What first quarter 2019 export figures mean for domestic firms, SMES

There is no doubt that Nigerian firms are now raising their game in order to enhance their top and bottom lines. A number of them, particularly notable SMEs, have invested in innovative strategies, quality control and customer service delivery with a view to remaining competitive locally and internationally.

For the international markets, quite a number of them need information as to where outside the shores of this country they can find readily available markets or customers for Nigerian goods. This analysis provides insight into this interesting aspect of their operations. In the first quarter of 2019, Nigeria’s foreign trade fetched N4.54 trillion for all the Nigerian firms and individuals involved in foreign trade transactions. You may not know to what extent the nation external sector has fared until comparison is made between the first quarter of this year and N4.69 trillion exporters realised in the first quarter of 2018. Year-on-year, foreign trade momentum declined by 3.37 percent in the first quarter of 2019.

In the two comparable quarters, that is, first quarters of 2018 and 2019, Europe remained Nigeria’s largest destination of our exports. In Q1 2018, 48.7 percent of Nigeria’s exports ended up in Europe; 27.9 percent in Asia; 12.6 percent in America while African countries received 10.5 percent of Nigeria’s exports. In other words, from every 100 items that left the shores of this country, only 11 ended up among African countries. At the fringe of the Nigeria’s foreign trade is Oceania, which received a paltry 0.3 percent of our exports.

But at the end of the first quarter of 2019, things were a little bit different. While Europe still remained largest buyer of Nigeria’s exports, only 40.4 percent of the goods sold overseas ended up in the European Union. Trade also picked up with Asian countries as 29.2 percent of goods that left the shores of this country were bought by Asian consumers.

Trade with America declined to 8.9 percent at the end of Q1 2019. The good news is that Africa is beginning to see the need to enhance trade among its members. At the end of the first quarter of 2019, 20.7 percent of goods sold outside the shores of this country ended up in African countries. Put differently, 21 goods out of every 100 goods sold by Nigerian firms and individuals were bought by African consumers compared with 11 in the corresponding quarter. Also, trade with the Oceania was more than doubled from 0.3 percent in Q1 2018 to 0.8 percent in Q1 2019.

For investors in agric value chain, Europe and Asia are the best bet for exports

In both quarters, that is, Q1 2018 and Q1 2019, agricultural exports accounted for just 1.8 percent of the total export proceeds. In monetary terms, export of agricultural goods rose by 17.53 percent from N73.24 billion at the end of the first quarter of 2018 to N86.09 billion as at the end of Q1 2019. Just like in 2018, the majority of the agric export proceeds were realised from Asia and Europe.

In Q1 2018, Nigerian exporters in the agric value chain realised 51.6 percent of their foreign earnings from Asia and 44.6 percent from Europe. That added up to 96.2 percent. Only 3.8 percent was realised from Africa, America and the Oceania combined.

In Q1 2019, Asia accounted for 56.2 percent of agric exports while Europe received 36.8 percent. When combined, 93.1 percent of Nigeria’s agric export ended up in the two continents (Asia and Europe). America received 4.4 percent of Nigeria’s agric export in that quarter, while in Africa and the Oceania, 1.4 percent and 1.2 percent of the nation’s agric exports were consumed by consumers in those continents. Trade in agricultural goods among African countries is very low due to the fact that most African countries have similar socio-economic characteristics including export of farm produce in primary state and with a low level of industrialisation.

For solid minerals, the export markets are in Africa and Asia

Solid minerals exports accounted for 0.6 percent Nigeria’s export proceeds in the first quarter of 2018 and 0.2 percent in Q1 2019. Notably, there was a sharp drop in the export of solid minerals. In Q1 2018, Nigerian exporters sold N26.9 billion worth of solid minerals overseas but it was just N8.99 billion in the first quarter of 2019. What’s more? Export of solid minerals was distributed among four markets in Q1 2018 but sales of these products were prominent in two markets in Q1 2019.

In Q1 2018, Africa accounted for 19.7 percent of Nigeria’s solid minerals export proceeds. American consumers bought 49.7 percent of solid minerals exported by Nigerian traders; Asia firms and individuals consumed 13.5 percent while Europe bought 17.1 percent of the nation’s solid mineral sales.

In Q1 2019 that was not the case for solid minerals exports as only Africa and Asia were on the radar of Nigerian solid minerals exporters. African firms and individual consumers acquired 64.1 percent while Asian consumers used 35.4 percent. In Africa, Niger Republic, Togo and Chad Republic are where the markets are for now. Niger Republic consumers bought emery, natural corundum and natural garnet from Nigerian exporters.

In Asia, the markets for Nigerian solid minerals are in China, Hong Kong and Malaysia. Nigerian solid minerals such as lead ores and concentrates, niobium, tantalum, vanadium ores and concentrates are the preferred goods by Asian firms and individual users.

Markets for Nigerian manufactured goods moved from Europe to Africa

Year on year, export of Nigeria’s manufactured goods rose by 6.4 percent from N434.38 billion in Q1 2018 to N462.33 billion in Q1 2019. That was expected from a country that has put in so much to diversify its economy. However, what is interesting is the sudden change in the direction of trade. In Q1 2018, European customers-both industrial and households, bought N373.84 billion worth of manufactured products from Nigeria, which means, 86.1 percent of exported manufactured goods in that quarter were sold to the clients in the European Union. In that same quarter, only 7 percent was sold to African clients; 5.9 percent to Asia while 1 percent went to America.

Things were not the same in the first quarter of 2019, as African countries bought 85 percent of manufactured goods from Nigeria. That translated to N392.20 billion. America bought 5 percent; Europe, 7 percent while Asia bought just 3 percent. There are rumours that due to credibility problems, Nigerian exporters now take their goods to other African countries for re-export to other continents on one hand and the fact that export documentations, trade protectionism in Africa might not be as cumbersome as they are in America, Europe and Asia.

In addition, in December 2018, Afreximbank launched a $1 billion programme to promote Nigeria-Africa trade. This sudden change in the direction of trade may be attributed to the aforementioned factors. Otherwise, how do we explain the sudden change in the direction of trade of this magnitude in just twelve months?