Analysts at FSDH Research stated that the unimpressive growth rate of Nigeria’s exports (especially non-oil exports) may negatively impact the country’s exchange rate. The experts, who stated this in a note obtained by Telegraph, cited the external trade data for Q3 2018 released by the National Bureau of Statistics (NBS) recently, which, according to them, shows the continued dominance of crude oil exports on total exports.
According to the analysts: “Although Nigeria recorded a favourable trade balance (total merchandise exports higher than merchandise imports) in Q3 2018, it dropped sharply compared with previous quarters.
The external trade data that the NBS published for Q3 2018 shows that there was an importation of submersible drilling platforms of N1.16trillion in August 2018. “This increased imports significantly during the quarter. However, adjusting for the occasional drilling platforms, the trade balance was lower than the last two quarters of the year 2018.
Despite the substantial increase in crude oil during the quarter, the unimpressive growth in exports (especially non-oil exports) has adverse implications for the exchange rate.” Specifically, they pointed out that the NBS data indicates that crude oil exports grew by 40per cent in Q3 2018 compared with the level recorded in Q3 2017, while non-crude oil exports grew by 17per cent.
It was also noted that the contribution of crude oil exports to total exports increased to 85per cent in Q3 2018, the highest level attained since Q1 2016. “The increase in the price of crude oil without a corresponding growth in non-crude oil exports, was the major driver of the growth of crude oil exports to total exports.
FSDH Research estimates that Nigeria would have recorded an unfavourable balance of trade (total merchandise imports higher than merchandise exports) in Q3 2018 had the price of crude oil not increased substantially during that period,” the experts stated. Indeed, the analysts said that given the consistent decline in the crude oil price in the Q4 2018 so far, “there are indications that imports may exceed exports.”
It further stated the Federal Government should urgently address what they described as “export limiting” factors such as, “the gridlock in the Apapa area in Lagos, lack of standardization from the regulatory bodies and duplication of duties by the port agencies.”