Culled—Proshare

December 30, 2019

By FBNQuest Research                                                                              

The latest monthly Economic Report from the CBN puts non-oil exports provisionally at US$455m in November, indicating a m/m increase of 15% and a y/y increase of 49%. The m/m increase was largely driven by a sharp rise in export receipts from minerals which stood at US$79m. The sectoral breakdown shows that export receipts from the food products and industrial sub-sectors declined by 10% and 7% respectively when compared with the previous month.                     

Export receipts from agricultural products stood at US$139m and accounted for 30.5% of total receipts in November compared with earnings of US$204m in August. Anecdotal evidence points towards a reduction in the value of exports to neighbouring countries on the back of the ongoing border closure which took effect in August.

The CBN governor recently disclosed that the CBN will intensify its policy measures to reach US$4bn in non-oil revenues next year. This will require collaboration with the Nigerian Export-Import Bank (NEXIM). As such, the CBN plans to improve access to the N500bn facility (driven by NEXIM) designed to support the growth of non-oil exports by increasing the export of value-added goods relative to raw materials.

Furthermore, the FGN has made provision of N2.5bn tax credit for non-oil exporters in 2020. This provision was included in the 2020 national budget. The tax credit is expected to bring some relief to non-oil exporters after the prolonged delay of the Export Expansion Grant.

The Africa Continental Free Trade Area agreement (AfCFTA) remains topical. Ideally, the AfCFTA should encourage export activities from Nigeria. However, it is likely that Nigeria will struggle with producing profitable standard products able to compete in the global village due to infrastructural issues.