A paucity of credits on the services account

Nigeria’s current-account data are generally predictable, with a surplus on trade and a healthy inflow of remittances balanced by net outflows for services and income. The quarterly deficit for services has returned to a range of US$4.5bn to US$5.5bn now that fx availability has been transformed as a result of the CBN’s reforms in early 2017. The backlog has long since been cleared so that, for example, debits for travel soared from US$490m in Q1 2017 to US$1.48bn one year later and those for business services from US$560m to US$2.18bn over the period.                                                                                                        

  • Debits for freight have settled at +/- US$500m per quarter on merchandise imports running at between US$7bn and US$9bn.
  • The net outflow on government services is stable, at +/- US$50m.
  • One bright spot among the services credits is the pick-up, albeit from a low base, in insurance services in Q1 and Q2 2018. Credits and debits for insurance are now evenly matched. A regular surplus should be attainable on the basis of developments within the industry.
Transactions on the services account (US$ bn)

Sources: CBN; FBNQuest Capital Research


  • Some emerging economies boast substantial services credits on the current account. For India, call centres and IT support (in addition to tourism) are an important source. Closer to home, Egypt achieved a services surplus of US$7.84bn in July 2017-March 2018, driven by receipts from the Suez Canal and tourism reflected in the transportation (US$5.28bn) and travel (US$5.55bn) categories. Kenya routinely reports a services surplus on the back of its tourism earnings.
  • Nigeria will not become a leading destination for foreign tourists in the near future but its film industry, said to be the most prolific globally, could make a sizeable contribution to services credits. Currently no inflows are shown from personal, cultural and recreational services in the period under review.

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