In the just concluded week, data released by the National Bureau of Statistics (NBS) showed that total Value Added Tax (VAT) collected in H1 2020 rose year-on-year (y-o-y) by 8.45% to N651.77 billion, from N600.98 billion in H1 2019, as implementation of the 50% increase in
VAT rate to 7.5% kicked-off in February 2020.
Of the N651.77 billion generated in H1 2020, N335.82 billion (51.52%) was collected as Non-Import VAT locally, N161.74 billion (24.82%) was generated as Non-Import (foreign) VAT, while Nigerian Custom Service (NCS) Import VAT
received was N154.21 billion (23.66%).
Further breakdown of the non-import VAT generated locally revealed that VAT revenue from Professional Services sector was the highest at N75.92 billion, closely followed by Other Manufacturing sector which generated N67.63 billion.
Other sectors that generated above N20 billion include: Commercial and Trading (N31.10 billion), Breweries, Bottling and Beverages (N24.77 billion), States, Ministries and Parastatals (22.51 billion) and Transport and Haulage Services (N20.30 billion).
However, locally generated VAT from sectors such as Minning, Textile & Garment and Pharmaceutical, Soap & Toiletries, remained low as their respective revenue contribution stood at N127.58 million, N499.19 million and N648.78 million.
In the monetary sector, the Central Bank of Nigeria (CBN) depository corporations survey showed a 3.54% rise in Broad Money Supply (M3 money) to N35.35 trillion in H1 2020.
This resulted from a 13.67% increase in Net Foreign Assets (NFA) to N7.58 trillion which was also supported by a 1.09% rise in Net Domestic Assets (NDA) to N27.77 trillion.
On domestic asset creation, the increase in NDA was chiefly driven by a 6.23% jump in Net Domestic Credit (NDC) to N38.05 trillion in H1 2020.
Further breakdown of the NDC showed a 4.13% decline in Credit to the Government to N8.86 trillion; however, Credit to the Private sector rose by 9.85% rise to N29.18 trillion.
On the liabilities side, the 3.54% increase in M3 Money was driven by the 10.48% increase in M2 Money to N32.17 trillion in H1 2020, but was offset by a 36.71% fall in treasury bills held by money holding sector to N3.17 trillion.
The increase in M2 was propelled by a 18.14% rise in Narrow Money (M1) to N12.20 trillion (of which Demand Deposits increased by 21.69% to N10.31 trillion, and currency outside banks, rose by 1.92% to N1.89 trillion), and accompanied by a 6.27% rise in Quasi Money (near maturing short term financial instruments) to N19.97 trillion.
Reserve Money (Base Money) strongly rose by 57.97% to N13.26 trillion as Bank reserves sky rocketed by 78.37% to N10.96 trillion, accompanied by a 2.27% rise in currency in circulation to N2.30 trillion.
On the global scene, US crude oil input to refineries rebounded week-on-week by 2.74% to 14.60 mb/d as at July 24, 2020 (but lower by 16.37% to 16.99 mb/d printed in July 26, 2019).
Also, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) moderated w-o-w by 1.98% to 525.97 million barrels (but higher by 17.00% from 436.55 million barrels as at July 26, 2019).
Hence, WTI crude rose by 0.34% to USD41.21 a barrel; although, Brent crude fell maginally by 0.02% to USD43.66 a barrel even as Bonny Light crude moderated by 2.02% to USD43.23 a barrel as at Wednesday, July 29, 2020. 350.00 300.00 250.00 200.00 150.00 World Oil Supply mb/d
Quarterly Collected Value Added Tax (N’ billion)
We expect to see inflow from the VAT line of federally collected revenue to further rise in H2 2020 as the negative effect of COVID-19 pandemic on economic activities eased at the end of Q2 2020 amid relaxation of restriction on movement by the federal government.
Howbeit, the 50% rise in VAT partly impacted the purchasing power of citizens as inflation climbed higher to 12.56% in the month of June.
Meanwhile, we commend the monetary authority for its strategic initiative in strongly increasing credit to the real sector businesses at lower rates.