Lagos — Nigeria's foreign trade improved sharply in the second quarter of 2012 with $12 billion surplus occasioned by 42 per cent decline in imports. The surplus represents 43 per cent increase when compared with the surplus of N8.62 billion recorded in the second quarter of the year.
The Central Bank of Nigeria (CBN) disclosed this in its External Sector report for the quarter posted on its website, yesterday.
It said the sharp increase in the trade surplus was occasioned by 42 per cent decline in aggregate imports and 8.2 per cent increase in aggregate export.
The Central Bank of Nigeria head office in Abuja.
The report also showed that foreign investment rose by 87.39 per cent to $6.07 billion in the second quarter from $3.43 billion in the first quarter.
The apex bank, however, expressed concern over the continued domination of portfolio inflows (investment) in the foreign investment in the country. According to the apex bank, portfolio investment accounted for more than three quarter of the total foreign investment during the quarter.
The report stated: "Nigeria's trade balance improved significantly from US$8.62 billion in Q2, 2012 and $1.60 billion in Q3, 2011 respectively to US$12.37 billion in Q3, 2012. Aggregate exports rose by 8.2 per cent from US$22.53 billion in Q3, 2011 to US$24.37 billion in Q3, 2012 while aggregate imports (CIF) declined by 42.7 per cent to US$11.99 billion in the review period
"The trade balance position improved due to lower imports of goods and services and increased exports earnings. The external reserves exceeded the international benchmark of three months of mports cover. However, the rising external debt stock remains a major concern. Most importantly, the debt service payments should be monitored in order not to constrain the financing of key development programmes.
"Also, the slow global recovery continues to dampen world demand for commodities and possibly lower prices could cause adverse trade shocks. Government, therefore, should address gaps in domestic production and investment in critical infrastructure in an effort to curtail the nation's heavy dependence on imports. Finally, the observed increase in the inflow of foreign direct and portfolio investment over the last two quarters suggests the need to put in place measures against capital reversal.
"The estimated current account balance posted a surplus of US$5.03 billion or 7.61 per cent of gross domestic product (GDP) compared with US$5.0 billion in the pre-ceding and against a deficit of US$3.86 billion in Q3, 2011. The performance was largely explained by the lower import bills, increased export earnings and decreased out-payments in respect of dividends and distributed branch profits to foreign investors.
Imports of goods declined by 21.67
"Further analysis revealed that imports of goods declined by 21.67 and 45.29 per cent below its level in Q2, 2012 and Q3, 2011 respectively. While earnings from exports of goods rose by 4.15 and 8.16 per cent when compared with the recorded levels in Q2, 2012 and corresponding quarter in 2011, respectively. The export earnings was largely driven by oil receipts which accounted for 97.4 per cent of total. The non-oil exports continued to underperform owing to high cost of production."