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Nigeria’s Trade Deficit Widens

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Nigeria’s Trade Deficit Widens

Nigeria’s trade deficit widens to N1.8trn in three months

Weak demand for Nigerian products increased the trade balance deficit to N1.87 trillion in the second quarter of 2021.

The National Bureau of Statistics (NBS) stated this in its “Foreign Trade Statistics – Q2 2021 obtained on Monday by Ripples Nigeria.

According to the report, Nigeria spent N6.95 trillion on imports but recorded exports worth N5.08 trillion.

What this means is that out of the N12.03 trillion trade merchandise recorded between April, May, and June, imports exceeded exports by N1.87trillion, which is the deficit.

NBS data however showed that trade recorded in the Q2 was 23.28% more than last quarter Q1 2021 and 88.71% more than the same quarter in 2020.

“During quarter 2, 2021 the total merchandise trade stood at N12,02 trillion representing 23.28% increase over the value (N9,757.87billion) recorded in Q1,2021 and 88.71% increase compared to Q2,2020,” NBS said.

Furthermore, NBS data shows that non-oil exports of N462.85 billion was recorded in the period under review. While crude oil/total exports constituted 80.29% of the transaction 42.22% was export/total trade.

“The export component of this trade was valued at N5.07 billion or 42.22% , the import was valued at N6,950.21billion or 57.78% while the trade balance stood at a deficit of N1,870.77billion.Crude oil which is the major component of export trade stood at N4,078.20 billion or 80.29% of total export. This further shows a sharp increase of 111.32% in Crude oil value in Q2, 2021 compared to (N1, 929.83billion) recorded in Q1,2021 while the Non-crude oil export recorded N1001.23 billion or 19.71% of total export trade during Q2,2021,” the report added.

Nigeria’s Trade Deficit Widens

For product classification, NBS said “total value of trade in agricultural goods in Q2 stood at N817.35 billion, with the export component totalling N165.27 billion while the import was valued at N652.08 billion.

“Topmost of these exported agricultural products were good fermented Nigerian Cocoa beans exported mainly to Netherlands (N16.48 billion), Malaysia (N9.32 billion) and the United States of America (N8.41 billion).”

For Solid Minerals, trade stood at N63.68 billion, with the export component at N14.93 billion while import was valued at N48.75 billion, with the top exported mineral products being cement exported to Niger Republic and Togo in values worth N3.12 billion and N2.32 billion.

For the manufactured goods sector, the value of trade stood at N4.51 trillion representing 37.50 per cent of total trade. The export component accounted for N211.67 billion while the import component was valued at N4.29 trillion.

“The products that drove up manufactured products were vessels and other floating structures for breaking up, which was exported to Cameroon in the value worth N71.90 billion.

“Vessels and other floating structures for breaking up were also exported to Spain and Equatorial Guinea in values worth N18.34 billion and N6.26 billion.

“In terms of manufactured imports, used vehicles were mainly imported from the United States and Italy in values worth N33.78 billion and N5.74 billion,” they said.

While in terms of Raw materials total trade stood at N904.51 billion, imports at N840.50 billion while the export component stood at N64.01 billion.

Asia is the leading partner with a record of N3.46 trillion or 49.92% with Europe with N2.30 trillion or 33.16% closely following.

America with N869.1 billion, Africa, N248.8 billion and Oceania, 58.1 billion. ECOWAS countries accounted for N24.2 billion.

On goods imported during the quarter, China led with a value of N2.078 trillion, followed by India with N570.01 billion, Netherlands with N557.16 billion, and the United States with N526.92 billion.

“In terms of regional trade, Nigeria exported most products to Asia (N1.84 trillion), Europe (N1.82 trillion), America (N806.81 billion) and Africa (N584.11 billion) while Oceania totalled N23.28 billion with goods worth N363.3 billion exported to ECOWAS.

“Analysis by country export trade showed that most goods were exported to India (N949.05 billion or), Spain (N524.49 billion), Canada (N355.60 billion) and Netherlands (N298.29 billion) and United States N256.63 billion,” NBS stated.

