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Coronation Trade Insights

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Nigeria in focus

The latest report from the National Bureau of Statistics (NBS) in its series on foreign trade in goods shows the total value of trade increased by 11.8% q/q to N11.7trn in Q4 ‘21. For FY ’21, total foreign trade increased by 57.6%, to N39.7trn from N25.2trn in 2020. Compared with 2020, the total export value rose by 51% to N18.9trn, from N12.5trn and the import value rose by 64.1% to N20.8trn from N12.7trn. The net result was a deficit of N1.9trn, which followed a deficit of N178bn the previous year.

Total trade in 2021 was higher primarily due to subsiding pandemic restrictions that had affected export activity in 2020 and increases in commodity prices (i.e. crude oil). The total trade as a percentage of nominal GDP stood at 22.6% in 2021, compared with 16.4% in 2020.

For Nigeria, the NBS notes that most imports in Q4 and FY ’21 originated from Asia (China in particular). In 2021, the value of imported agricultural goods, manufactured products as well as oil-related products rose by 57%, 2.5% and 43.3% respectively when compared to FY ‘20.

Regarding export destination, India remained the top exporting partner for Nigeria in 2021. The five top exports partners were India, (16.4%) Spain (11.8%), France (6.3%), the Netherlands (6.0%) and Canada (4.5%). These five countries accounted for 45% of the total exports in 2021.

Unsurprisingly, crude oil accounted for the largest share (76.2%) of total exports in 2021. The value of crude oil exports increased by 52.6% when compared to 2020. Bonny Light averaged USD71.1/b in 2021. We note that raw and fermented cocoa beans, sesamum seeds, ginger, cigarettes, natural rubber and aluminium featured as
non-oil export products in 2021.

Nigeria exported goods valued at N1.2trn to fellow members of the Economic Community of West African States (ECOWAS), compared with N841bn in 2020. This represented 51.4% of total exports within Africa. Meanwhile, imports from ECOWAS accounted for 15% of the value of total imports.

The leading port of operation during the year under review was the Apapa Port. Goods worth N17.1trn exited the country through this port. The next leading port of operation was Port Harcourt, through which goods worth N1trn were shipped to partner countries. Tin Can Island was also very active and goods worth N405bn exited Nigeria through this port.

The CBN announced the RT200 FX program, which is a set of policies, plans and programs for non-oil exports that will enable the country to attain the goal of USD200bn in FX repatriation from non-oil exports over the next 3-5 years. The program would rest on five key anchors; (I) non-oil exports proceed repatriation rebate scheme (II) Non-oil commodities expansion facility (III) Dedicated non-oil export terminal (IV) Value-adding exports facility (V) Biannual non-oil exports summit.

The CBN has released the operating guidelines for the non-oil export proceeds repatriation rebate scheme. Under this scheme, non-oil export proceeds sold to Authorised Dealers and Banks (ADBs) for third party use through investors and Exporters (I&E) window, will get a rebate of N65 for every USD and N35 for every US Dollar repatriated and sold into the I&E window for own use on eligible transactions only. The payment of the incentive will be made on quarterly basis.

The recent introduction of the pan-African payment and settlement system (PAPSS) is another welcome development, as over 80% of African cross-border transactions originating from banks within the continent are currently cleared and settled offshore.

Therefore, creating inefficiencies, and increasing the cost of African cross-border payments. PAPPS will facilitate payments as well as formalise some of the informal cross-border trade in Africa.

Through a simple, low-cost and risk-controlled payment clearing and settlement system, PAPPS would provide an alternative to the current high-cost and lengthy correspondent banking system, as well as an enabling infrastructure to spur the growth of intraAfrican trade and commerce, with the active participation of central banks, financial institutions, regional economic communities, the private sector, and other stakeholders.

Global/Regional in focus

Extraordinary measures such as lockdowns, quarantines and travel restrictions aimed at curtailing the spread of COVID-19 had a dramatic effect on global trade in 2020. According to data from the World Trade Organisation (WTO), merchandise trade declined by -7.3% or USD2.7trn to USD35.2trn in 2020, compared with USD37.9trn in 2019.

According to WTO, merchandise trade increased by 24.4% y/y (USD2.1trn) to USD11.2trn in Q3 ’21. However, the recovery in 2021 was affected by supply shortages, on the back of bottlenecks in global freight transport, spiralling shipping costs, logistic disruptions, semiconductor shortages, and rising energy prices. The Russia-Ukraine crisis has hampered progress with global trade activity and has led to hikes in prices of some core commodities such as wheat. Turning to Africa, in 2020, merchandise trade declined by 15.9% to USD895.3bn, compared with USD1.1trn in 2019.

However, there were notable improvements in African trade activity last year, as global economies reopened fully and there was progress with vaccine uptake (African vaccination rate currently stands at 20%). Based on data from the International Trade Center, in 2020, countries within Africa (combined) imported agricultural products worth USD4bn from Russia. Wheat accounted for c.90% of these imports. Egypt was the largest importer, followed by Sudan, Nigeria, Tanzania, Algeria, Kenya, and South Africa.

