June 28, 2024/FBNQuest Research

The most recent monthly economic report published by the Central Bank of Nigeria (CBN) shows that the total value of Nigeria’s merchandise trade increased by 4% M-o-M to US$8.1bn in Jan 2024. Although exports rose by 3% M-o-M to about N5.0bn, the higher value M-o-M was mainly due to a rise in imports, which increased by 6% M-o-M to roughly US$3.2bn. Consequently, the net trade position resulted in a lower trade surplus of about US$1.8bn compared with US$1.9bn recorded in the previous month. The CBN’s monthly trade performance data is provisional and subject to revisions in subsequent monthly reports.

• A breakdown of merchandise exports shows that crude oil (excluding gas) accounted for about 83% of the total value of the export proceeds. In absolute terms, its value increased by 8% M-o-M to about US$4.1bn.
• A combination of higher crude oil production and prices supported the M-o-M rise in the value of crude oil exports.
• Specifically, the average price of Nigeria’s benchmark crude blend increased by 4% M-o-M to US$89.2/barrel in January.
• On the other hand, the average crude oil output settled higher at 1.43 million barrels/day (mbpd) compared with 1.34mbpd recorded in the previous month.
• Enhanced monitoring of Nigeria’s oil infrastructure and geopolitical unrest, which continues to affect the supply of crude oil, underpinned the rise in domestic crude oil production and oil prices.
• Non-oil exports, constituting about 6% of Nigeria’s merchandise export trade, decreased to US$0.30bn from US$0.50bn, mainly due to lower urea exports during the month.
• According to the data, Nigeria’s top three non-oil export commodities in January were cocoa beans, urea (for nitrogenous fertiliser), and sesame seeds, which accounted for 25.0%, 19.3%, and 11.0%, respectively, of non-oil export earnings.
• Concerning destinations, Brazil (13.8%) was the top non-export destination, followed by the Netherlands (13.0%) and India (9.0%).
• Regarding imports, the higher M-o-M merchandise import value can be primarily attributed to a marked rise of 41% M-o-M in petroleum products to N1.2bn.  
• Conversely, the value of non-oil imports, which accounted for about 62% of total imports, decreased slightly to about US$2.0bn, down from US$2.1bn recorded in December.
• Looking ahead, we expect Nigeria’s merchandise trade balance to return to a trade deficit in February due to declining crude oil output, which settled at 1.23mbpd in February from 1.32mbpd in January, according to CBN’s crude oil data.
• However, we expect the reduction in crude oil production to be partially offset by crude oil price gains, which increased by 5% M-o-M to US$86.1/barrel in February.