By Chima Nwokoji | Lagos
The Central Bank of Nigeria (CBN), in its monthly economic report (MER), said Nigeria reported a trade deficit amounting to $20 million in November 2022, which was as a result of lower export receipts from crude oil due to the decline in crude oil prices at the international market.
This was a 60-percent dip month over month from $50 million in October 2022.
According to the report, the slow demand for crude oil in the international markets was due to rising United States’ inventories, looming recession fears across the globe and the resurgence of COVID-19 cases in China which has impacted oil price oscillation and the end result was lower receipts from crude oil exports.
Notably, global oil demand growth for 2022 was revised downward twice to 2.6 mb/d (0.3 mb/d in July and 0.5 mb/d in September) to reflect growing concerns regarding global macroeconomic developments amid successive policy rate hikes by major central banks, the continuation of China’s zero-COVID policy, rising inflationary pressure and logistic bottlenecks.
To bring to light as a refresher, the Central Bank Governor, Godwin Emefiele, lamented Nigeria’s low foreign exchange earnings from crude oil sales into Nigeria’s official reserves, which have steadily been on a decline to ground zero as of November 2022 from $3 billion in 2014.
Emefiele also said that due to the struggle in the naira as well as the increase in the demand for forex, there has been a huge decline in foreign reserves.
According to the provisional data from the CBN, aggregate exports, primarily from oil receipts, declined by 7.7 percent to $3.90 billion as of November 2022. A breakdown from the apex bank reveals that crude oil export receipts fell by nine percent to $3.30 billion, from $3.65 billion in the preceding month.
The decrease was driven by the fall in the price of Nigeria’s reference crude, the Bonny Light, by 3.3 percent to an average of $93.36 per barrel, relative to $96.57 per barrel in October.
However, non-oil export earnings surged by 16.9 percent to $400 million, resulting from sustained favourable commodity prices on the international market.
According to the CBN report, Nigeria recorded a 6.2 percent month-on-month decline in imports to $4.35 billion in the same period. The decline is attributed to the decline in the import of petroleum products to $0.89 billion from $1.24 billion in October. Non-oil imports, on the other hand, increased by 1.7 percent to $3.46 billion, up from $3.41 billion in the previous month.
Non-oil imports accounted for 79.5 percent of total imports, while oil constituted the remaining 20.5 percent.
Analysts say Nigeria’s deficit from merchandise trade poses and re-echoes the need and a call for a solid structure and policy reforms to allow for the private sector as well as exporters to be seen and heard on the decision-making table.
This they added, opens opportunities for charting a way forward on what best global practices can be adopted to ensure there is a solid structure that will see the continuous and free flow of forex earnings from crude oil sales into the economy in the bid to grow Nigeria’s forex reserves.
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