By Peter OBIORA InvestAdvocate

Lagos (INVESTADVOCATE)-Nigeria’s current-account surplus grew last fiscal year to the higher on record amidst insurgency challenges for President Goodluck Jonathan in boosting Africa’s largest economy following its rebased gross domestic product (GDP).

The surplus of $5.38 billion in the fourth quarter (Q4) 2014 was 47.5 percent and 9.3 percent higher than the $3.65 billion and $4.93 billion recorded in Q3 2013 and Q4 2012 respectively according to the external sector development report in Q4 2013 by Nigeria’s central bank.

The report said the development was largely traceable to the lower investment income repatriations as well as improved financial inflows (home remittances) from Nigerians in Diaspora.

According to the report, further analysis revealed that aggregate exports of goods declined by 3.6 percent and accounted for by the oil and gas component, while non-oil exports increased 21.3 percent in Q4 2013 above the level in Q3 2013.

The Nigeria’s central bank said the improved performance of the non-oil exports may not be unconnected with the current policy emphasis on the promotion of non-oil commodity exports particularly output from commercial agriculture.

“Similarly, aggregate imports declined 7.2 percent. Out-payments in the services account increased by 9.9 percent when compared with the level recorded in Q3 2013; while the deficit in the income account improved from $6.96 billion in Q3 2013 to $5.47 billion in Q4 2013” the report said.

Nigeria’s central bank reported that current transfers surplus driven largely by remittances from Nigerians in diaspora, widened 1.7 and 11.1 percent to $6.06 billion in Q4 2013 when compared with the respective levels recorded in Q4 2012 and Q3 2013.

FDI and Portfolio Inflows

The report said aggregate foreign capital inflow increased 24.3 percent to $4.94 billion in Q4 2013 from $3.97 billion in Q3 2013 owing to an increase in both direct and portfolio investment inflows.

Nigeria’s central bank said direct investment and portfolio investment inflows increased 16.1 and 26.6 percent from $0.86 billion and $3.11 billion in Q3 2013 to $1.00 billion and $3.94 billion, respectively.

CBN reported that portfolio investment inflow remained dominant and accounted for 79.7 percent of total foreign inflows while direct investment inflows accounted for 20.3 percent of the total. “The higher inflow of foreign capital in Q4 2013 was a welcome development which should be sustained through macroeconomic stability and enhanced investment environment including good corporate governance,” the CBN said.

Inflow and Outflow

The central bank affirmed that available data revealed that total foreign exchange inflows to the economy in Q4 2013 stood at $35.34 billion compared to $38.49 billion recorded in Q3 2013 indicating a decrease of 8.2 percent.

“Inflows through the central bank decreased 20.2 percent from $11.86 billion in Q3 2013 to $9.47 billion in Q4 2013 while inflows through autonomous sources declined 2.9 percent to $25.88 billion,” CBN said.

The report further affirmed that similarly, outflows in Q4 2013 decreased 13.1 percent to $11.22 billion compared to $12.91 billion in Q3 2013. “Consequently, a lower net inflow of $24.12 billion was recorded in Q4 2013 compared with $25.59 billion in Q3 2013, indicating a decline of 5.7 percent in the review period.

External Reserves Depletion

Nigeria’s external reserves as at end-December 2013 depleted $1.26 billion from $42.85 billion to $44.11 billion in the preceding quarter. The CBN said it observed depletion in external reserves was due largely to the sales of foreign exchange to authorised dealers, payments to public sector and debt service payments. “The current level of external reserves could finance 11.9 months of foreign exchange disbursements and 10.4 months of import commitments compared to10.5 months of foreign exchange disbursements and 9.9 months of import commitments recorded in Q3 2013.

While the CBN disclosed that the holdings of external reserves shows that the share of the apex bank’s holdings in the total stock of reserves stood at 86.2 percent while that of the Federation and Federal Government were 7.7 and 6.1 percent respectively.

Nigeria’s Debt

The CBN reported that external debt sustainability index, computed as the ratio of external debt to nominal GDP remained at 0.1. It said the public sector external debt rose from $8.26 billion in Q3 2013 to $8.82 billion in the review period. “Public sector debt service payments increased from $0.10 million in Q3, 2013 to $0.30 billion in Q4, 2013,” the report said.