From the balance of payments (BoP) for Q1 2018 we see that the current-account surplus widened from the equivalent of 3.6% of GDP in Q4 2017 to 4.8%. Merchandise exports increased by 10.2% on the quarter: significantly, the 14.4% share of oil and gas exports in GDP was the highest since Q2 2014, when spot Bonny Light was trading above US$100/b. Non-oil exports grew by 12.3% to US$970m. Merchandise imports increased by 13.9% on the quarter, which was due entirely to a near-doubling of imports of oil and gas products.
- Oil and total exports predictably move in tandem, and the rare current-account deficits are caused by oil revenue weakness.
- Nigeria runs consistent deficits on services and income, reflecting the failure of the efforts by successive governments to diversify the economy. The data is yet to show any positive response to the attempts of the current administration in that direction.
- Net current transfers, which are overwhelmingly workers’ remittances, had a strong quarter, achieving the highest level in US dollar terms for at least five years. This was impressive since remittances generally peak in the fourth quarter for the holiday season, and then fall away in Q1.
- We could be seeing the relative economic strength of the remitting countries (principally OECD members) at work. A trend increase over the past 12 months could be a response to the opening of new fx windows by the CBN.
Sources: CBN; National Bureau of Statistics (NBS); FBNQuest Capital Research
- We are comfortable with the current-account surplus/GDP ratio at a low single-digit level because of the FGN’s success in tapping the Eurobond markets and its traditional multilateral partners, and of the return of the offshore portfolio community since Q3 2017.