The devaluation of the naira slashed Nigeria’s trade deficit by 44 per cent to N196.5bn in June, from N351.3bn in March, the National Bureau of Statistics said on Tuesday.
The bureau said the value of exports increased by 63 per cent to N1.9tn in the quarter.
“The improvement in export value is largely due to the depreciation in the value of the naira,” the NBS said in a statement.
The NBS, in the merchandise trade statistics for the second quarter of this year, said the country recorded a 49 per cent increase in trade from N2.65tn in the first quarter to N3.94tn.
The bureau in the report stated that the increase in trade was as a result of a rise of N725.6bn in the value of exports against what was recorded in the preceding quarter.
It said as a result of the improvement in the second quarter trade, the country’s negative trade balance had now reduced by N154.8bn to N196.5bn.
The report stated, “The total value of Nigeria’s merchandise trade in Q2, 2016 was N3.94tn. This was 49 per cent more than the value of N2.64tn recorded in the preceding quarter.
“This development arose from a rise of N725.6bn or 63.3 per cent in the value of exports (largely due to the exchange rate gains), combined with a rise of N570.8bn or 38.1 per cent in the value of imports against the levels recorded in the preceding quarter.
“The current trade position brought the country’s negative trade balance to N196.5bn during the period under review. This shows a N154.8bn reduction in the country’s trade deficit over the previous quarter.”
In terms of the structure of Nigeria’s trade, the report stated that the country’s import stood at N2.06tn at the end of the second quarter, representing an increase of 38.1 per cent from the value N1.9tn recorded in the preceding quarter.
As with exports, it said the increase in import value could be traced to a decline in the value of the naira.
It said capital goods and parts, with N663.6bn or 32.1 per cent, accounted for the highest chunk of the country’s imports.
This was followed by industrial supplies with N421.2bn or 20.4 per cent, and transport equipment and parts with N356.1bn or 17.2 per cent.
It said the import trade by direction showed that the country imported goods mostly from China, the Netherlands, the United States, India and the United Kingdom.
Trade with these countries accounted for N493.5bn or 23.9 per cent; N285.7bn or 13.8 per cent; N199bn or 9.6 per cent; N124.9bn or six per cent; and N119.3bn or 5.8 per cent, respectively, of the total value of goods imported during the quarter.
For export, the report put the value of the trade at N1.87tn in the second quarter, indicating an increase of N725.6bn or 63.3 per cent over the value recorded in the preceding quarter.
“The improvement in export value is largely due to the depreciation in the value of the naira,” it added.
The structure of the export trade, the report added, was still dominated by crude oil exports, which contributed N1.49tn or 79.7 per cent to the value of total domestic export trade in 2016.
“Whenever there is a devaluation of the currency it encourages exporters because they get more naira for the goods sold at the international market or priced in dollar,” an analyst at Lagos-based Financial Derivatives Company, Opeyemi Oguntade, told Reuters.
“For the country and the exporter, the thing to consider is if the benefit of the devaluation is high enough to outweigh the cost of rising inflation,” he added.
Nigeria’s leading export markets include India, the US, Spain and the Netherlands.
Ogun Records N13.3B Internally Generated Revenue Monthly in Q1 of 2021
Ogun State Government has recorded an average of N13.3billion monthly as Internally Generated Revenue (IGR) in the first quarter of 2021.
The government said it is also planning to raise its yearly Gross Domestic Product (GDP) rate from the current single digit by 25 percent.
The Commissioner for Finance, Dapo Okubadejo disclosed this to newsmen in Abeokuta ahead of the state’s investment summit tagged: ‘OgunIseya21: Becoming Africa’s Model Industrial and Logistics Hub’, slated for July 13th-14th, 2021.
Okubadejo who doubles as the State’s Chief Economic Adviser noted that the state’s IGR had experienced an upward movement after last year’s shortfall due to the Covid-19 pandemic and the attendant lockdown.
“We had a significant turnaround in the first quarter of this year. In fact, as of April, we have done almost N40bn in the Internally Generated Revenue. Our target this year is to exceed all the previous records we have set in IGR. That’s why we have put in place, all these transformation initiatives, friendly policies and also facilitate this investment summit to further showcase Ogun State as the preferred industrial destination,” he said.
