June 6, 2022/CSL Research
Based on the data released by the National Bureau of Statistics, Nigeria’s foreign trade position in Q1 2022 returned to a surplus position of N1.2tn as exports (N7.1tn) significantly exceeded the value of the country’s imports (N5.9otn) in the period. Relative to Q1 2021, total exports of N7.10trn were 137.9% y/y higher in Q1 2022 than the value of N2.98trn reported in Q1 2021 while total imports of 5.90trn were 21.0% y/y higher in Q1 2022 than the N4.88trn recorded in Q1 2021.
The total trade value of N13.0tn in Q1 2022 when compared to the value of N7.86tn in Q1 2021 is a testament to the continued global economic recovery. Likewise, the rally in crude oil price in Q1 2022 also played a significant role in exports since Africa’s biggest economy’s export is skewed to crude oil (79.2% of total exports in Q1 2022). When compared to Q4 2021, total imports of N5.90trn declined marginally by 0.7% q/q, while total exports of 7.10trn increased by 23.1% q/q. Again, the increase in crude oil price in Q1 2022 proved supportive. Brent crude averaged US$97.86/bbl in Q1 2022, compared to US$79.66/bl in Q4 2021 and an average price of US$61.32/bl in Q1 2021.
On the import side, mineral fuels accounted for the highest value of imports in Q1 2022, making up 32.3% of the value of total imports into the country and up by 12.2% y/y when compared to Q1 2021 and 12.2% q/q compared to Q4 2021, respectively. The increase in mineral fuels imports must have been driven by the increase in the price of PMS as crude oil prices increased in Q1 2022, arising from geopolitical tensions amid the demand recovery.
This was followed by machinery and transport equipment, which accounted for 28.0% of the total value of imports and was up by 28.6% y/y and 0.9% q/q when compared with Q1 2021 and Q4 2021 respectively. In the first quarter of 2022, the top eight countries where imports came from were China, Netherlands, Belgium, India, the United States, Norway, France, and South Korea.
Gains from crude oil prices were the fulcrum of the increased crude oil exports as the country keeps grappling with low production owing to theft, vandalism, and terminal shutdowns. Looking ahead, we expect oil prices to remain high, which bodes well for Nigeria, given its oil dependency and this should boost export value However, the continued low oil production is a reminder that gains associated with high crude oil prices that should have accrued to export value will remain sub-optimal if the perennial issues affecting production persist. On the import front, we project imports to also grow, supported by improving domestic consumption.
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