Return to trade surplus in 2017

The latest data from the NBS in its Foreign Trade in Goods Statistics report for Q4 2017 show the total value of trade as N6.02trn, representing a decline of less than 1% on the preceding quarter. Compared with Q3, the total export value was 9% higher at N3.91trn, and the import value 15% lower at N2.11trn. Thus a surplus of N1.80trn (US$5.9bn) was achieved. When we consider the full year data, we note a surplus of N4.04trn in 2017 compared with a deficit of N290bn recorded in 2016.

  • The decline in imported products is partly linked to the modest success achieved by the FGN in its import substitution strategy. Local substitution has been primarily focused on agricultural products. The data show a 29% decline in the value of food imports from N434bn recorded in Q2 2017 to N337bn (US$1.10bn) in Q4.
  • Additionally, the spending capacity of households remains subdued despite the nascent economic recovery, resulting in soft demand for foreign purchases.
  • The significant depreciation of the naira when compared with the fx rate in 2015 should encourage export activities. We understand that there has been a pick-up in food exports. However, crude oil gulped the largest share of exports, representing 83% of total exports in the quarter, and other oil products a further 12%.

Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research
  • In the quarter under review, Nigeria exported goods valued at N383bn to other African countries; exports to ECOWAS members accounted for 40% of this figure.
  • Globally, there has been growing concern around a potential trade war following US President Trump’s threat to impose additional tariffs on specific products. A potential implication for Nigeria’s trading activities would be escalated cost of imports.
  • In our opinion, trade policies within Nigeria need to become more export-oriented without diminishing efforts geared towards trimming the country’s import bill.

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