Q2 2021 Foreign Trade Report: Strong Growth in Merchandise Trade


Monday, September 13, 2021 / 10:40 AM / by FBNQuest Research / Header Image Credit: Global Trade 


The NBS' recent foreign trade in goods report for Q2 '21 shows that overall merchandise trade value increased by 23% q/q (89% y/y) to NGN12trn. Exports increased by 75% q/q to NGN5.1trn, on the back of increasing crude oil exports, which more than doubled q/q. On a y/y basis, the increase in export was stronger at c.128%, thanks to weak base effects from Q2 '20. Following the extraordinary decline in global oil demand as a result of COVID-19, Nigeria's principal export, oil, shrank to 1.2-1.3 million barrels per day in Q2 '20. The value of total imports also advanced by 2% q/q (68% y/y) to NGN7.0trn. The net result was a deficit of c.NGN1.9trn, which follows seven straight quarters of trade deficits.


We see from the data that manufactured goods accounted for around 62% of total imports by value. Although imports for the segment declined 5% q/q, they increased 54.3% y/y.


Used automobiles, machinery for reception and transmission, which we presume are for the electricity and telecommunications sectors, and polypropylene for plastic materials and packaging for consumer products are at the top of NBS' list of imported manufactured items.


Other petroleum products (i.e. gasoline and gas oil), raw materials and agricultural goods were the second, third and fourth-biggest import categories, accounting for c.16% 12% and 9% of total imports respectively. The three segments grew by 13%, 25%, and 4% q/q respectively.


The increase in import value q/q can be partly linked to the CBN's adoption of the NAFEX rate of c.NGN411 as the rate for official transactions in Q2 '21, compared with c.N380 previously.


Excluding crude oil which dominated exports, the other key items on the list were other petroleum products and manufactured goods (mainly vessels) whose export shares by value were 11% and 4% respectively. Both segments shrank by c.-0.7% and 11% q/q respectively.


In terms of trade intensity, Nigeria's main trading partners were India, Spain and Canada. They accounted for c.19%, 10%, and 7% of export trades respectively. Some of the major export items to these countries were crude oil, tanned leather and cashew nuts. With respect to imports, Nigeria's major trading partners were China, India and the Netherlands.


The CBN's credit interventions and import compression policies have aided import substitution to some extent. However, production from the Dangote Group's refinery and petrochemical plant, which is expected to kick-off in 2023, will be a game-changer as the facility's output is expected to replace imported items like refined petroleum products and polypropylene among other things, and save the country c.USD2.5bn in foreign exchange, according to the Group.


Merchandise trade values (NGN' trn)                                  

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Sources: National Bureau of Statistics (NBS); FBNQuest Capital Research

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