September 12, 2022/CSL Research
Based on the data released by the National Bureau of Statistics, Nigeria’s foreign trade position in Q2 2022 was a surplus for the second consecutive quarter as exports (N7.4tn) significantly exceeded the value of the country’s imports (N5.4tn) in the period resulting in a surplus position of N1.97tn. Compared to Q2 2021, total exports of N7.4trn was 47.5% y/y higher in Q2 2022 than the value of N5.0trn reported in Q2 2021 while total imports of 5.4trn was 15.8% y/y higher in Q2 2022 than the N4.7trn recorded in Q2 2021. Overall, the total trade value in Q2 2022 was N12.8tn, an improvement of 32.2% y/y compared to the value of N9.7tn in Q2 2021.
The elevated crude oil price in Q2 2022 played a significant role in amplifying the value of exports since the Africa’s biggest economy’s export is skewed to crude oil (79.8% of total exports in Q2 2022). When compared to Q1 2022, total imports of N5.4trn declined by 7.9% q/q, while total exports of 7.4trn increased by 4.3% q/q. Again, the increase in crude oil price in Q2 2022 proved supportive. Brent crude averaged US$111.98/bbl compared to US$97.86/bbl in Q1 2022, and an average price of US$69.08/bbl in Q2 2021.
On the import side, mineral products accounted for the highest value of imports in Q2 2022, making up 27.9% of the value of total imports into the country and up by 9.0% y/y when compared to Q2 2021, but down 22.1% q/q compared to Q1 2022. The y/y increase in mineral products imports must have been driven by the increase in the price of PMS as crude oil prices increased in Q2 2022, arising from geopolitical tensions amid the demand recovery.
This was followed by machinery and transport equipment, which accounted for 19.5% of the total value of imports and was up by 11.2% y/y, but down by 13.4% q/q when compared with Q2 2021 and Q1 2022, respectively. In the first quarter of 2022, the top eight countries where imports came from were China, Netherlands, the United States, India, Belgium, Germany, Russia and Italy.
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, the oil environment remains favourable and 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.
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