Furthermore, in the same year, wheat accounted for c.48% of total imported agricultural products from Ukraine, valued at c.USD2.9bn. The ongoing Russia-Ukraine crisis has resulted in further supply-chain disruptions. The sanctions imposed by the US and its allies on Russia could have an adverse effect on trade activities between countries within Africa and Russia.

The United Nations Conference on Trade and Development disclosed that, in 2019, intra-African trade accounted for less than 15% of total exports among African countries. This suggests that there are potential benefits from increased regional trade.

However, if informal cross-border trade is considered, this percentage increases. We note that in some African countries, informal cross-border trade accounts for c.90% of official trade flow and contributes c.40% to total trade within regional economic communities.

Africa currently engages in the global value chain mainly via the supply of primary goods. The intra-trade level in Africa is low when compared with other regions, like Asia and Europe. The African Continental Free Trade Area (AfCFTA) is expected to boost the intra-regional economy and provide new dynamics to Africa’s participation in the global value chain. According to World Bank’s analysis, the AfCFTA will boost intracontinental exports by over 81% and exports with non-African countries by 19% by 2035.

Regarding sectors, manufacturing exports are anticipated to make the most gains: a 110% increase for intra-African trade and 46% for non-African trade. For Nigeria, the local manufacturing sector needs to be strengthened in order to benefit from the potential boost.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

EFCC Grills Suspended Accountant-General of The Federation, Discovers 17 Properties 

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Ahmed Idris - Investors King

The Economic and Financial Crimes Commission (EFCC) said it has traced not less than properties to the Accountant-General of the Federation, Ahmed Idris. 

On Wednesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the suspension of Idris who is currently being grilled by the EFCC for fraud amounting to N80bn.

The letter titled: ‘Letter of Suspension’, read in part: “Following your recent arrest by EFCC on allegations of diversion of funds and money laundering, I write to convey your suspension from work without pay effective May 18, 2022.”

Investors King can confirm that an anonymous EFCC official revealed that the 17 properties linked to the former AG of the Federation are located in the UK, Dubai, Abuja, Lagos, and Kano. 

However, he said preliminary investigations showed that the nation’s chief accountant allegedly used proxies to buy some of these properties. The commission would therefore need to invite some of the proxies of the accountant-general.

The official added that from all indications, these properties were purchased while Idris was in office and did not declare them before the Code of Conduct Bureau as stipulated by law.

 “About 17 houses in London, Lagos, Kano, Abuja and Dubai have been traced to him. In Abuja, some of the houses are located in serviced estates,” he added.

Investors King reported earlier in the week that EFCC had arrested the suspended Accountant-General, saying “the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.”

“The funds were laundered through real estate investments in Kano and Abuja.

“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts.

“It further alleged that the funds were laundered through real estate investments in Kano and Abuja,” EFCC added. 

REcall that Ahmed Idris had been under surveillance since last year following allegations that he offered huge sums of money to a family in order to secure the marriage of their 16-year-old daughter.

 

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Nigeria’s Trade Deficit Rises to $765m in Q1 2022  – CBN

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Trade - Investors King

The Central Bank of Nigeria (CBN) has said the value of Nigeria’s international trade deficit rose by 175.13 percent from $152.94m recorded in January 2022 to $420.79m in March 2022. 

The International Trade Summary on the CBN’s website reports that the total value of international trade as of the first quarter (Q1) of 2022 was $28.77bn. Imports stood at $14.77bn while exports accounted for $14.01bn, reflecting a total trade deficit of N764.69m.

In January 2022, export was $4.74bn and import was $4.89, with a trade deficit of $152.94m.

The value of the trade deficit increases further in February 2022 to hit $190.96m, with exports at $4.70bn and imports at $4.89bn.

There was a massive increase recorded in March 2022 as the trade deficit jumped to $420.79m, with exports at $4.57bn and imports at $4.99bn.

In June 2021, Godwin Emfiele, the CBN Governor has said Nigeria would reduce its imports bill by the first quarter of 2022, especially with the Dangote refinery projected to resume operations. This, he said would help reduce the importation of finished petroleum products.

“Of course for petroleum products, by the time the refinery goes into production by the first quarter of next year and the petrochemical plants we would have reduced our importation by about at least close to 35 per cent,” he said. 

However, Nigeria has failed to cut down on its import bill and the Dangote refinery is yet to be completed and operational. In fact, a recent Fitch report estimated that the refinery won’t be operational until 2024, and that is if Aliko Dangote raises the needed $1.1 billion (N900 billion) necessary for its completion.

In its recent report titled ‘Reforms Towards Resolving Foreign Exchange Challenges in Nigeria’, the Nigerian Economic Summit Group (NESG) explained how a rising trade deficit caning impact the nation’s economy.

According to the NESG, Nigeria will continue to rely on foreign loans via Eurobonds and multilateral financial institutions to bolster its foreign reserves as long as the nation’s trade balance continues to decline.

In part, the report stated: “Owing to the deteriorating trade balance position, the country is increasingly exposed to external borrowing through Eurobonds and multilateral loans to shore up its external reserves. In 2021, the trade deficit widened to N1.9tn from N178.3bn in 2020.