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Naira depreciates further to N614/$ at parallel market

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Naira depreciates further to N614/$ at parallel market

The Nigerian naira has dropped to N614 against the dollar at the parallel section of the foreign exchange market.

The figure signifies a depreciation of N7 or 1.2 percent compared to the N607 it traded last two weeks.

Bureaux De Change operators (BDCs), popularly known as ‘abokis’, who spoke to TheCable in Lagos on Tuesday, said they purchase the greenback at N608/$, make a gain of N6, and then sell at N614.

At the official market, the naira also depreciated by 0.21 percent to close at N421/$ on Monday, according to information obtained from FMDQ OTC Securities Exchange — a platform that oversees official foreign-exchange trading.

Nigeria operates multiple exchange rate windows ranging from the importers and exporters window (I&E) window, where forex is traded between exporters, investors, and purchasers of forex, the SMEIS window where forex is sold to importers, and others.

International organisations such as the World Bank and the International Monetary Fund (IMF) have constantly advised the Central Bank of Nigeria (CBN) to unify the official and parallel market exchange rates.

But Godwin Emefiele, the CBN governor, had said that despite advice offered by IMF and the World Bank, developing economies such as Nigeria had the liberty of adopting “homegrown solutions to their economic problems.

According to him, the managed floating exchange rate, which allows the CBN to intervene in the market when there is a supply shock, would be in place as long as supply exceeds demand.

“They want us to free the exchange rate. And you do know that this has some impacts on the exchange rate itself,” he had said.

“When you allow that to happen, you will have an uncontrollable spiral on the naira.

“But what managed float means is that we have some measures in place to help control the spiral.”

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

These are challenging times for the federal and state governments as one major source of income to the federation account seems to be totally cut off.

On Monday, The National Petroleum Company Limited (NNPC) revealed it failed to remit monies to the federation account in May 2022 despite making N470.61 billion.

This is the fifth straight month NNPC has failed to credit the federal account while exporting crude at an average price of $100 per barrel.

Details of the June FAAC report obtained by The Harmattan News showed NNPC since the start of the year made N1.897 trillion, over N234.1 billion more than the expected revenue.

Sadly, however, NNPC said all the revenue had gone into various expenditure which includes petrol subsidy, oil search, Pipeline Security & Maintenance cost, National Domestic Gas Development and Nigeria Morocco Pipeline cost among others.

As expected, the bulk of the expenditure, N1.27 trillion, went toward recovery (also known as petrol subsidy).

In fact, NNPC said it has budgeted another N617 billion for petrol subsidy in June.

The report reads: “The Value Shortfall on the importation of PMS recovered from May 2022 proceeds is N327,065,907,048.06 while the outstanding balance carried forward is N617bn .”

“The estimated Value Shortfall of N845,152,863,012.97bn (consisting of arrears of N617bn plus estimated May 2022

Value Short Fall of N227,721,200,478.23) is to be recovered from June 2022 proceed due for sharing at the July 2022 FAAC Meeting,” it added.

The development means states have a tough road ahead and will have to look inwards to cover for the drop in federal allocations.

Already, some states have announced plans to slash workers’ salaries over dwindling income.

Kano Sate has already announced plans to slash workers’ salaries, following in the foot steps of the Ekiti State government that announced civil servants’ and political appointees’ salaries will be slashed in response to the present economic reality in the country.

Ekiti went further to suspend minimum wage implementation with no date of resumptions.

The Harmattan News had recently reported that pension contribution from governments dropped to a 16-year low in the first quarter of 2022.

From recent developments, it is more likely the figure will tank further.

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Nigerian govt to auction N225bn bond as search for funds continues

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Nigerian govt to auction N225bn bond as search for funds continues

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

The debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

In a circular published on its website and obtained by The Harmattan News, all three maturities are re-opening, meaning they are from the previously sold bonds.

The circular noted that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction. Another N75 billion worth of a 10-year note maturing in 2032 is up for grabs and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment will be done on the maturity date.

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