Bisola David
One reason for the third quarter’s net trade surplus has been attributed to the foreign exchange market’s segmentation.
The Punch reported that the emergence of a net trade surplus in Q3’23 is a noteworthy deviation from previous quarters, underscoring Nigeria’s trade resilience amid global economic shifts, according to a report released by analysts at Cowry Asset Management Limited.
The impact of the recent currency devaluation, which was purposefully implemented to increase the competitiveness of the country’s exports, is closely related to this encouraging development.
“Nigeria is in a favourable position as a result of its declining national currency and rising global oil prices, which may encourage exports in response to rising import expenses.
“The Q3’23 trade landscape is essentially the result of a confluence of factors that have shaped Nigeria’s adaptive response to the complex dynamics of the global economic landscape. These factors include robust crude oil exports, improved global oil prices, increased production, and strategic economic measures.”
Regarding the overall trade statistics, the report stated that the notable surge in trading activity is “Propelled by favourable worldwide oil prices surpassing $90 per barrel throughout the timeframe, combined with a minor rise in domestic and condensate production, attaining a mean daily production of 1.45 million barrels per day.
This production level exceeds Q2’23 figures and the daily average recorded in Q3’22 by 0.25 million barrels per day. A reduction in oil theft and pipeline vandalism, which can be linked to ongoing maintenance and repairs at important oil facilities, and the recent removal of fuel subsidies are contributing factors.
The National Bureau of Statistics’ most recent Foreign Trade data revealed that the net trade surplus was N1.88 trillion, the highest level since Q2 of 2018.
In the third quarter of 2023, Nigeria’s total trade was valued at N18.804 trillion, with exports valued at N10.346 trillion and imports totaling N8.457 trillion.
Nigeria’s total merchandise trade value reached N43.01 trillion in nine months as total exports continued to surpass total imports at N23.27 trillion and N19.74 trillion, resulting in a net trade balance of N3.52tn for the first time since 2018 (9M: N4.49tn).
For the first time since the second quarter of 2018, when Nigeria’s trade surplus reached N2.08tn, the trade surplus for the period under review improved to N1.88tn despite the spike in overall merchandise trade during the reviewed period.
This is the result of export revenues exceeding rising import expenses, which has kept the overall trade balance rising for the fourth quarter in a row since Q3 of 2022, when a trade deficit of N409.4 billion was recorded.
When the Central Bank of Nigeria standardized parts of the country’s foreign exchange market in mid-June, the country’s currency significantly declined. The strong demand and low supply for the dollar contributed to its weakening.