“The country had persistently recorded a trade deficit since the fourth quarter of 2019 when the land borders were shut. However, maintaining a trade surplus consistently coupled with adequate inflows of foreign investments will contribute significantly to improving the net flows of forex through the economy – which crashed from $100.8bn in the first three quarters of 2014 to $44.5bn in the corresponding period of 2021.”

“Huge dependence on imports has limited the CBN’s ability to effectively manage the demand for foreign exchange,” it stated. 

NESG further said, “Meanwhile, the massive dependence on imports has constrained the CBN’s ability to manage forex demand by prohibiting certain commodities that could otherwise be produced locally from accessing forex at the official market since 2015.

“The result of this policy action has heightened demand pressures in the parallel market, leading to a wide gap between the official exchange rate (now the I&E Window exchange rate) and the parallel market exchange rate. The parallel market premium averaged N104.7/US$ in 2021, 64.9 per cent higher than the average premium of N63.5/US$ in 2020.”

 

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Twitter Agog As Nigerians React To AGF’s Arrest, Fraud Allegations

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Ahmed Idris

The social media has been buzzing all day as Nigerians were in dismay, following the arrest of the Accountant-General of the Federation, Ahmed Idris by the Economic and Financial Crimes Commission (EFCC) for allegedly looting a sum of N80bn. 

While many Nigerians lauded the efforts of the EFCC, some said the looted money is far more than what the Academic Staff Union of Universities (ASUU) is requesting.

In his reaction via the micro-blogging platform, Twitter, the spokesperson of former President Goodluck Ebele Jonathan, Reno Omokri said: “Dear ASUU, If the Accountant General of the Federation can steal N80bn, you have no reason to end your strike. Ask Buhari to use the stolen N80bn to pay you and keep the change. After all, the money ASUU is asking for is not even up to N80bn!”

Some Other Twitter Reactions:

The Mouthpiece @Real_AmakaIke said: “Fight Against Corruption In Nigeria Always End With Cruise. Just Loot And Bail Yourself If At All You Are Arrested,And They Will Reward You With Another Political Position. Ahmed Idris’s 80 Billion Naira Fraud Case Has Ended With Immunity. Nigeria Is A Very Big Scam.”

Adenike Danjuma @DeNiike_Ahmed said: “Idris should be persecuted using Sharia law.”

Kwaghngu John @DoshimaJohn“According to the EFCC, the funds (stolen by the AGF Ahmed Idris) were laundered via real estate investments in Kano and Abuja” Real estate investments!!! Folks standing on this table ehn! It will take some balls to vigorously shake this table. A table of crooks & rogues.”

Ayemojubar.js @ayemojubarAlhaji Ahmed Idris, the Accountant General of the Federation stole $137,931,034. Please, how much is ASUU asking for?

Adebola @ThisIsAdemuyiwaOur problem is not religion and ethnicity. Religion and ethnicity are distractions. Alh. Ahmed Idris (Accountant General) who stole N80bn couldn’t have done it alone. He’d have been aided by Southerners from other faiths . Let nobody deceive you.

OKEKE OLIVER (Don Olive) @OKEKEOLIVER2 Ahmed Idris was appointed Accountant General of the Federation on 25th June, 2015, to succeed Jonah Ogunniyi Otunla. His predecessor was sacked by Buhari for alleged misappropriation of N2.5bn naira.

If you make ₦28.3m a year, it would take you 40 years to make ₦1 billion. The Accountant General stole N80bn in 4 years, at ₦28.3M/year it would take you 3,200 years to accumulate that much money. Ahmed Idris you are very very heartless,” another user, Jerry ayuba (@Donjerry_) said.  

Investors King recalls that Operatives of the Economic Financial Crimes Commission (EFCC), on Monday, arrested the current Accountant General of the Federation, Mr. Ahmed Idris in connection with alleged diversion of funds and money laundering activities. 

EFCC, in a statement, wrote: “The Commission’s verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.

“The funds were laundered through real estate investments in Kano and Abuja.

“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts”.

EFCC further noted that: “Its verified intelligence showed that the AGF raked off the funds through bogus consultancies and other illegal activities, using proxies, family members and close associates.

“It further alleged that the funds were laundered through real estate investments in Kano and Abuja”.

The anti-graft agency stated that Idris was arrested after failing to honour invitations to respond to issues connected to the fraudulent acts. 

Ahmed Idris was appointed as Accountant General on June 25, 2015, to succeed Jonah Ogunniyi Otunla who was sacked by Muhammadu Buhari on allegedly misappropriating security agencies’ funds.

EFCC had, on December 7, arraigned the former Accountant-General of the Federation, Mr Jonah Otunla, and eight others before the Federal High Court in Abuja on money laundering charges involving diversion of N2bn from the account of the Office of the National Security Adviser.

The defendants were to be arraigned before Justice Nnamdi Dimgba on Tuesday but the arraignment was rescheduled to December 7 due to the absence of the judge, who was said to be attending a training organised for some judges in the country.

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