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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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Economy

$2 Billion Lekki Deep Sea Port Berths First Cargo

The Nigeria Port Authority (NPA) on Friday announced that the $2 billion Lekki Deep Sea Port in Lagos has docked its first ship.

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Deep Sea port - Investors King

The Nigeria Port Authority (NPA) on Friday announced that the $2 billion Lekki Deep Sea Port in Lagos has docked its first ship.

Mohammed Bello-Koko, the Managing Director of NPA, who received the marine vessel “Zhen Hua 28”, explained that the Lekki Deep Sea Port would help decongest Apapa Ports and reduce ship waiting time by about 60%.

Estimated at $2 billion, Lekki Deep Seaport was constructed by China Habour Engineering firm to ease shipment pressure and improve the efficiency of Nigeria’s maritime economy.

According to Koko, the port has the capacity to evacuate and handle more cargoes because of a series of automation integrated into it during construction.

“The successful delivery today (yesterday) at the Lekki Deep Seaport of three Super Post Panamax state-of-the art Ship to Shore (STS) Cranes and 10 Rubber Tyred Gantries (RTG) is a testament to the unflinching commitment of NPA to providing the support necessary for placing Nigeria on the global list of countries with Deep Seaports.

Koko said: “The successful delivery of these very important equipment which are critical for the Lekki Deep Seaport to commence operations before the end of the year 2022 is a demonstration of our readiness to take trade facilitation a notch higher. This has been made possible by the tremendous backing of His Excellency, President Muhammadu Buhari and the Federal Ministry of Transportation who have over the time played a key role from the initial construction stage and also granted fast tracked approval for this historic exercise.

“For us at the NPA, the coming on stream of Lekki symbolises a lot of positives. Apart from being Nigeria’s first Deep Seaport, Lekki Port will also be the first fully automated port at take-off. This provides an insight into the path we are already toeing as a management team to govern the operationalisation of not just the forthcoming Badagry, Ibom and Bonny Deep Seaports, but also of the reconstruction of the aged Tin-Can Port, where work is set to commence once we secure the necessary approvals from the Federal Ministry of Transportation and FEC, respectively.”

He stated that “automation remains the most veritable tool for assuring port efficiency, and as most of us are aware, the NPA is working assiduously under the technical guidance of the International Maritime Organization to deploy the Port Community System (PCS), which will enable us respond squarely to the dictates of global trade facilitation and optimise the opportunities of the African Continental Free Trade Area (AfCFTA) Agreement to which Nigeria is signatory.”

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Oxford Business Group signs MoU with Lagos Chamber of Commerce and Industry for 2023 Economic Analysis

Nigeria’s plans to put the private sector at the heart of the next phase of its economic development will be explored in a forthcoming report by the global research and advisory company Oxford Business Group (OBG).

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2023 Economic Analysis

Nigeria’s plans to put the private sector at the heart of the next phase of its economic development will be explored in a forthcoming report by the global research and advisory company Oxford Business Group (OBG).

The Report: Nigeria 2023 will look in detail at the key sectors of the country’s economy with high growth potential, which include agriculture, energy, ICT and industry.

It will also consider the important role earmarked for public-private partnerships in supporting Nigeria’s infrastructure development, with major projects such as the Lekki Free Zone and the Lekki-Epe road among those in the spotlight.

The openings that are expected to emerge from the African Continental Free Trade Area will be another focal point, with in-depth analysis provided of the potential that the initiative holds for boosting exports and fostering new trade partnerships.

Other topics set for coverage include a drive under way to encourage innovation and the introduction of tech solutions across the economic sectors, with the aim of galvanising growth in nascent segments, such as fintech.

OBG has signed a new memorandum of understanding (MoU) with the Lagos Chamber of Commerce and Industry (LCCI) as it begins work on The Report: Nigeria 2023. Under the agreement, the LCCI will team up with OBG to produce the Group’s first post-pandemic analysis of Nigeria’s investment opportunities and economic development, and other related content.

The MoU was signed by Wen Qian Chang, Country Director, OBG, and Chinyere Almona, Director General, LCCI.

Commenting after the signing, Almona said that OBG’s new report comes at a time when Nigeria is looking to the private sector to unlock the potential of key legislative reforms put in place in recent years and spearhead a new era of growth.

