Dear Subscriber,

Nigeria’s Tax to GDP ratio of 6% is one of the lowest in SSA (average of 19.1%), but the country is now confronted with a debt service to revenue challenge as well. According to the IMF, 72% of the federal government’s independent revenue will be used to service debt in 2018. This has prompted a rash of measures to increase the tax revenue of the country. These include the VAIDS programme and recently, the new excise duty on tobacco, beverage and alcohol. The impact of these on the fiscal balance is currently a subject of national discourse.

GDP per head in dollar terms has declined from $5,970 in 2014 to $5,850 in 2017. This is because real GDP is growing at a slower pace than population. It is in this context that there has been massive resistance to any increase in taxes or reduction in subsidies. It has also led to civil disobedience against the Lagos State Government’s controversial Land use charge.

In Q4’17 Nigeria’s fuel consumption increased by 57% and the government incurred approximately $6bn on the importation of PMS. In spite of this, fuel supply has been erratic since December, with average price of PMS declining by 9.64% to N172.5/litre in February.

In this edition of the FDC Monthly publication, the FDC Think-Tank analyzes these issues and their implications on businesses and investment decisions.

Enjoy your read.