"Nigeria\u2019s trade surplus nears 4-year high as oil exports rise"

" Nigeria\u2019s trade surplus nears 4-year high as oil exports rise \r\n\r\n \r\n\r\nNigeria\u2019s trade surplus surged to the highest in nearly four years in the second quarter of this year, a BusinessDay analysis of the latest foreign trade statistics report has shown.\r\n\r\nThe National Bureau of Statistics (NBS) report shows that the country recorded a positive trade balance of N1.29 trillion for the third straight quarter in Q2, a 38.7 percent increase from N927.2 billion in the previous quarter. It rose by 27.7 per cent from N1.01 trillion on a year-on-year basis.\r\n\r\nA trade surplus, an economic measure of a positive trade balance, occurs when a country\u2019s exports exceed its imports.\r\n\r\nA report breakdown revealed that total exports, contributing 55.1 per cent to total merchandise trade (N12.7 trillion), grew by 8.2 per cent to N7.01 trillion in Q2 from N6.48 trillion in Q1.\r\n\r\nImports\u2019 trade share of total trade accounted for 44.9 per cent of real work as it rose marginally by 2.9 per cent compared to N5.72 trillion from N5.55 trillion.\r\n\r\nExports trade was dominated by crude oil exports valued at N5.57 trillion, which accounted for 79.6 per cent of total exports, In comparison, non-crude oil export value stood at N1.43 trillion or 20.4 per cent of total exports, of which non-oil products contributed N688.7 billion, representing 9.82 per cent of total exports.\r\n\r\n\u201cThe country was bound to have an improvement in exports because of the recovery in the country\u2019s crude oil production and stable global oil prices. Last year, we were doing less than one million barrels per day,\u201d Ayorinde Akinloye, an investor relations analyst at Seplat Energy Plc, said.\r\n\r\nIkemesit Effiong, head of research at SBM Intelligence, an Africa-focused geopolitical research and strategic communications firm, said oil production vastly improved due to a combination of a seasonal spike in European demand and the coming online of critical Nigerian crude grades, which have been under \u201cforce majeure.\u201d\r\n\r\n\u201cIt\u2019s worth noting that these trends are unlikely to hold in the medium term because fierce competition from Russian and Middle Eastern crude in the Asian market plus uncertainty in the security environment of key oil producing areas in the Niger Delta is increasingly forcing Nigerian producers to sell crude at a discount,\u201d he said.\r\n\r\nCrude oil production is a significant source of revenue for the federal government for Africa\u2019s biggest economy. According to the Nigerian Upstream Petroleum Regulatory Commission, the country produced 1.25 million barrels per day in June from 998,602 barrels per day in April. On a year-on-year basis, it also rose from 1.16 million barrels per day in June 2022.\r\n\r\nData from information websites like Oilprices.com and statistics show that global Brent oil prices averaged $74.84 per barrel in June from 82.5 per barrel in January.\r\n\r\n\u201cCrude oil exports drove the growth in the trade balance. We had experienced low crude oil production last year before the subtle pick up this year,\u201d Abiodun Keripe, managing director at Afrinvest Consulting Limited, said.\r\n\r\nHe added that the marginal growth in imports due to the Foreign Exchange (FX) liquidity challenges improved exports marginally and a further recovery in the trade balance, which is positive for the economy.\r\n\r\nBefore the Central Bank of Nigeria collapsed all segments of the FX market into the Investors & Exporters (I&E) window in June, the country\u2019s dollar liquidity crisis worsened on the back of the Russia-Ukraine crisis, which took place last February.\r\n\r\nThe naira depreciated from 416.52\/$1 as of February 28, 2022, to N771.59\/$1 on September 7, 2023, at the official market. At the parallel market, popularly called the black market, the dollar was quoted to N925\/$1 from N575\/$1.\r\n\r\nAccording to a recent survey by the Manufacturers Association of Nigeria, manufacturing activities continue to suffer due to the persisting scarcity of forex and further naira depreciation.\r\n\r\n\u201cOnly 14.7 per cent of manufacturers enumerated claimed that the rate at which forex was sourced improved in Q2; 66 per cent disagreed while 19.3 per cent were not sure if forex sourcing had improved in the quarter under review,\u201d the association said.\r\n\r\nIt added that the lingering forex scarcity and continuous naira depreciation have left manufacturers bleeding and limited their capacity utilization since importing non-locally produced critical input has become a nightmare.\r\n\r\nThe FX challenge has hurt the manufacturing sector, said Keripe of Afrinvest. \u201cIt has impacted the ability of the manufacturers to import as many key materials that they need for the production of goods.\u201d\r\n\r\nAccording to Israel Odubola, a Lagos-based research economist, Nigeria\u2019s trade surplus is not backed by economic fundamentals.\r\n\r\n\u201cIt is not because we are producing and earning more in exports. It just shows that we are still very much dependent on oil exports, and so much talk about diversification has not been effective regarding the numbers,\u201d he said.\r\n\r\nHe added that Nigeria is still an oil-dependent foreign exchange economy and should scale up value addition in non-oil exports to ensure that it has a diversified export base.\r\n\r\nThe NBS\u2019s trade report highlighted that The Netherlands (N788.9 billion), the US (N718.6 billion), Indonesia (N550.1 billion), France (N540.7 billion) and Spain (N504.5 billion) were the top five export destinations in Q2.\r\n\r\nIn terms of imports, the top five were China (N1.27 trillion), the US (N921.6 billion), Belgium (N460.4 billion), India (N417.8 billion) and The Netherlands (N369.7 billion).\r\n\r\n "

"Nigeria\u2019s trade surplus nears 4-year high as oil exports rise"

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