Economy
Nigeria’s Imports Jump 80.7% to $56bn in Six Years—WTO
By Adedapo Adesanya
Nigeria’s import levels increased by 80.7 per cent in six years, rising from $31 billion in 2017 to $56 billion in 2023, according to the latest World Trade Organization (WTO) Trade Policy Review.
This rise, according to the report, was primarily fueled by refined petroleum, which made up 38.3 per cent of the total imports.
The WTO noted that the Nigerian government’s trade and economic policies lacked consistency in the past, affecting the achievement of ambitious government goals.
The report added that some of Nigeria’s restrictive and interventionist policies seemed to counteract broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.
The sixth Trade Policy Review of Nigeria, based on reports by the WTO Secretariat and the Government of Nigeria, emphasises the critical role of trade in Nigeria’s economic development strategy.
According to the WTO, Nigeria, with a nominal GDP of $363 billion, remains one of Africa’s largest economies, largely due to its oil and gas exports, which continue to dominate its portfolio.
“Crude oil alone accounted for 80.6 per cent of goods exports, while gas made up 10.5 per cent. Exports have risen by nearly 50 per cent over the last six years, reaching $65 billion.
“Exports of goods continue to be dominated by crude oil (80.6 per cent) as well as gas (10.5 per cent).
“Between 2017 and 2023, they increased by nearly 50 per cent to $65 billion. Services exports, about 6 per cent of all exports, are dominated by transport and travel (58.2 per cent), as well as increasingly financial services (22.9 per cent, predominantly traded digitally).
“The share of non-oil exports in total exports doubled between 2017 and 2023, consisting primarily of agricultural products, fertilizer, and metals.
“Imports also grew strongly from $31 billion to $56 billion, with refined petroleum accounting for the largest share (38.3 per cent).
“Services imports, which accounted for more than 20 per cent of total imports, are also dominated by transport and travel services (63.7 per cent of services imports), followed by other business services (20.1 per cent, predominantly traded digitally),” the report said.
The review highlights the Nigerian government’s ambitious Agenda 2050, which aims to diversify the economy and reduce reliance on oil by promoting manufacturing, linking domestic raw materials with industries, and expanding the domestic market.
The WTO said that despite these efforts, some restrictive policies seem to counter the goal of economic diversification.
“For example, the share of intermediate goods in non-oil imports fell from 44 per cent to 32 per cent between 2017 and 2023, indicating limited progress in expanding manufacturing’s contribution to the economy.
“Government strategies and policies at times seem to lack consistency and, in the past, did not fully achieve their ambitious objectives.
“Some restrictive and interventionist policies seem to counteract broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.
“Nigeria’s trade in intermediary goods developed little between 2010 and 2021 and the share of intermediate goods in total non-oil imports declined from 44 per cent to 32 per cent between 2017 and 2023.
“FDI has continued its downward trend and virtually ceased in 2022, with few disaggregated figures available,” the report said.
The WTO explains that economic reforms have been underway in Nigeria, including the removal of fuel subsidies and a restructuring of the foreign exchange rate system.
According to the report, in 2023, Nigeria eliminated its complex multi-tiered exchange rate system, which had resulted in significant foreign exchange shortages.
“In 2023, the Government initiated important reforms regarding the foreign exchange rate, fuel subsidies, and fiscal discipline. In June, it eliminated a complex exchange rate system using multiple windows and rates which had led to significant foreign exchange (FX) shortages.
“The largely inaccessible official rate of the naira rapidly aligned with the parallel rate at which most FX transactions had effectively taken place and by March 2024, the official exchange rate had lost around 70 per cent of its value in USD terms.
“In 2023, the Central Bank of Nigeria (CBN) also removed restrictions on the use of FX for the import of 43 groups of commodities, affecting more than 900 tariff lines that had been in place since 2015.
“A price verification system for imports and exports to avoid under- or over-invoicing was in place between August 2023 and June 2024. However, some FX restrictions remain in place, including repatriation requirements,” it said.
The report added that following an earlier failed attempt in 2020, the government also removed costly and inefficient fuel subsidies in mid-2023 but established retail price caps for fuels at the end of 2023, effectively reintroducing some form of support.
“These subsidies accounted for about 15 per cent of government expenditure in 2022.
The Nigerian government also decided to end the practice of financing a significant share of its spending via overdrafts from the Central Bank of Nigeria (CBN), which had contributed to increasing debt as a share of GDP to 30 per cent.
“At below 9 per cent, the revenue-to-GDP ratio in Nigeria remains very low and the Government aims to increase it significantly by 2025.
The official exchange rate, which aligned with the parallel rate by March 2024, saw a rapid devaluation of the naira. In June 2023, Nigeria also removed longstanding foreign exchange restrictions on 43 groups of imports to ease access to foreign currency.
“These reforms were intended to create a more stable economic environment, though some foreign exchange restrictions remain, including repatriation requirements for companies.”
By Dipo Olowookere
A 1.08 per cent growth was further printed by the Nigerian Exchange (NGX) Limited on Friday on improved appetite for Nigerian stocks.
Data showed that the insurance sector lost 0.61 per cent yesterday due to profit-taking as the energy space gave up 0.08 per cent, while the commodity counter closed flat.
However, the industrial goods landscape appreciated by 2.06 per cent, the banking index improved by 1.31 per cent, and the consumer goods sector expanded by 0.83 per cent.
At the close of business on Customs Street, the All-Share Index (ASI) increased by 1,563.92 points to 147,040.07 points from 145,476.15 points and the market capitalisation went up by N996 billion to N93.722 trillion from N92.726 trillion.
UAC Nigeria led the advancers’ log yesterday after it grew by 10.00 per cent to N96.80, Transcorp Hotels jumped by 9.71 per cent to N172.80, Royal Exchange appreciated by 8.89 per cent to N1.96, Ikeja Hotel soared by 8.74 per cent to N31.10, and Veritas Kapital leapt by 8.07 per cent to N1.74.
On the flip side, Union Dicon declined by 10.00 per cent to N6.30, ABC Transport slipped by 9.88 per cent to N3.10, AXA Mansard depreciated by 7.19 per cent to N12.90, FTN Cocoa lost 4.62 per cent to trade at N4.75, and Guinea Insurance dropped 3.36 per cent to finish at N1.15.
A total of 38 stocks ended on the gainers’ table and 17 stocks finished on the losers’ table, representing a positive market breadth index and strong investor sentiment.
Traders transacted 361.6 million equities for N14.8 billion in 21,051 deals yesterday versus the 1.9 billion equities worth N19.2 billion traded in 23,369 deals a day earlier, showing a decline in the trading volume, value, and number of deals by 80.97 per cent, 22.92 per cent, and 14.20 per cent, respectively.
The busiest stock for the session was Zenith Bank with 59.5 million units worth N3.6 billion, Access Holdings traded 46.1 million units valued at N973.0 million, Fidelity Bank exchanged 29.4 million units for N560.4 million, FCMB transacted 27.9 million units worth N293.9 million, and Tantalizers sold 13.0 million units valued at N29.8 million.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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