Wednesday, December 20, 2017 /3:41PM / CardinalStoneResearch 

Trade Balance Surge on RisingExports
Nigeria’s trade value rosefor the sixth consecutive quarter to N5.92 trillion. This represents a 3.94%QoQ and 23.86% YoY growth. Total exports value grew by 15.19% QoQ and 53.85%YoY to N3.57 trillion while total imports value declined 9.41% QoQ and 4.47%YoY to N2.35 trillion. Bolstered by a sustained growth in exports as well asdeclining imports, Q3’17 balance of trade remained favourable, climbingsignificantly by 141.8% QoQ to N1.2 trillion. On a year-to-date basis, totaltrade value stood at N16.9 trillion, just 2.5% shy of the total trade value forthe year 2016 (N17.4 trillion). Exports made up 57.2% of year-to-date tradevalue, with a significant trade surplus of N2.5 trillion (compared to full year2016 N290 billion trade deficit).  



Refocusing imports to boostdomestic sector
Trade imports declined 9.5%QoQ and 4.5% YoY to N2.4 trillion. Importation of crude Inedible materials slumpedsignificantly by 82.6% QoQ to N38.1 billion while importation of food and liveanimals also decreased by 20.2% QoQ from N434.5 billion in the precedingquarter. Quite noticeably though, there was an increase in machinery andtransport equipment imports by 20.6% QoQ and 7.1% YoY to N648.8 billion. Thispossibly hints to increased effort by the government to develop the localmanufacturing sector.



Oil Exports still trademainstay
Crude oil exports, being thedominant trade commodity, grew 22.5% QoQ to N2.9 trillion. This, largelysupported by the rise in oil production volume (2017 Ytd average 1.9mbpd; 2016average 1.8mbpd) as well as global oil price recovery (2017 Ytd average$54.47/barrel; 2016 average $44.86/barrel), was more than double the figure inthe corresponding quarter in 2016 (Q3’16: N1.9 trillion). As a percentage oftotal exports, crude oil rose 500bps QoQ to 83.2% signifying that it remainsthe key revenue generator, despite ongoing efforts to diversify the economy.Overall, total oil-related exports grew by 17.4% QoQ and 53.4% YoY respectivelyto N3.5 trillion. 



In contrast, non-oil exportsdeclined by 23.3% QoQ but grew by 68.5% YoY to record at N126.5 billion withmanufactured goods making up 39.6% of all non-oil exports. Agriculture exportsdeclined for the third consecutive quarter to N21.5 billion (Q2’17 N29.7billion; Q1’17 N30.0 billion). This represents 17.0% of total non-oil exportsand 0.60% of total exports respectively. Year-to-date, however, agricultureexports amounted to N81.2 billion, 33.8% higher than the entire figure for 2016(c. N60.7 billion) signifying increased efforts to develop the sector. 



Europe pivotal to burgeoningtrade
India (17.4%) and the UnitedStates of America (13.9%) were the two major export trading partners accountingfor about 31.4% of total exports in Q3’17. Other top destinations include:Spain (10.0%), Netherlands (6.8%) and France (6.3%). Overall, exports to Canadahad the highest quarter-on-quarter growth by 65.5% to N149.1 billion. On aregional basis, 36.2% of all exports were made to Europe, while Africaaccounted for only 10.3% of exports. 



While China accounted for ameagre 1.8% in trade exports in Q3’17, it was responsible for over 22.3% of all importsinto Nigeria, further highlighting the wide trade deficit between the twonations which rose 25.6% QoQ to N458.9 billion (Exports: N63.9 billion;Imports: N522.8 billion). Other major import trading partners include theUnited States of America (8.0%), the Netherlands (7.6%), India (5.1%), and theUnited Kingdom (4.1%). On a regional basis, Europe accounted for about 43.5% oftotal imports while Africa accounted for 4.4%.  



Trade surplus key to rejuvenating economybut diversification concerns remain
Improvements in trade figures strengthenNigeria’s trade position globally especially given the gradual ascent ofprotectionist policies among several nations. The steady increase in tradesurplus which represents a net inflow of foreign currency further strengthensthe prospect of a stable Naira and makes a case for the domestic currencyappreciation in the near term. On the flip side, however, an appreciating nairamay render export prices uncompetitive internationally, thus hurting exports aswell as domestic sector growth. As a result, strategic management of tradepolicies is critical in order to ensure both currency stability as well ascompetitive pricing for exports. 

More so, with crude oil accounting forover 83.2% of exports in Q3’17, Nigeria remains exposed to a near unpredictablevolatility in international oil supply-demand dynamics. Economicdiversification remains a far reaching, yet attainable goal. Development of thedomestic sector remains crucial to driving sustainable economic growth, as itprovides the requisite platform for ensuring diversification. Governmentsupport for the domestic sector is key towards making Nigerian non-oil exportsboth viable and competitive internationally. 

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