There was a major improvement in export earnings in the second quarter of 2023, as a result of the floating of the naira which ensured earnings from crude oil exports swells. Crude oil receipts rose 8.5 per cent to N5.6 trillion. This represents 79.6 per cent of total exports.
“The improvement in export earnings was mainly spurred by crude oil receipts which rose 8.5 per cent quarter-on-quarter (q/q) to N5.6 trillion (about 79.6 per cent of total exports) though production level was unimpressive as per national Bureau for Statistics (NBS) data (down 19.2 per cent q/q to 1.22mbpd).
“Noteworthy, we suspect that the improvement in oil receipt was also impacted by exchange rate revaluation gain given that the Central Bank of Nigeria (CBN) switched from a hard-pegged exchange rate regime to a managed float in June 2023, causing the official conversion rate of oil proceeds to rise from N461/$ to over N650/$. Hence, nullifying the effect of lower crude oil price in the second quarter ($78.13/bbl.) relative to the first quarter ($81.11/bbl.).”, said analysts at Afrinvest.
Data from NBS showed that the value of Nigeria’s total trade (imports and exports combined) improved over the preceding quarter (up 5.8 per cent) but trailed the level attained in the corresponding period of 2022 by 7.6% to settle at N12.7 trillion.
For the third consecutive quarter, Nigeria recorded a positive trade balance amounting to N1.3 trillion in the second quarter, aided by the faster growth in export earnings (up 8.1 per cent q/q to N7.0 trillion) as against import expenses (up 3.0 per cent q/q to N5.7 trillion).
Similarly, non-crude oil and non-oil exports also grew 6.8 per cent and 5.6 per cent q/q to N1.4 trillion and N688.7 billion respectively.
“We attribute these gains to the recovery in the broader economy from the negative knock-on effect of pre-election jitters and poor implementation of the naira redesign policy in the first quarter (GDP expanded 2.5 per cent vs. 2.3 per cent in the first quarter)”, said Afrinvest.
It is important to highlight that Agricultural goods remain Nigeria’s largest source of non-oil export earnings (4.0 per cent of export share), while Manufacturing, Raw material goods, and Solid mineral goods trailed with 3.0 per cent, 2.1 per cent, and 0.5 per cent, respectively.
Cashew nuts (shelled and unshelled), sesame seeds, and cocoa beans combined accounted for 65.7 per cent of the total N278.4 billion Agric exports in the period – an indication that cash crop exports could be a major source of non-oil foreign exchange (forex) earnings for Nigeria if adequate investment is made on procuring modern farming equipment and insecurity is wholistically checked.
In terms of trade performance with other regions, the previous quarter’s trend was sustained as Nigeria booked a surplus with three of its five trading regions – America (N178.5 billion), Europe (N1.2 trillion), and Africa (N510.5 billion) – while a deficit was recorded in trade with Asia (N584.5 billion) and Oceania (N98 billion). In terms of destination, the Netherlands (11.2 per cent), the US (10.2 per cent), and Indonesia (7.8 per cent) were the top export hubs by share while China (22.2 per cent), the US (16.1 per cent) and Belgium (8.0 per cent) topped imports origin.
