A Fourth Successive Trade Deficit


Wednesday, December 09, 2020 09:40 AM / By FBNQuest Research / Header Image Credit: Express Tribune


The latest report from the NBS in its series on foreign trade in goods shows the total value of trade as N8.4trn in Q3'20, representing an increase of 34% on the preceding quarter. Compared with Q2, the total export value increased by 36% q/q to NGN3.0trn, and the import value rose by 34% q/q to NGN5.4trn. The net result was a deficit of NGN2.4trn, which followed a deficit of NGN1.8trn the previous quarter. This makes four consecutive trade deficits. The data were drawn primarily from the Nigeria Customs Service.


Q3'20 saw a partial recovery in global trade as production resumed and lockdown measures were eased in major economies. This partially explains the increase recorded in Nigeria's trade activity.


From the bureau's commentary we note that the value of imported raw materials, agricultural goods, solid minerals and manufactured goods rose by 25% q/q, 21% q/q, 22% q/q and 24% q/q respectively. These increases can be linked to fx rate adjustments (i.e. depreciation) as well as the end to the lockdown in Nigeria. 


As usual, crude oil accounted for the largest share (81%) of total exports in Q3. The value of crude oil exports rose by 56% q/q, but declined by -35% y/y. The crude oil price (Bonny Light) averaged USD43/b in Q3 and global demand for oil products picked up in the quarter after a highly challenging March/April for producers.


In the quarter under review, Nigeria exported goods valued at NGN182bn to fellow members of the Economic Community of West African States; compared to the value of NGN149bn recorded the previous quarter. This represented 41% of total exports within Africa. 


The Federal Executive Council has ratified Nigeria's membership of the African Continental Free Trade Area (AfCFTA), ahead of the December deadline. The AfCFTA agreement comes into effect on 01 January 2021. The AfCFTA could assist with boosting trade activity for Nigeria across Africa.


Merchandise trade values (NGN' trn)

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Source: NBS; FBNQuest Capital Research

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