The latest monthly Economic Report from the CBN puts non-oil exports provisionally at US$1.1bn in Q4 2016, indicating substantial rises of 128% q/q and 367% y/y. This surge was due to increases recorded in the export of goods within the manufacturing and industrial sectors. It would be revealing to see a breakdown by product rather than by sector. On an annualised basis, non-oil export earnings stood at US$3.2bn in 2016 and, based on our estimates, represented just 0.8% of GDP for the year.
Although a steep rise was recorded in proceeds from manufacturing and industrial exports in Q4 2016, a stark contrast was observed in receipts from food products, agricultural goods and minerals, which declined by 42% q/q, 54% q/q and 0.3% q/q respectively.
Fx illiquidity at the time resulted in a reduction in imported inputs, thus hampering non-oil exports. Last month the CBN introduced a special fx window for investors and exporters. The indicative closing rate in this window yesterday was N383.2 per US dollar, compared with the interbank rate of N305.7. It is premature to judge the success of this initiative.
The FGN plans to reintroduce the export expansion grant (EEG) and has set aside N20bn for its revival in the form of tax credits.
Non-oil export earnings by sector, Q4 2016 (% shares).
Sources: CBN; FBNQuest Research
We also gather that as a prerequisite for the reintroduction of the EEG scheme, the Nigerian Export Promotion Council (NEPC) has started processing baseline data. Last month non-oil exporters were required to submit the data for 2013 to 2016 to enable the NEPC to calculate applicable EEG rates. The grant was scrapped under the previous administration due to widespread abuse.
We hope to see a pickup in export-oriented activities once the EEG is finally relaunched and by extension a considerable rise in non-oil revenue.
