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Nigeria’s Non-oil Export to US Falls by 24%

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  • Nigeria’s Non-oil Export to US Falls by 24%

Nigeria’s non-oil export to the United States under the African Growth and Opportunity Act policy has continued to lag, recording $1.141m in 2016.

According to the AGOA trade statistics, non-oil exports to the US under the policy fell by 23.5 per cent from $1.491m in 2015 to $1.141m in 2016.

This is as the oil export under the policy continues to take the centre stage, accounting for 99.9 per cent out of the $3.475bn AGOA exports to the United States in 2016.

In addition, Nigeria’s energy export to the United States under the policy boosted trade balance between the two countries, creating a trade surplus of $2.390bn in 2016.

In the same year, exporters of chemical products, agro-products, mineral and metals enjoyed a duty-free trade deal.

Chemical products valued at $80,000 were exported to the US; agricultural products worth $1.05m, mineral and metal worth $6000 and other export products valued at $1,000 were also exported.

Overall, the total export under AGOA in Nigeria rose by 148 per cent from $1.402bn in 2015 to $3.475bn in 2016.

Nigeria led countries that benefitted from the tariff-free export opportunity last year with South Africa and Angola coming behind it.

After leading for several years, South Africa’s export under AGOA declined from $2.88bn in 2015 to $2.86bn in 2016 with Angola recording a 6.8 per cent improvement from $1.83 to $1.96 in 2016.

AGOA, which is a United States’ trade policy, was enacted in 2000 as a legislation facilitating trade between exporters from sub-Saharan Africa and the United States, duty-free.

After much clamour from the beneficiary countries, the export opportunity was extended in 2015 by another 10 years. This was after completing an initial 15-year validity period.

This means that Nigeria and 42 other countries, which met the eligibility criteria, will benefit from the tariff-free opportunity up until 2025.

The United States is one of Nigeria’s major import and export destinations, with the export representing up to 12.08 per cent of the total exports in 2016 and 8.01 per cent of the total imports into the country.

Statistics from the National Bureau of Statistics showed that the export intensity, which compares the share of Nigeria’s exports to the US with the share of world exports, was 0.6 in October; 0.6 in November; and 0.2 in December 2016.

The President, Nigeria America Chamber of Commerce, Mr. Olabintan Famutimi, said that chamber had redoubled its efforts to fully maximise the AGOA opportunity after its extension to 2025.

This, according to him, will ensure the volume of export to the US under the scheme will surpass the past years.

He said, “We have redoubled our efforts. Just last year, we got more engaged with AGOA. We participated in AGOA forums, set up an AGOA desk at the chamber; and employed a specialist to manage the desk.

“We are part of the United States Agency for International Development trade hub headquartered in Ghana. We signed a Memorandum of Understanding on AGOA. We have been conducting AGOA sensitisation programmes to encourage more participation. We are working with the USAID’s Nigeria Expanded Trade and Transport, which is promoting export for Nigeria community.

“The crude oil has bottomed out. We want to increase the export of Nigeria products to the US and that is why we have embarked on all these activities.”

Meanwhile, stakeholders in the export community have been complaining of low participation in the scheme where other African countries have been earning foreign exchange from the initiative.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

NNPC To Resume Oil Exploration In Sokoto Basin

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The Nigerian National Petroleum Corporation on Thursday announced plans to resume active oil exploration in Sokoto Basin.

A statement issued in Abuja on Thursday by NNPC spokesperson, Kennie Obateru, said the corporation’s Group Managing Director, Mele Kyari, said exploration for crude would resume in the Sokoto Basin.

The statement read in part, “Kyari also hinted of plans for the corporation to resume active exploration activities in the Sokoto Basin.”

The NNPC boss disclosed this while receiving the Governor of Kebbi State, Atiku Bagudu, who paid Kyari a courtesy visit in his office on Thursday.

In October 2019, the President, Major General Muhammadu Buhari (retd.), had during the spud-in ceremony of Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-East, said the government would explore for oil and gas in the frontier basins across the country.

He outlined the basins to include the Benue Trough, Chad Basin, Sokoto and Bida Basins.

Buhari had also stated that attention would be given to the Dahomey and Anambra Basins which had already witnessed oil and gas discoveries.

Kyari restated NNPC’s commitment to the partnership with Kebbi State for the production of biofuels, describing the project as viable and in tandem with the global transition to renewable energy.

He said the rice production programme in the state was a definite boost to the biofuels project.

Kyari said the linkage of the agricultural sector with the energy sector would facilitate economic growth and bring prosperity to the citizens.

He was quoted as saying, “We will go ahead and renew the Memorandum of Understanding and bring in any necessary amendment that is required to make this business run faster.”

The Kebbi State governor expressed appreciation to the NNPC for its cooperation on the biofuel project.