The Finance Commissioner was supported in highlighting the investment potentials of the summit by his counterparts from the Ministries of Industry, Trade and Investment, Mrs. Kikelomo Longe; Works and Infrastructure, Ade Adesanya; Culture and Tourism, Toyin Taiwo; Budget and Planning, Olaolu Olabimtan and the Director-General, Public-Private Partnership, Dapo Oduwole.
Unemployment To Push More Nigerians Into Poverty – NESG
On Friday, The Nigerian Economic Summit Group said that many more Nigerians are expected to fall into the poverty trap amid rising unemployment in the country.
The NESG, a private sector-led think-tank, noted in its economic report for the first quarter of 2021 that the country’s economic growth in the period under review was relatively weak.
It said, “Nigeria’s economic growth trajectory is better described as jobless and less inclusive even in the heydays of high growth regime in the 2000s.
“While the Nigerian economy recovered from the recession in Q4 of 2020, the unemployment rate spiked to its highest level ever at 33.3 percent in the same quarter.
“With the COVID-19 crisis heightening the rate of joblessness, many Nigerians are expected to fall into the poverty trap, going forward.”
The group noted that the World Bank estimated an increase in the number of poor Nigerians to 90 million in 2020 from 83 million in 2019.
“This corresponds to a rise in headcount poverty ratio to 44.1 percent in 2020 from 40.1 percent in 2019. The rising levels of unemployment and poverty are reflected in the persistent insecurity and social vices, with attendant huge economic costs,” it said.
According to the report, huge dependence on proceeds from crude oil, leaving other revenue sources unexplored, indicates that Nigeria is not set to rein in debt accumulation in the short to medium term.
The NESG noted that public debt stock continued to trend upwards, with a jump from N7.6tn ($48.7bn) in 2012 to N32.9tn ($86.8bn) in 2020.
It said public debts grew by 20 percent between 2019 and 2020, adding, “This is partly due to the need for emergency funds to combat the global pandemic and alleviate its adverse economic impacts on households and businesses.”
According to the group, Nigeria needs more than an economic rebound, and there is a need to improve growth inclusiveness.
It said, “Nigeria has struggled to achieve inclusive growth for many decades. Since recovery from the 2016 recession, the economy has been on a fragile growth path until it slipped into another recession in 2020 due to the COVID-19 pandemic.
“This suggests that the country needs to attain high and sustainable economic growth to become strong and resilient.
“The relationship between economic growth and unemployment rate in Nigeria suggests that economic growth has not led to a reduction in the unemployment rate – jobless growth.”
The NESG said to reverse this recurring trend, there was an urgent need for collaborative efforts between the government and relevant stakeholders towards addressing the constraints to value chain development in high-growth and employment-elastic sectors, including manufacturing, construction, trade, education, health and professional services, with ICT and renewable energy sectors as growth enablers.
It noted that despite the re-opening of the land borders that the Nigerian government shut since October 2019, inflation reached a four-year high of 18.1 percent in April 2021.
“While we expect improved agricultural production in coming months to partially ease inflationary pressures, this positive impact could be suppressed by recurring key structural bottlenecks including insecurity in the food-producing regions, electricity tariff hike, fuel price increase and hike in transport and logistic costs,” it added.
IMF Queries FG Strategies On Fuel Subsidy, Unemployment, Inflation
The International Monetary Fund has raised the red flag over Nigeria’s resumption of petrol subsidy payments, describing it as injurious to the economy.
It also reiterated the importance of introducing a market-based fuel pricing mechanism and deployment of well-targeted social safety nets to cushion any adverse impact on the poor.
In a report produced after a virtual meeting with Nigerian authorities from June 1 to 8, the IMF also expressed concerns over the rising unemployment and inflation rates, even as it admitted that real Gross Domestic Product was recovering.
The IMF team, led by Jesmin Rahman, further hailed the Central Bank of Nigeria for its efforts at unifying the exchange rate by embracing needed reforms.
The Fund said: “Recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate.
“The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.
“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.
“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.
“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels.”
The IMF also recognised that tax revenue collections were gradually recovering but noted that with fuel subsidies resurfacing, additional spending for COVID-19 vaccines and to address security challenges, the fiscal deficit of the Consolidated Government is expected to remain elevated at 5.5 percent of GDP.
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