The latest data from the NBS in its report on foreign trade in goods for Q2 2018 show the total value of trade as N6.57trn, representing a decline of -9% on the preceding quarter. Compared with Q1, the total export value dipped by -5% q/q to N4.46trn, and the import value declined by -16% q/q to N2.11trn. However, a surplus of N2.36trn (US$7.7bn) was achieved, representing a q/q increase of 8%. These customs data generally tell a different story to the BoP series from the CBN.
- From the bureau’s commentary we note a considerable decline in raw material imports of -8.3% q/q and -14.2% y/y. Local substitution has picked up in recent quarters and may help to explain the decline.
- Despite the FGN’s economic diversification strategy, crude oil gulped the largest share of exports again, representing 82% of total exports in the quarter. The value of crude oil exports rose by 4.2% q/q and 54% y/y. However, oil production activity slowed in Q2 2018 due to the shutdown of numerous pipelines and maintenance programmes: this was mirrored in the Q2 national accounts, also released by the NBS (Good Morning Nigeria, 28 August 2018).
- The y/y increase in the value of crude oil exports can be linked to the surge in oil prices. The current oil price level of c.US$70/b is significantly higher than the US$50/b average recorded in the corresponding period of the previous year.
Sales and demand at FGN bond auctions (N bn)
Sources: Debt Management Office (DMO); FBNQuest Capital Research
- In the quarter under review, Nigeria exported goods valued at N109bn to other African countries; exports to ECOWAS members accounted for just 13% of this figure. When we consider the ongoing conversations around membership of the African Continental Free Trade Area (AfCFTA), the underperformance seen in regional export activity makes it difficult to buy-into the narrative in favour of the area.
- Nigeria is yet to sign and some important stakeholders remains opposed. There are currently 49 out of 55 possible signatures.