Analysis of Nigeria’s current account surplus level in the year 2018 according to data compiled from the official website of the CBN has shown country’s annual current account surplus level declined by 49 percent year on year.
Nigeria recorded a surplus of $5.33 billion in her current account transactions for the year 2018 against a 3 year-high level of $10.39 billion in 2017.
This shows a reversal of Nigeria’s current account balance as a percent of GDP by 1.42 percent to 1.34 percent against 2.76 percent recorded in 2017.
Further analysis revealed that annual merchandize import transaction in 2018 increased significantly by 25 percent to $40.75 billion, first annual increase since 2014.
During the period 2014 to 2017, goods import transactions has declined annually consistently at an average of 15 percent.
Meanwhile, Nigeria’s current account recorded a surplus in the fourth quarter of the year 2018 after account dipped into the deficit zone in the third quarter of 2018.
In Q4 2018, Nigeria’s current account recorded a surplus of N338.19 billion ($1.10 billion), which is equivalent just 1.0 percent of GDP, compared with a downwardly revised deficit of -1.4% the previous quarter.
The improvement of the current account in Q4 2018 was due to a decline by 19.9 percent in importation of merchandise during the period.
Merchandise imports in Q4 2018 stood at $9.86 billion against $12.43 billion in the previous quarter, divided between $2.4 billion and $7.45 billion on oil and non-oil transactions respectively.
Also, transactions in the current account recorded an improvement in merchandise exports by 2.8 percent to $16.65 billion compared to $16.19 billion in the previous quarter.
Contributing to the surplus also was a decline in the net income outflow by 10.8 percent balanced by a substantial deterioration on the net services account 16.5 percent.
According to a report by FbnQuest, while the current account has returned to surplus in Q4, the long-term trend is one of deterioration.
“If we look back to the start of the data series in 2008, and so cover periods of high and low oil prices, we see that import growth has outpaced export growth,” the report stated.
Imports have risen on the back of the rising population, diversification notwithstanding, while exports have stagnated.
The BOP data for Q3 has been revised, with the current-account deficit adjusted from US$3.1bn to US$1.5bn.
Imports for the quarter are now US$1.7bn lower than previously reported, which we attribute to more accurate data for the cost of imported drilling platforms and other infrastructure for the oil and gas industry.
An improvement in the reporting of oil industry transactions will be one of the main responsibilities of the new national BOP committee, chaired by the CBN and including the NBS.