Decline in non-oil exports raises economic concerns

The latest report on foreign trade statistics published by the National Bureau of Statistics (NBS) shows that the country’s exports in the second quarter of 2022 increased by 4.31 and 47.55% compared to the figure recorded in the first quarter of the year and the corresponding quarter. of 2021 respectively.

This, along with a fall in the value of imports, saw the country record a trade surplus of N2 trillion naira in the second quarter, down from 1.2 trillion naira recorded in the first quarter and the highest in the last 16 quarters.

In the second quarter of 2022, total trade stood at 12.84 trillion naira, lower than the 13 trillion naira recorded in the first quarter of 2022 but higher than the 9.71 trillion naira recorded in the corresponding period of 2021 Total exports were N7.4 trillion. whose re-exports amounted to N9.63 billion, while total imports amounted to N5.43 trillion.

The trade surplus was supported by the double effect of expanding export earnings which rose by 4.3 percent and lower import bills which fell by 7.9 percent quarter on quarter. . Crude oil exports accounted for the largest portion of the export figure at N5.91 trillion.

This is an improvement of 5.11% and 45.08% compared to the value of exports recorded in the first quarter of the year and the corresponding period of 2021, when 5.62 trillion naira and 4 .07 trillion naira had been recorded respectively.

Analysts have also linked the fall in the value of imports to the devastating impact of high domestic inflation on the level of demand and reduced activity by importers and manufacturers due to the lingering foreign exchange quagmire.

However, concerns are still high both on the percentage of crude exports as well as the slow growth of non-oil exports and in particular the decline in exports of manufactured and agricultural products. The report showed that the export value of agricultural products stood at 141.77 billion naira in the second quarter of 2022, indicating a decline of 29.67% from the 201.59 billion naira recorded in the first quarter. 2022 and also decreased by 14.32% from N165. 0.46 billion which was recorded in the second quarter of 2021.

Similarly, the value of exports of manufactured goods stood at N119.53 billion in the second quarter of 2022, showing a decline of 45.44% from the N219.08 billion recorded in the first quarter of 2022 and a also decreased by 14.84% from the value of 140 naira. 36 billion recorded in Q2 2021.

Analysts at Afrinvest West Africa, in an emailed note on trade statistics, said: oil exports up 1.3% to 1.5 trillion naira were the catalysts for oil growth. trade surplus as non-oil export revenue fell 5.6% QoQ to N675.1 billion.

“In our view, the decline in non-oil export earnings amid high commodity prices in the global market and the CBN’s numerous export promotion initiatives such as the 100 percent PPP, underscore the need a coordinated fiscal and monetary policy political actions to resolve the fundamental challenges afflicting the non-oil sector.

For his part, the former Director General of the West African Institute of Financial and Economic Management (WAIFEM) and President of the Foundation for Economic Research and Training, Professor Akpan Ekpo, said that the country had to get out of its dependence on oil while sharply reducing imports.

Professor Ekpo noted that the solution to solving the country’s currency crisis is to build a productive economy and export non-oil goods and services to earn foreign exchange while reducing dependence on oil.

“There is a trade surplus and looking at the data, we have exported more crude oil, that’s why we have a surplus. But if we have working refineries and we produce enough for local consumption, we will see now a lot of foreign currency,” he said.

The value of the naira has seen a decline at the counter of investors and exporters lately.

Last week, the value of the naira depreciated by 0.4% week-on-week to 436.33 naira per dollar of 434.75 naira / at the I&E counter, due to pressure from the low crude oil revenues for Nigeria despite trading Brent Crude at a higher than the 2022 budget benchmark.

Similarly, the panic buying in the market resulting from news that some foreign airlines were planning to sell air tickets in foreign currencies, caused many forex users to seek out the greenback for their personal travels and professionals, while apex bank interventions in the forex space have always seen street traders being ignored with funding.

In the parallel market, the naira depreciated a further 6 naira or 0.9% week-on-week to close at 708 naira to the dollar from 702 naira as continued demand pressure remained unchanged for another week amid falling reserves and weak oil export earnings.

Analysts at Cowry Assets Management said they expected the naira to depreciate further in all segments of the foreign exchange market due to mounting demand pressure for dollars.

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