February 15, 2022/Proshare
by FBNQuest Research
The latest monthly Economic Report from the CBN puts the value of total trade in Oct ’21 provisionally at USD10.0bn, a slight increase of 1.5% m/m. October’s trade balance shows a 43% y/y increase, based on data drawn from the CBN’s quarterly statistical bulleting (QSB). Following the pandemic’s near-paralysis of international commerce in 2020, global trade activity soared in 2021, thanks to an increase in merchandise trade. The UNCTAD Handbook of Statistics for 2021 forecasts 22.4% growth in merchandise trade for 2021, demonstrating the robustness of the recovery.
Moving back to Nigeria’s external trade position, total merchandise exports increased by 13% m/m and 85% y/y to USD4.9bn, mainly due to higher crude oil proceeds. The value of crude oil and gas exports was c.USD4.5bn (up 15% m/m), or c.90% of total exports. We note that crude oil prices surged to over USD80/barrel in October last year.
Non-oil exports, on the other hand, have averaged over USD450m in the six months leading to October 21. They have not yet recovered to their pre-pandemic monthly run-rate of over USD700m.
Total merchandise imports were valued at USD5.1bn, down 8% m/m. On a y/y basis, the value of imports increased by 17%, on the back of improvements in trans-border trade flows.
The federal government is committed to boosting non-oil exports. In the past, one of the incentives it has initiated to expand the country’s non-oil export base is the export expansion grant (EEG). The Nigerian Export Promotion Council (NEPC) had also launched the Zero Oil Plan, which had a goal of generating c.20% of Nigeria’s GDP from non-oil exports within 10 years.
Last week, the CBN announced the RT200 Program, a non-oil export stimulus plan with a USD200bn fx income target in the next three to five years.
Under the scheme, the CBN will fund the development of specialised non-oil export terminals in collaboration with commercial banks, allowing exporters to avoid the current bottlenecks at Lagos ports.
It would also provide businesses with loans for value-adding and the creation of finished items for export at 5% interest for a 10-year term, with a two-year moratorium.
