Posted Tue, Dec 10, 2024 9:54 AM

Nigeria's External Trade Position improved significantly in 2024Q3

The external trade value stood at N35.2 trillion in 2024Q3, rising from N19.4 trillion in 2023Q3. This was driven by exports outpacing imports, resulting in a trade surplus of N5.8 trillion in 2024Q3 - a significant improvement relative to a trade surplus of N1.3 trillion and N4.0 trillion recorded in 2023Q3 and 2024Q2, respectively. Similarly, the total value of goods exported almost doubled from N10.3 trillion in 2023Q3 to N20.5 trillion in 2024Q3, attributable to the significant increase in oil exports (at N18.0 trillion in 2024Q3) and non-oil exports (N2.5 trillion). Meanwhile, proactive measures are required to sustain this trajectory as the recent decline in the oil rig count signals a possible drop in domestic crude oil production in the near term. It is, therefore, essential to urgently address the impediments to domestic crude oil production, including oil theft, low investments, and deteriorating oil and gas infrastructure.

Similarly, in 2024Q3, the increase in non-oil exports was driven by a rise in all categories of exportable goods, with the highest increase recorded in favour of agricultural and manufactured products, which accounted for 35 percent and 42 percent of total non-oil exports, respectively. This suggests that binding constraints such as insecurity, flooding, and high production costs due to rising inflation and exchange rate depreciation should be suppressed to improve productivity in the Agricultural and Manufacturing sectors to enhance their contributions to economic growth and non-oil exports in subsequent quarters.

Data: NBS; Chart: NESG Research

On the flip side, the increase in the value of imported goods jumped from N9.0 trillion in 2023Q3 to N14.7 trillion in 2024Q3, attributable to the rise in import bills across the various tradable items. The most significant increase was recorded in favour of mineral fuel, which accounted for 35 percent of total imports in 2024Q3. This suggests that Nigeria is still not self-sufficient in local oil refining. The refurbished Port Harcourt refinery has yet to commence operations, and issues around its functionality remain controversial. Moreover, the Dangote Refinery, which is supposed to support local refining of fuel products, keeps lamenting about the limited supply of crude oil from the local market. Hence, persistent importation of refined petroleum products would put upward demand pressure on the Foreign Exchange (FX) market amid limited inflows of FX.