FEBRUARY 9, 2018 – In a mark of rising confidence in the Nigerian economy, aggregate foreign exchange (FX) inflow into the economy grew to $30.45 billion in the fourth quarter (Q4) of 2017, indicating an increase by 14.5 per cent, compared to the preceding quarter.
This also represented a significant increase by 86.9 per cent over the corresponding quarter of 2016.
The Central Bank of Nigeria (CBN) disclosed this in its quarterly economic report for Q4 2017 released Thursday.
Increased FX flows were attributed to the 22.7 per cent and 7.7 per cent increase in inflows through the CBN and autonomous sources, respectively.
Also, the report showed that FX inflows into the economy increased in the fourth quarter of 2017 as a result of the rise in the spot price of Nigeria’s reference crude oil, Bonny Light, to an average of US$62.48 per barrel during the quarter.
The rise in crude oil price was also attributed to the decline in United States shale oil output, increased global demand for refined petroleum products, and extension of the Organisation of Petroleum Exporting Countries (OPEC) production-cut deal to the end of 2018.
An overall balance of payments surplus of 2.2 per cent of the gross domestic product (GDP) was also recorded by the country during the fourth quarter of last year.
“Consequently, FX inflow through the CBN stood at $14.71 billion, showing an increase of 22.7 per cent and 118.7 per cent over the levels in the preceding quarter and the corresponding period of 2016, respectively.
“The increase reflected the rise in receipts from oil and improvement in non-oil proceeds,” the CBN report indicated.
Aggregate outflow through the CBN, on the other hand, fell to $8.38 billion, from $9.34 billion in the preceding quarter, but recorded an increase over the $4.65 billion in the corresponding period of 2016.
According to the report, the decline in outflow relative to the preceding quarter reflected the fall in interbank utilisation, third party MDA transfer, drawings on letters of credits, external debt service, and FX special payments in the review period.
Overall, a net inflow of $6.33 billion was recorded through the central bank, compared with $2.64 billion and $2.08 billion in the preceding quarter and the corresponding period of 2016, respectively
The report also showed that oil sector receipts, which accounted for 10.6 per cent of the total, stood at $3.23 billion, compared with $3.17 billion and $1.97 billion in the third quarter of 2017 and the corresponding period in 2016, respectively.
It also put non-oil public sector inflow at $11.48 billion (37.7 per cent of the total), indicating a rise by 30.3 per cent and 141.2 per cent above non-oil sector inflows in the third quarter of 2017 and the corresponding period in 2016, respectively.
“Autonomous inflows at $15.74 billion rose by 7.7 per cent and 64.6 per cent above the levels in the preceding quarter and the corresponding period of 2016, respectively, with inflows from autonomous sources accounting for 51.7 per cent of the total.
“At $9.19 billion, aggregate FX outflows from the economy fell by 9.6 per cent below the level in the preceding quarter, but represented a 69.9 per cent increase over the level in the corresponding period of 2016.
“The development, relative to the preceding quarter, was driven by a 10.3 per cent and 2.0 per cent decline in outflow through the CBN and autonomous sources, respectively.
“Total non-oil export earnings received through the banks rose by 20.7 per cent above the level in the third quarter of 2017 to $614.50 million in the review quarter.
“The development was due mainly to the 43.2, 18.0 and 6.1 per cent increase in foreign exchange receipts from agricultural, industrial and minerals sub-sectors.
“A breakdown by sectors showed that proceeds from agricultural products, minerals, industrial sector, manufactured products and food products were $312.6 million, $103.5 million, $98.9 million, $88.5 million and $10.9 million, respectively,” the report added.
Furthermore, provisional data showed that sectoral FX utilisation stood at $7.45 billion in the fourth quarter of 2017, indicating a 5.5 per cent increase above the level in the preceding quarter. The development reflected the 7.1 per cent and 5.5 per cent rise in disbursement/utilisation for invisible and visible imports, respectively.
The invisible sector accounted for the bulk (47.7 per cent) of total FX disbursed in the Q4 of 2017, followed by the industrial sector (27.0 per cent).
According to the report, Nigeria’s crude oil production, including condensates and natural gas liquids, averaged 1.80mbd or 165.60 million barrels (mb) in the review quarter.
This represented a decline of 0.03mbd or 1.8 per cent, compared with 1.83mbd or 168.36mb recorded in the preceding quarter.
The drop in oil output was attributed to the shut-ins/shut-down in some of the production facilities.
“Crude oil exports stood at 1.35mbd or 124.20mb, representing a 2.4 per cent decline compared with 1.38mbd or 126.96mb in the preceding quarter. This was due mainly to the continued commitment by OPEC and Non-OPEC countries to avoid flooding the global market, despite the exemption of Nigeria from the production cap agreement.
“Allocation of crude oil for domestic consumption was maintained at 0.45mbd or 41.40mb in the review quarter.
“The average spot price of Nigeria’s reference crude oil, Bonny Light (37° API), rose from $52.92 per barrel in the third quarter of 2017 to US$62.48 per barrel in the review quarter, representing an increase of 18.1 per cent.
“The increase was attributed to the production-cut agreement, demand growth from China and increased refining activities in the United States.
“UK Brent at $61.69/b, WTI at $55.47/b, and the Forcados at $62.60/b exhibited similar trends as the Bonny Light,” the CBN report explained.
In addition, the report revealed that activities in the industrial sector showed a significant improvement over the level in the third quarter of 2017.
This was attributed to sustained supply of FX and stability in the naira exchange rate, which facilitated the importation of critical raw materials as well as intermediate goods for domestic production, resulting in new orders, output growth and increased export business.