Nigeria’s trade surplus, the difference between exports and imports, rose to N6.95 trillion in the second quarter of 2024, according to the latest foreign trade statistics report released by the National Bureau of Statistics (NBS) on Wednesday.

This marks a 33.63 percent increase from the N5.19 trillion recorded between January to March 2024, bringing the total value at N12.14 trillion in the first half of 2024.

This is however higher than N154.12 billion recorded in the first six months of 2023, the NBS data revealed.

The report showed that the country recorded a positive trade balance for the sixth straight quarter in Q2, signifying key economic development.

A trade surplus occurs when a country’s exports exceed its imports.

Total merchandise trade in Africa’s most populous nation stood at N31.8 trillion in Q2, a decline of 3.76 percent compared to the preceding quarter and a 150.39 percent jump compared to a year ago.

“Exports accounted for 60.89% of total trade with a value of N19,418.93 trillion, showing a marginal increase of 1.31% compared to the value recorded in Q1 2024 (N19,167.36) and a 201.76% rise over the value recorded in the second quarter of 2023 (N6,435.13),” NBS said.

Analysts attributed the surge in exports to the exchange rate depreciation caused by the foreign exchange reform implemented last June.

Tobi Ehinmosan, a fixed income and macroeconomic analyst at Lagos-based FBNQuest Capital, said the major factor for this significant trade surplus numbers is the decline in import trade.

“No doubt, our export performance has been on the rise but then the main driver is the drop in import trade, especially from June 2023 when the exchange rate was floated,” he said.

“A reasonable explanation for the lower import figure is the challenges traders face in sourcing for FX,” Ehinmosan noted, adding that the scarcity of FX has led to lower import of commodities into the country.

Echoing the same sentiment, Michael Adeyemi, an economics lecturer said the surplus suggests a reduction in imports, caused by such factors like currency devaluation or high import costs.

“A trade surplus strengthens the balance of payments, which can help stabilize Nigeria’s currency, the naira,” Adeyemi said.

“It also allows the country to build foreign reserves and pay off international debt obligations more comfortably,” the university lecturer explained.

The naira has tumbled by over 70 percent this year following a two-time devaluation last year. The official exchange rate increased from N463.38/$ on June 9, 2023, to N1.558.7/$ as of September 12, 2024.

At the parallel market, the naira depreciated to over N1,600/$ from 762/$.

Recent data from the International Monetary Fund highlighted that Nigeria’s current account balance, a measure of its net trade in goods, services, and transfers with the rest of the world, rose to $1.43 billion this year from $1.21 billion surplus in 2023.

“A growing current account surplus can be a sign of economic strength, indicating that the country’s industries are competitive internationally and that its exports are in demand,” Ibrahim Bakare, a professor of Economics said.

“It may also lead to an appreciation of the country’s currency, as increased demand for its goods and services boosts the value of its currency relative to others,” he added.

The Federal Inland Revenue Service (FIRS) generated N1.56 trillion in Value Added Tax (VAT) in the second quarter (Q2) of 2024, according to the latest report from the National Bureau of Statistics (NBS).

This represents an increase of 9.11% compared to the N1.43 trillion reported in the first quarter of 2024.

A breakdown of the report showed that local VAT payments accounted for N792.58 billion of the total amount generated, while foreign VAT payments stood at N395.74 billion, and import VAT contributed N372.95 billion.

A quarterly analysis of the report revealed that human health and social work activities recorded the highest growth rate with 98.44%. This was followed by agriculture, forestry, and fishing with 70.26%, and water supply, sewerage, waste management, and remediation activities with 59.75%.

On the other hand, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use had the lowest growth rate with –46.84%, followed by real estate activities with –42.59%.

Sectoral analysis showed that the manufacturing sector contributed the most at 11.78%. Information and communication and mining and quarrying contributed 9.02% and 8.79%, respectively.

Nevertheless, activities of households as employers and undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.00%, followed by activities of extraterritorial organizations and bodies with 0.01%, and water supply, sewerage, waste management, and remediation activities and real estate services with 0.04% each.

On a year-on-year basis, VAT collections grew by 99.82% from Q2 2023 despite ongoing economic challenges.

Nigeria’s inflation rate remains well above 30 percent, while new job creation is almost nonexistent.

Other key economic factors, such as investor sentiment, the purchasing managers’ index, and consumer spending, remain weak amid intermittent protests by citizens demanding improvements in quality of life.

The federal government in the second quarter of 2024 generated a total of N1.56 trillion from Value Added Tax. This is a 9.11 percent increase from the N1.43 trillion in Q1 2024.

According to the National Bureau of Statistics report, local payments recorded were N792.58 billion, foreign VAT payments were N395.74 billion, while import VAT contributed N372.95 billion in Q2 2024.

“On a quarter-on-quarter basis, human health and social work activities recorded the highest growth rate with 98.44%, followed by agriculture, forestry and fishing with 70.26%, and water supply, sewerage, waste management and remediation activities with 59.75%,” NBS reported.

“On the other hand, activities of households as employers, undifferentiated goods and services producing activities of households for own use had the lowest growth rate with 46.84%, followed by Real estate activities with 42.59%.

“In terms of sectoral contributions, the top three largest shares in Q2 2024 were
manufacturing with 11.78%; information and communication with 9.02%; and Mining and quarrying with 8.79%.

“Nevertheless, activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.00%, followed by activities of extraterritorial organisations and bodies with 0.01%; and Water supply, sewerage, waste management and remediation activities with and real estate services 0.04% each.

“However, on a year-on-year basis, VAT collections in Q2 2024 increased by 99.82% from Q2 2023.”