September 1, 2023/FBNQuest

According to the most recent Quarterly Statistical Bulletin (QSB) from the Central Bank of Nigeria (CBN), Nigeria’s current account recorded a surplus of USD2.5bn in Q1 ’23, slightly higher than a revised surplus of USD2.4bn in Q4 ’22. On standardised terms, the figure improved to 2.2% of GDP in Q1 ’23 compared with 1.8% of GDP in the previous quarter. With the surplus in Q1 ’23, the current account has now posted surpluses for two consecutive quarters. It is worth noting that the data is provisional and is subject to revisions.

The positive outcome on the current account was mostly due to a lower net deficit on the services account, which decreased to -USD3.0bn from -USD3.1bn in Q4 ’22.

Another contributing factor to the positive outturn on the current account was a net surplus on the trade account of USD2.7bn. However, it was slightly lower than the trade net surplus of USD2.8bn in Q4 ’22.

Although the value of imports decreased slightly by -USD84m to USD11.7bn, the modest q/q drop in the surplus on the trade account was primarily due to a -USD204m decrease in the value of total exports to USD14.4bn.

The net deficit on the income account increased to -USD2.7bn from -USD2.3bn, because of higher net outflows related to investment income, most of which are dividend repatriations.

The surplus on the current transfers account increased slightly to USD5.5bn compared with USD5.0bn in Q4 ’22.

Workers’ remittances, which is the largest contributor to the current transfers, stood at USD4.8bn during the quarter.

Moving forward, we expect the current transfers of Nigeria’s balance of payment to remain in surplus due to the impact of inbound remittance inflows.

However, we anticipate that the current account will move to a deficit in Q2 ’23, largely due to issues around low productivity of oil output levels.