“These have been challenging times for Nigeria, with recession and high inflation weighing on the country’s economic performance. However, higher oil prices and a rise in post-Covid remittances, are combining to improve the outlook,” she said. “Oxford Business Group is known for producing highly regarded, detailed resources on emerging economies and has consistently provided accurate, in-depth analysis of Nigeria’s economic development over the years. I look forward to working closely with its representatives to highlight the latest openings across the economy as the country prepares for a new chapter in its growth story.”

Chang said she was delighted to have the LCCI on board for OBG’s 2023 report on Nigeria, with the country looking to build on its strengths, led by an abundant supply of natural resources, a sizeable workforce and a vibrant business scene, in the recovery phase.

“Long a regional powerhouse, Nigeria is now assessing the impact of measures adopted during the pandemic aimed at strengthening resilience and enabling the economy to withstand future shocks,” she said. “The private sector is recognised as the linchpin of Nigeria’s economic strength, with businesses ably supported by key organisations such as the Lagos Chamber of Commerce and Industry, which provides a broad range of services aimed at encouraging innovation and growth. I’m thrilled that our research into the many investment opportunities emerging in Lagos and beyond will benefit from the local knowledge and expertise of its members.”

The Report: Nigeria 2023 will mark the culmination of more than a year of field research by a team of analysts from Oxford Business Group. It will be a vital guide to the many facets of the country, including its macroeconomics, infrastructure, banking and other sectoral developments. OBG’s publication will also contain contributions from leading representatives across the public and private sectors.

The Report: Nigeria 2023 will be available online and in print. It will form part of a series of tailored studies that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including ESG and Future Readiness reports, country-specific Growth and Recovery Outlook articles and interviews.

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Economy

IPPIS Helps Uncover 70,000 Ghost Workers, TSA Saves Over N10 Trillion, Says FG

The Federal Government has said its recently enforced Integration Personnel and Payroll Information System (IPPIS) has helped uncovered 70,000 ghost workers in the civil service system.

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Treasury Single Account

The Federal Government has said its recently enforced Integration Personnel and Payroll Information System (IPPIS) has helped uncovered 70,000 ghost workers in the civil service system.

Dr. Dasuki Arabi, the Director-General, Bureau of Public Service Reforms, stated at the 43rd session of the ministerial briefing organised by the Presidential Communication Team at the Presidential Villa, Abuja on Thursday.

According to the Director-General, the Federal Government has saved at least N220 billion through IPPIS and about N10 trillion via the Treasury Single Account (TSA) since it was fully implemented by President Muhammadu Buhari.

Explaining the advantages of IPPIS, Arabi said the Federal Government can now give an account of the total Federal Civil Service personnel working in the country. He puts the total at 720,000 as of today.

Arabi said, “With the introduction of IPPIS, about 70,000 ghost workers have been eliminated from the payroll. We have a one-shot opportunity to look at IPPIS and say, as of today, we have 720,000 public servants working for Nigeria.

“We’ve been able to reduce more than N220bn wastage through wrong management of IPPIS on payroll by ministries, departments and agencies of government. We have reduced the budget deficits and changed the budget composition.

“We have succeeded in getting the Treasury Single Account deployed in all ministries, departments and agencies of government. Challenges have come in that implementation at the initial stage, but we are overcoming that and the government is able to save over N10tn over the years because whatever you’re generating now goes into a Treasury Single Account that is managed by somebody else, not you.

“And the government, especially at the top, is always able to see what has come into our Treasury Single Account today and what has gone out of that. So planning has been simplified. Budgeting has been simplified.”

The Integrated Financial Management Information System digitised government business and “reduced man-to-man contact and processing payments in ministries, departments and agencies.”

He said, “Transparency has been improved. A lot of things are done even outside the office. But the most important thing is the ability given to central agencies, the Office of the Accountant-General of the Federation, and the Ministry of Finance to see what is happening in all government MDAs because GIFMIS is not controlled by the agencies.

“It is controlled by the central agencies, but every activity you are doing under GIFMIS somebody is watching you and is monitoring that activity. This is a great achievement for us and for all of you and for all Nigerians.”

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