Welcome uptick in non-oil exports in Q1

The latest quarterly Economic Report from the CBN puts non-oil exports provisionally at US$0.87bn in Q1 2017, indicating a substantial rise of 86% q/q. However, they declined by 15% y/y. The q/q surge was attributed to a significant increase in receipts from food and agricultural products. Additionally, according to the trade statistics report by the National Bureau of Statistics, the exportation of agricultural goods grew by 82% in Q1.

The sectoral breakdown shows that proceeds from agricultural products stood at US$340m in Q1, representing 39.5% of total non-oil export proceeds. Meanwhile food products, manufactured products and industrial goods counted for 10.8%, 16.9% and 10.9% respectively.

We note that food inflation has risen steadily over the past few months (January – March inclusive). One likely reason, although anecdotal at this stage, is the increasing preference of farmers to export their produce as opposed to supplying domestically.

In our view, this preference can be linked to the fact that the currency has depreciated by 56% from N196/US$ on the interbank market over the period in question (i.e. Q1 2017 vs Q1 2016).

The FGN has announced its intention to boost export activities through payment of the export expansion grant (EEG). The EEG was suspended in 2014. However, N20bn was set aside for its revival in this year’s budget.

The Manufacturers Association of Nigeria, following discussions with the authorities, thinks that the new grant may have lower rates than previously, be robustly designed to prevent abuse by applicants and reward exporters for value addition.

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