Nigeria’s external trade balance improved to 10.67 billion dollars (N16.63 trillion) in the first quarter of 2012, from the 8.44 billion dollars (N13.5 trillion) it recorded in the same period last year. The Central Bank of Nigeria (CBN) disclosed this in a publication entitled: “Development in the External Sector”, released on Monday in Lagos.
The bank attributed the improvement to the expansion in the export of merchandise and the contraction of the importation of merchandise. It noted that Nigeria’s merchandise exports increased from 23.37 billion dollars (N36.42 trillion) in the first quarter of 2011 to 24.97 billion dollars (N38.92 trillion) in the period under review. The bank said that the aggregate imports declined marginally from 14.93 billion dollars (N23.27 trillion) in fourth quarter of 2011 to 14.30 billion dollars (N22.28 trillion).
It also said that the degree of openness, measured by the ratio of Nigeria’s total trade to Gross Domestic Product (GDP) was 67.0 per cent in the review period, up from the 59.0 per cent recorded in the preceding quarter. The publication said that the aggregate foreign capital flows from the Foreign Direct Investment (FDI) and portfolio investment flows stood at 9.35 billion dollars (N1.4 trillion) in the first quarter of 2012.
It said that the aggregate foreign capital inflows in the first quarter of 2012 was 5.53 billion dollars (N8.6 trillion), an improvement on the 3.39 billion dollars (N5.28 trillion) recorded in the first quarter and 3.48 billion dollars (N5.42 trillion) in the fourth quarter respectively. The FDI inflow accounted for 31.0 per cent, while the portfolio investment accounted for 69.0 per cent, it said.. The bank also said that further analysis revealed that the FDI dropped from 2.13 billion dollars (N3.32 trillion) in the fourth quarter of 2011 to 1.72 billion dollars (N2.68 trillion) in the first quarter of 2012.
However, it said that the estimated portfolio investment inflows increased significantly from 1.36 billion dollars (N2.11 trillion) in the first quarter of 2011 to 3.82 billion dollars (N5.95 trillion) in first quarter of 2012.
“The decline in FDI inflows during the review period was traced to the insecurity occasioned by terrorist activities,’’ the bank said. It noted that the increase in portfolio investment inflows was attributable to the positive effect of the bank’s policy on foreign investment in short-term instruments and the relatively high yield. The CBN added: “It is, however, important to note that the continued increase in portfolio investment over and above FDI portends serious consequences for foreign exchange management.” According to the bank, there is the need to closely monitor the development and evolve measures to stem any adverse effect in case of a reversal.
