Diversification away from Oil shall double Revenue and Dangote secures China Loan

Nigeria expects its non-oil revenues to nearly double this year as Africa’s top oil producer seeks to offset a slump in oil revenues, according to a presentation seen by Reuters yesterday. President Muhammadu Buhari plans a record 6.06 trn naira (US$ 30.6bn) budget to stimulate Africa’s biggest economy, which has been hammered by a fall in oil exports that had made up 70% of state income. Funding of the budget with an expected deficit of 2.2trn naira has been so far unclear.

h3. Non-Oil Revenue Plan

Detailing its plans, the government expects to generate 3.38 trn naira (US$ 17bn) this year from non-oil sources, up 87% from 1.81 trn naira in 2015, the presentation showed. Corporate income tax collection is expected to exceed the 700bn naira generated last year, while the government also aims to recover stolen Nigerian assets stashed abroad as part of efforts to crack down corruption, it said. The biggest source of revenues this year will come from what the presentation called “independent revenue”, without providing further details.

President Muhammadu Buhari plans to squeeze informal small traders who make up almost half of GDP, this year to boost tax revenues by 33%. On Saturday, Finance Minister Kemi Adeosun said Nigeria was considering the issue of Chinese Panda or Japanese Samurai bonds to help fund the budget. The government also wants to switch its debt mix so that 40 percent of loans would be from abroad, compared to 16% now, the presentation showed. Loan repayments will be stretched. Buhari has asked the United States for help in returning stolen Nigerian assets stashed in US banks. In March, the US said it had frozen more than US$ 458 million of funds that the late military ruler Sani Abacha had stolen.

Nigeria has recovered about $1.3bn of Abacha’s money from various European jurisdictions as of last year, with more than a third of that coming from Switzerland. Abacha also held assets in France, Britain and British offshore centers such as Jersey.

h3. Loan from China

Nigeria has also held talks with China, the World Bank and other international institutions to get loans to fund his plans to roll out infrastructure projects, of which a loan from China has come through.

Dangote Group, the company owned by Africa’s richest man Aliko Dangote, signed a deal today for an US$ 2bn loan from the Industrial Commercial Bank of China for two cement plants, he told Reuters. “The interest rate is okay, quite favourable with me,” Dangote said, without elaborating. “It’s for my two cement companies that we are establishing in Nigeria.” The deal included China Export & Credit Insurance Corporation.

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