Bagudu said the cassava programme was well on course but the same could not be said of the sugarcane programme as the targeted milestone was yet to be attained.

Kebbi state is one of the states that the NNPC is in partnership with for the development of renewable energy.

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Economy

Nigeria To Benefit As G-20 Approves Extension Of Debt Relief Till December

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Finance ministers of G-20 countries have approved an extension of debt relief for the world’s poorest nations till December 2021.

David Malpass, World Bank president, made the announcement at the virtual spring meeting, on Wednesday.

TheCable had earlier reported that the G-20 countries will meet this week to consider an extension of the debt freeze.

The G-20, is a group of finance ministers and central bank governors from 19 of the world’s largest economies, including those of many developing nations, along with the European Union.

G-20 countries had established a debt service suspension initiative (DSSI) which took effect in May 2020.

Nigeria had benefited from the initiative which delivered about $5 billion in relief to more than 40 eligible countries.

The suspension period which was originally set to end on December 31, 2020 was extended to June 2021.

Malpass said the extension to December 2021 will boost economic recovery and promote job creation in low income countries.

He urged countries to be transparent in their approach to the debt service payment extension.

“On debt, we welcome a decision by the G20 to extend the DSSI through 2021. The World Bank is also working closely with the IMF to support the implementation of the G20 Common Framework,” he said.

“In both these debt efforts, greater transparency is an important element: I urge all G20 countries to disclose the terms of their financing contracts, including rescheduling, and to support the World Bank’s efforts to reconcile borrower’s debt data more fully with that of creditors.

“Participation by commercial creditors and fuller participation by official bilateral creditors will be vital. I urge all G20 countries to instruct and create incentives for all their public bilateral creditors to participate in debt relief efforts, including national policy banks. I also urge G20 countries to act decisively to incentivize the private creditors under their jurisdiction to participate fully in sovereign debt relief efforts for low-income countries.

“Debt relief efforts are providing some welcome fiscal space, but IDA countries need major new resources too, including grants and highly concessional resources. From April to December 2020, the first DSSI period, our net transfers to IDA and LDC countries were close to $17 billion, of which $5.8 billion were on grant terms.

“Our new commitments were almost $30 billion, making IDA19 the single largest source of concessional resources for the poorest countries and the key multilateral platform for support. To recover from COVID, much more is needed, and we welcome the G20’s support for advancing IDA20 by one year.”

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Economy

IMF / Fiscal Monitor Report April 2021 Forecast

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Unprecedented fiscal support by governments during the pandemic has prevented more severe economic contractions and larger job losses, but risks remain of long-term scarring the International Monetary Fund says in its Fiscal Monitor report released on Wednesday (April 7) in Washington, DC.

Meanwhile, such support, along with drops in revenues, has raised government deficits and debt to unprecedented levels across all country income groups, said Vitor Gaspar, Director of the Fiscal Affairs Department at the IMF.

The first lesson one year into COVID-19 is that fiscal policy can act timely and decisively. The fiscal policy response was unprecedented in speed and size looking across countries. We also learned that countries with easier access to finance or stronger buffers were able to give more fiscal support. They’re also projected to recover faster,” said Gaspar.

Average overall deficits as a share of GDP in 2020 reached 11.7 percent for advanced economies, 9.8 percent for emerging market economies, and 5.5 percent for low-income developing countries. Countries’ ability to scale up spending has diverged.

“So, what have we learned? We’ve learned that fiscal policy is powerful and that sound public finances are crucial in order to enable that power to be used to the fullest,” stressed Gaspar.

Gaspar urged policy makers to balance the risks from large and growing public and private debt with the risks from premature withdrawal of fiscal support, which could slow the recovery.

“In the spring 2021, we emphasize differentiation across countries. Moreover, COVID-19 is fast evolving, as are the consequences from COVID-19. The fiscal policy must stay agile and flexible to respond to this fast-evolving situation.” Said Gaspar.

He also warned that the targeting of measures must be improved and tailored to countries’ administrative capacity so that fiscal support can be maintained for the duration of the crisis—considering an uncertain and uneven recovery

“Moreover, countries are very different in their structures, in their institutions, in their financial capacity and much else. Therefore, policies and policy advice have to be tailored to fit.” Said Gaspar

Gaspar concluded his remarks by emphasizing that global vaccination is urgently needed, and that global inoculation would pay for itself with stronger employment and economic activity, leading to increased tax revenues and sizable savings in fiscal support.

“A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever. But the Fiscal Monitor also emphasizes the importance of giving a fair shot at life success for everyone. It documents that preexisting inequalities made COVID-19 worse and that COVID-19 in turn made inequalities worse. There is here a vicious cycle that threatens trust and social cohesion. Therefore, we recommend stronger redistributive policies and universal access to basic public services like health, education, and social security,” said Gaspar.

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