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00:00 The term national cake is a familiar phrase for the average Nigerian, often used in discussions
00:07 about the nation's wealth.
00:09 However, it is frequently associated with corruption amongst those managing the country's
00:14 finances.
00:16 So that brings us to the question, how does the government bake this so-called national
00:20 cake?
00:21 Does it just sit there waiting to be divided piece by piece?
00:25 The success of any nation's economy depends on a steady inflow of financial resources
00:30 and Nigeria is no exception.
00:33 Just like any other government, Nigeria relies on various sources of income to prosper.
00:38 Now let's delve into the national cake ingredient.
00:43 Nigeria is oil rich due to its substantial oil and gas reserves.
00:47 Our country heavily relies on extraction and export of crude oil for a significant portion
00:52 of its revenue.
00:53 Oil revenue is derived from exploration, production, refining and exportation of crude oil.
01:00 Both oil and non-oil revenues play significant roles in funding the government.
01:05 Revenue from oil and gas sectors has historically been a major source of income.
01:10 The Nigerian National Petroleum Corporation, NNPC, oversees the oil and gas operations,
01:16 collecting revenue through taxes, royalties and profit-sharing agreements with international
01:21 oil companies.
01:23 The oil revenue contains proceeds from crude oil sales, petroleum profit tax, rents and
01:29 royalties.
01:30 Now, let's delve into the non-oil revenues.
01:34 The Nigerian government has actively pursued diversification by promoting non-oil sectors.
01:40 This strategic move acknowledges the vulnerability of an economy heavily reliant on oil.
01:45 Other industries that contribute to the government's income include agriculture, solid minerals
01:52 manufacturing, income from central banks, capital gains from foreign financial institutions
01:58 and telecommunications.
02:01 As these sectors grow and attract investments, they have the potential to reduce the country's
02:05 dependency on oil revenue.
02:07 The Nigerian government also generates income through other means.
02:12 First and foremost, taxes.
02:15 Taxation is a critical revenue source for the Nigerian government.
02:19 The Federal Inland Revenue Service, FIRS, is responsible for collecting various taxes,
02:24 including corporate income tax, value-added tax, personal income tax and custom duties.
02:32 These taxes are levied on individuals, businesses and imported goods.
02:37 Tax revenue forms a substantial part of the government's income and funding of essential
02:42 public services.
02:44 The most common tax is personal income tax.
02:47 This is the taxation all citizens pay the government from their earnings.
02:51 Nigerian government takes 24% of your net income as revenue, unlike the company income
02:57 tax where 30% of your company's profit must be paid to the government on operations in
03:01 a trading year.
03:03 On top of that is value-added tax, VAT.
03:06 This indirect tax is paid by individuals whenever they purchase goods or services such as dining
03:12 at a restaurant.
03:13 The government levies a 7.5% charge on the total bill.
03:18 Continuing with fines and penalties.
03:21 Individuals or firms pay fines when they violate laws.
03:24 These payments serve as penalties for breaking the law, such as fines for illegal parking,
03:30 overspeeding and expired legal documents.
03:33 In addition, we have licenses and permits.
03:37 The government charges fees for permissions required for activities like business operations,
03:41 events, and using natural resources.
03:45 Also there is fees and payments.
03:48 Citizens pay fees for government-provided services such as school fees, electricity
03:52 bills, water utility payments, rented government houses, court orders, and many more.
04:00 Another crucial way is through grants.
04:03 Grants are non-payable funds that the government receives from another government or organization.
04:08 The government receives these grants to improve its economy or start a project.
04:13 This is a good source of revenue for the government because the government does not have to worry
04:17 about paying this money back.
04:20 Another vital income generator is the telecommunication and ICT sector.
04:25 The Nigerian Communications Commission, NCC, collects fees and levies from telecommunications
04:30 companies operating in the country.
04:33 It is important to note that broadcasting and media houses pay tax.
04:37 The National Broadcasting Commission, NBC, regulates licenses for radio and television
04:42 stations and collects fees from broadcasting stations.
04:46 Who could forget tourism?
04:48 Revenue is generated through entry fees to national parks, cultural sites, tourist attractions,
04:54 and taxes from tourism-related businesses.
04:57 Next we have mining and solid minerals.
05:01 Nigeria's significant mineral reserve contributes revenue through mining activities, royalties,
05:07 and fees.
05:08 Equally important is the import and export levies.
05:12 Nigeria's import-dependent economy generates revenue through custom duties and tariffs
05:16 on imported and exported goods.
05:19 Lastly, we have the Sovereign Wealth Fund.
05:22 The Nigerian Sovereign Investment Authority, NSIA, manages excess revenue from oil and
05:27 gas exports, investing it in strategic assets for long-term economic development.
05:33 Over the years, the federal government and its subnational components have utilized these
05:39 income sources to fulfill various responsibilities, including infrastructure provision, debt servicing,
05:46 social amenities, and judicial services.
05:49 This contributes to the economic development of the nation, ultimately boosting the Gross
05:54 Domestic Product, GDP.
05:58 With this understanding, you now know how the Nigerian government generates its income
06:02 and how it is not a national cake.
06:05 It is your money, my money, and not a treasure chest.
06:08 For more insightful stories and reports, subscribe to our channels.
06:12 I am Lois Oguni for Guardian TV.
06:14 Bye for now.
06:15 [music]