October 12, 2023/FBNQuest Research
The CBN’s recently published monthly economic report shows that the provisional value of Nigeria’s total merchandise trade decreased by around -4.5% m/m to USD8.7bn in May ’23. The lower trade value reflects decreases in both export and import trade. While total exports declined by -2.9% m/m to c.USD4.8bn, merchandise imports fell by -6.4% m/m to roughly USD4.0bn. The net trade position resulted in a higher net trade surplus of USD0.8bn in May ’23, compared with USD0.6bn the previous month.
A breakdown of export trade shows that crude oil and gas exports, which accounted for around 86% of total export trade value, declined by -4% m/m to almost USD4.1bn.
In terms of split, crude oil export receipts dropped to USD3.6bn from USD3.7bn in the preceding month. Similarly, revenue from gas exports also decreased to USD0.49bn from USD0.5bn in Apr ’23.
Export earnings from non-oil exports rose by 3% m/m to around USD0.7bn, constituting about 14% of the total export trade value.
The top three non-oil export commodities were cashew nuts, urea (for nitrogenous fertilizer), and cocoa beans, which contributed 23.0%, 12.5%, and 10% respectively to non-oil export earnings.
Turning to merchandise imports, the m/m decline in import value was driven by the elevated prices of imported products, largely due to the higher pricing of foreign exchange amid challenges with fx liquidity.
A breakdown shows that non-oil imports, which contributed around 65% of merchandise import value declined by -2.0% m/m to USD2.6bn. Notably, the value of petroleum product imports fell to USD1.2bn, from nearly UUSD1.5bn in Apr ’23.
Cumulatively, Nigeria’s merchandise trade is down -23% y/y to USD45.4bn over the 5M ’23 period. This comprises of exports of USD24.8bn and imports of USD20b.6n, implying a trade surplus of USD4.2bn for the period.
Looking ahead, we anticipate a further drop in petroleum product imports in the subsequent months, following President Tinubu’s announcement in his inaugural speech about the elimination of fuel subsidies. That said, it appears fuel subsidies have been reinstated.
