The latest monthly Economic Report from the CBN puts non-oil exports provisionally at US$0.38bn in October, indicating a rise of 46% m/m and 69% y/y. The m/m surge was attributed to a significant increase in receipts from minerals as well as food and agricultural products. The sectoral breakdown shows that proceeds from agricultural products stood at US$51m in October, representing 13.3% of total non-oil export proceeds. Meanwhile industrial goods and food products accounted for 9.9% and 5.2% respectively.
Export earnings from minerals accounted for the largest share (58.8%). We note that there has been increased traction in Nigeria’s solid minerals sector. Given that most states are endowed with minerals, it is important for their governments to identify and tap into their respective solid mineral deposits. In H2 2018 the Ebonyi state government launched a combined lead, zinc and copper processing plant.
Furthermore, the China Miners Association and Nigeria Miners Association are set to sign a Memorandum of Understanding (MoU) in Q2 2019, geared towards promoting solid minerals trade between both countries. This should encourage increased investments into mining and by extension, boost non-oil exports.
Non-oil export earnings by sector, October 2018 (% shares) Total: US$380m
Sources: CBN; FBNQuest Capital Research
The FGN is still committed to boosting non-oil exporters through payment of the export expansion grant (EEG). In the FGN 2019 budget, N5.1bn has been set aside for the grant, compared with N20bn in 2018. We understand that there is a N1.2trn EEG payment backlog. The FGN has converted the backlog into national debt, to be paid through promissory notes. However, payments are still pending due to the slow pace of approvals.
In December the FGN signed an MoU with AFREXIM for a trade facilitation vehicle worth US$1bn, to assist with diversifying Nigeria’s export basket with products that can compete in the global market.