In line with the turnaround narratives of 2017, the CBN Statistical Bulletin for Q4-2017 showed that Nigeria’s Balance of Trade rebounded by 394.8%y/y to end the year at positive N3.2tn ($10.4bn). Nigeria’s trade balance which remains largely driven by crude-oil exports had previously plummeted to the negative region in 2015/16 as a result of the twin impact of a crash in global oil prices (from mid-2014) and drop in local production volumes.
With the recovery in crude oil prices in 2017, the total value of exports has rebounded significantly, up 32.0%y/y to $45.8bn in 2017. However, this remains at a shadow of the pre-crisis level of $82.6bn in 2014. On the other hand, the total imports contracted, down 7.3%y/y to $32.7bn in FY-17, thanks to capital control measures by the CBN, a weaker value of the naira as well as increased import substitution efforts.
With our estimate for oil prices to average $55- $60/b in 2018, it is unlikely for oil-export to spur Nigeria’s trade balance back to its pre-crisis levels in the near to medium term. Accordingly, Nigeria will benefit significantly from intensifying efforts to boost non-oil exports and consequently foreign earnings, while sustaining recent import-substitution efforts, to return to the 2014 level.
UNITED CAPITAL NIGERIA