National Social Investment Programme (NSIP).

The increase in the 2021 budget is quite worrisome, as the effects of the COVID-19 pandemic are still lingering, and the economy is yet to recovery. The projections of some key items on the budget can only be achieved when normalcy returns. One of such is the oil price. Global demand for oil is declining.


First Thoughts: The Underdog Story

The idea of politics fascinates me to no end. While I wouldn’t necessarily call myself partisan, I am honest enough to say I do a lot of watching on the side lines. I am not a registered member of any political party in Nigeria, but I have always tried to be a good citizen and cast my votes a couple of times since the first time I voted in 2007. I had missed the 2003 elections by whiskers as I was yet to hit the voter eligibility age of 18 at the time. Elections, both in Nigeria and outside Nigeria have continued to thrill me even till date. For instance, I can hardly wait for the U.S.A Presidential Elections in November.

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In this piece, I shall be walking you through the importance of financial and tax management for start-ups in Nigeria. In recent times, Nigeria has risen to be one of the leading business locations in Africa; most significantly for start-up businesses.

Business in Nigeria is a wonderful experience when your business venture succeeds, however before success there could be great challenges and difficulties that a new business or startup must face, one of which is usually financial and tax management.

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According to the latest Federation Account Allocation Committee (FAAC) Disbursement Report, released by the National Bureau Statistics (NBS), the sum of N606.20bn was disbursed in May 2020 bringing a decrease of about 22% compared to the N780.93bn from the previous month (April 2020).

The drastic decline in the revenue generated in May 2020, compared to the previous month – April 2020, is an issue of great concern and reinforces the great importance of exploiting new sectors of the economy both on the Federal and State Government levels. No need for the long story of oil not being as lucrative as it was in the past years. I assume we are all aware of this by now.

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A Series on Tax Reliefs – Part 3

Welcome to the third part of this series.

We have been reviewing the tax reliefs made available by the Federal and State Governments to taxpayers to cushion the effects of the COVID-19 pandemic.

So far, we have reviewed the tax reliefs made available in the following states: Lagos, Bayelsa, Kebbi, Gombe, Jigawa, Bauchi, Akwa Ibom and Yobe State. You can read them HERE.

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First Thoughts:
Use and Disuse

Jean Baptiste Lamarck’s law of use and disuse remains a vital point of discourse for me. In summary, the law emphasizes that certain traits or characteristics develop based on their use or disuse and can be transferred hereditarily to progenies. I would prefer not to dwell on the somewhat controversial nature of the law, its criticisms or comparison to Charles Darwin’s Theory of Evolution among other lines of thought. Rather, I would relate the salient points of this law to our reality today.

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Stamp Duties to the Rescue

Kola, an entrepreneur in Lagos State woke up to see multiple bank alerts on his phone much to his greatest surprise. No, those were not credit alerts but debit alerts, the worst alerts you can receive especially for transactions you did not initiate. As we progress in this article you would understand what those debits alerts were and no, he was not scammed either.

I am sure you realize that we are in unprecedented times. More than ever before the Federal Government of Nigeria is intensifying efforts to ensure that all non-oil revenue sources are revived.

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A Brief Review of the Finance Act, 2019: What are the Tax Incentives, does it Benefit my Organization and are they Practicable? – An Opinion from a Tax Enthusiast

Companies Income Tax (CIT) is a tax levied on the profits a company.  It is no longer news that in spite of the strides made in recent years by the relevant tax authorities, tax compliance in Nigeria is still far from the expected performance. Nigeria’s tax-to-GDP ratio is one of the lowest in Africa with an average of 5.6% while the average global tax-to-GDP ratio is about 21% (World Bank, CIA Factbook).

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