Foreign Trade Statistics: Trade Surplus Bolstered by Recovery in Global Oil Market

During last week, the National Bureau of Statistics (NBS) released Foreign Trade Statistics for Q3:2017 which indicated a trade surplus for the third consecutive quarter. The report showed total trade for Q3:2017 at N5.9tn – implying a 23.9% Y-o-Y improvement (from N4.8tn in Q3:2016). For the period, a trade surplus of N1.2tn was recorded (N3.5tn in exports vs N2.3tn in imports), in stark contrast to a trade deficit of N135.9bn (N2.3tn in exports vs N2.5tn in imports) in Q3:2016. Similarly, Q-o-Q analysis shows that total trade increased 3.9% from N5.7tn in Q2:2017. We attribute the jump in exports to improved global oil prices and domestic production in Q3:2017 (Price: US$52.16/b, Output: 2.0mbpd) relative to Q3:2016 (Price: US$46.98/b, Output: 1.6bpd).  Total Exports numbers were significantly boosted by the sustained rally in oil prices which boosted value of export from “Petroleum oils and oils obtained from bituminous mineral, which accounted for 83.2% of total export. 

As noted earlier, rising exports remain primarily driven by developments in the oil sector. Crude oil prices have rallied above US$60.0/b while recent statistics on oil production volumes show an average of 2.0mb/d (as at Q3:2017) from an average of 1.8mb/d in the preceding quarter. As a result, Mineral Products (Crude, LNG and other petroleum products) accounted for 97.2% of total exports with Crude oil exports representing the highest proportion (N3.0tn or 85.5%). Interestingly, contribution from agricultural produce remained on the downtrend, from as high as 1.0% in Q1:2017 to 0.6% (N21.4bn) in Q3:2017. Unsurprisingly, the 98.2% of the export activity in the quarter was via the Apapa port, which underscores the importance of the completion of the ongoing rehabilitation of the port. India (23.1%), United States (19.2%) and Spain (12.5%) accounted for the largest proportion of crude oil export destination while India (28.4%), Spain (22.5%) and France (18.7%) accounted for the largest proportion of non-oil exports.
On the other hand, total imports contracted 4.5% Y-o-Y and 9.5% Q-o-Q to N2.3tn in Q3:2017. By Sector, Manufactured goods accounted for the largest proportion of total imports (51.7%) followed by other petroleum oil products (25.7%) and raw material goods (12.2%).  By product distribution, motor spirit (20.3%), Gas oil (2.4%) and Durum wheat (2.4%) accounted for the largest proportion while China remained the major source of imports representing 31.2%. China (31.2%), Belgium (18.3%), United States (11.2%), Netherlands (10.7%) and India (7.1%) ranked as Nigeria’s largest countries for importation. Overall, the data release suggests that as at Q3:2017, Nigeria’s largest trading partners were India (17.2%), United States (15.9%), United Kingdom (13.8%), China (12.1%) and Spain (9.7%).
In our view, while foreign trade statistics for Q3:2017 show overall improvements, it has also pictured the reality of over-dependence of the economy on oil as it accounted for 83.2% of total exports. Federal Government has channelled efforts towards developing the non-oil sector and diversifying the revenue base of government. The attention the Agricultural sector has received, especially over the past five years suggests that if these efforts are sustained, the dominance of oil in total export will begin to moderate in the medium to long term. The Nigerian economy has so far relied on oil to boost trade balance. The recent cessation of attacks on oil & Gas installations and the possible sustenance of OPEC production cut deal till H2:2018, an agreement expected to keep prices stable, is bound to support positive trade balance in the near term.