Based on data by the National Bureau of Statistics (NBS), Nigerian farmers will earn an additional estimated N160.3 billion from agricultural exports in the second half of the year as a result of the depreciation of the Naira in the official market window.
On the other hand, the country will source an additional estimated N603 billion to foot its agricultural import bill during the same period using the H2 2022 performance as a benchmark.
The Central Bank of Nigeria (CBN) on June 14, 2023 announced a foreign exchange policy reform which entailed floating the Naira at the I&E window. This is against the previous system of pegging the exchange rate where the currency traded with a 60 percent gap between the official and parallel channels.
By this development, commodity exporters will now earn more Naira while importers will source for more Naira to match the dollar bill for their transaction.
According to NBS ‘Foreign Trade in goods statistics for Q3 2022, the value of agricultural goods exported during the period was N84.21 billion. Using the Q3 performance as benchmark, the exporters would have earned a dollar equivalent of $180.4 million at N467/$. In H2 2023, this would amount to N137.2 billion which is extra N53 billion arising from the depreciation of the Naira (assuming the same value of transaction).
The Q4 2022 report showed an export value of N170.59 billion or $365.4 million at the exchange rate of N467/$. In H2 2022, the exporters would receive N277.8 billion at the exchange rate of N760/$ amounting to an extra Naira income of N107.3 billion.
According to NBS, during this quarter, most agricultural products were exported to Europe, valued at N81.0 billion, followed by Asia with N80.21 billion. Export of agricultural products was dominated by ‘Superior quality Cocoa beans’ valued at N74.65 billion followed by
‘Sesamum seeds,’ with N38.56 billion and ‘Standard quality Cocoa beans’ with N14.16 billion.
The report showed that ‘Superior quality Cocoa beans’ worth N8.07 billion and N6.63 billion were exported to Indonesia and Malaysia respectively. Furthermore, ‘Sesamum seeds’ worth N5.62 billion and N5.49 billion were exported to Japan and China respectively, followed by exports of ‘Cashew nuts in shell’ worth N3.86 billion and N2.21 billion to Vietnam and India respectively.
The NBS report showed that total imports of agricultural goods in Q3, 2022 stood at N512.91 billion, or $1.1 billion at the old exchange rate of N467/$. At the floated exchange rate, the country would need N836 billion which is additional N324 billion at the new exchange rate of N760/$.
The major agricultural goods imported in Q3, 2022 included ‘Durum wheat (not in seeds)’ from the United States of America with N78.29 billion and Poland with N45.62 billion. This was followed by ‘Jack and horse mackerel (Trachurus spp.) meat, frozen’ From Chile, valued at N15.87 billion and The Netherlands with N1.69 billion.
For Q4 2022 when a total of N444.82 billion was spent on the importation of agricultural products, the country would have spent a dollar equivalent of $952.5 million at the old exchange rate. Assuming that the same amount was spent in H2 2023, the Naira equivalent at the new exchange rate of N760/$ would be N723.5 billion – an extra Naira of N278,8 billion,
The major agriculture goods imported in Q4, 2022 included ‘Durum wheat (not in seeds)’ from Latvia with N46.28 billion and Lithuania with N41.54 billion. This was followed by ‘Fractions of Palm oil and its fractions, not fit for human consumption.’ from Malaysia valued at N43.27 billion.
The foreign exchange reform will impact negatively on Nigeria’s balance of trade in the second half of the year as the Naira depreciation deepens.
According to the NBS report, Nigeria’s total trade in Q1 2023 stood at N12,046.92 billion of which total exports stood at N6,487.04 billion and total imports amounted to N5,559.88 billion.
Total exports increased in the first quarter by 2.00% but declined by 8.66 per cent when compared to the amount recorded in the fourth quarter of 2022 (N6,359.61billion) and the corresponding quarter in 2022 (N7,102.11 billion) respectively.
In the same vein, total imports increased by 3.67 per cent in the first quarter of 2023 compared to the value recorded in the fourth quarter of 2022 (N5,362.83 billion) but then again declined by 25.83 per cent when compared to the value recorded in the corresponding quarter of 2022 (N7,495.67 billion).
The top five export destinations in the first quarter of 2023 were the Netherlands with N837.65 billion or 12.91 per cent, the United States of America with N579.35 billion or 8.93 per cent, Spain with N488.17 billion or 7.53 per cent, France with N487.34 billion or 7.51 per cent and India with N456.69 billion or 7.04 per cent of total exports.
Altogether, exports to the top five countries amounted to 43.92 per cent of the total value of exports. ‘Petroleum oils and oils obtained from bituminous minerals, crude’ with N5,148.58 billion representing 79.37 per cent remains the commodity with the largest export values in the period under review, followed by ‘Natural gas, liquefied’ with N622.36 billion accounting for 9.59 per cent and ‘Urea, whether or not in aqueous solution’ with N146.79 billion or 2.26 per cent of total exports.
In terms of Imports (CIF), China, The Netherlands, Belgium, India, and the United States of America were the top five countries of origin of imports to Nigeria in the first quarter of 2023.
The values of imports from the top five countries amounted to N3,101.42 billion representing a share of 55.78 per cent of the total value of imports.
While the commodities with the largest values of imported products were ‘Motor Spirit Ordinary’ (N1,492.28 billion or 26.84 per cent), ‘Gas Oil’ (N472.40 billion or 8.50 per cent and ‘Durum Wheat (Not in seeds)’ (N249.22 billion or 4.48 per cent).
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
