Posted Fri, Sep 13, 2024 12:01 PM

Nigeria's Trade Surplus improved significantly in 2024Q2

The external trade value stood at N31.9 trillion in 2024Q2, rising from N12.7 trillion in 2023Q2. This was driven by the growth in exports, which outpaced that of imports, resulting in a trade surplus of N6.9 trillion in 2024Q2 - a significant improvement relative to a trade surplus of N0.13 trillion and N5.2 trillion recorded in 2023Q2 and 2024Q1, respectively. However, external trade declined by 3.8 percent quarter-on-quarter from N33.1 trillion in 2024Q1. Meanwhile, the total value of goods exported rose sharply from N6.4 trillion in 2023Q2 to N19.4 trillion in 2024Q2, attributable to the increase in oil exports and non-oil exports. The oil exports mainly benefitted from elevated global oil prices and increased domestic crude oil production, which averaged US$86.6/barrel and 1.4 million barrels/day, respectively, in 2024Q2.

Data: NBS; Chart: NESG Research

Similarly, the increase in non-oil exports was driven by a rise in all categories of non-oil exports, with the highest increase recorded in favour of agricultural and manufactured products, which accounted for 50 percent and 25 percent of total non-oil exports, respectively, in 2024Q2. This reflects limited progress in local value chain development and low manufacturing capacity utilisation in Nigeria. Both the Agricultural and Manufacturing sectors have struggled with growth for many quarters. This suggests the need to tackle insecurity in the food-producing regions and create an enabling environment for businesses to thrive. The recent fuel scarcity and sudden hike in fuel prices have elevated the operation costs of businesses.

On the flip side, the value of imported commodities rose sharply to N12.5 trillion in 2024Q2 from N6.3 trillion in 2023Q2, attributable to the increase 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 2024Q2. Nigeria’s dependence on imported fuel stood at 80 percent of local fuel consumption, exposing the country to logistics and supply chain vulnerabilities. A case in point is the recent fuel scarcity partly attributed to limited foreign exchange to import refined petroleum products. Therefore, the government should expedite actions to refurbish Port Harcourt and other local refineries. Also, the government should ensure a steady supply of crude oil to the Dangote refinery, as this would partly resolve the ongoing fuel scarcity. Fully producing refined petroleum products locally would save the country some foreign exchange that would otherwise be channelled to other useful purposes.