Nigeria recorded a current account deficit of $424 million in the second quarter of 2021, dropping to its lowest level in over two years. This is according to data on Nigeria’s balance of payment from the Central Bank of Nigeria (CBN).
Although Nigeria’s balance of payment continues to trail in the negative region, it dropped significantly by 79.8% compared to a deficit of $2.1 billion recorded in the previous quarter. Also, it reduced by 87% compared to a deficit of $3.27 billion recorded in Q2 2020.
The upward movement in the country’s balance of payment is attributed to the significant surge in crude oil export. Notably, crude oil export increased by 73% quarter-on-quarter in Q2 2021 from $6.48 billion to $11.22 billion. Compared to the corresponding period of 2020, crude oil export increased by 116.7% from $4.31 billion.
According to data from the National Bureau of Statistics, crude oil production has hovered around 1.6 million barrels per day in the past year as against an average of 2.02 mbpd before the pandemic.
In the period under review, goods worth $12.61bn were exported, representing a 63.5% increase compared to the prior quarter.
On the other hand, importation of goods stood at $11.55 billion in the review period, resulting in a net credit of $1.06 billion.
In terms of services, a net negative current account of $4.67 billion was recorded, increasing by 58.7% compared to a deficit of $2.94 billion recorded in the previous quarter and 80.6% increase when compared to a similar deficit of $2.59 billion in Q2 2020.
Nigerians spent a sum of $1.54 billion on travelling in the period under consideration, an increase compared to the previous period. This is largely due to pent-up travel obligations carried over from the period of lockdown in major countries around the world.
Nigeria has now endured a negative balance of payment for 10 consecutive quarters, since Q1 2019. However, considering the appreciation in global crude oil prices as the economy continues to reopen amidst intensified vaccine roll-out, which could, in turn, see remittances receive some form of boost, we are likely to see positive numbers in the coming quarters.
A cursory look at the foreign trade data from the NBS shows that Nigeria’s foreign trade deficit dropped in Q2 2021 to N1.87 trillion from N3.94 trillion recorded in the previous quarter. Just as the balance of payment has maintained a negative position since Q1 2019, Nigeria’s foreign trade balance has also been in a deficit since Q4 2019, exacerbated by a significant increase in import value.