0
Nigeria: Slow Growth in U.S, Eurozone Threatens Country's Exports
// Font size:
The linkage that exists in international trade has put Nigeria at the receiving end of the current economic misfortunes of her trade partners in US and Eurozone, but a shift of attention to emerging markets could save the day, reports Festus Akanbi
One burning economic issue in the country today is the controversy generated by the implementation of the 2012 budgets. Responding to an enquiry during a summon by the National Assembly a fortnight ago over the speculation that Nigeria was broke, Co-ordinating Minister of the Economy and Minister of Finance, Dr.Ngozi Okonjo-Iweala, insisted Nigeria is not broke. However, with the ominous signals coming from the nation's export market, analysts said there are fresh challenges that threaten the Nigerian export market and the economy as a whole.
There is Cause for Alarm
Insisting there is cause for alarm over the fresh threats posed by the escalation of the economic misfortune currently plaguing Nigeria's major trading partners in Europe and America, analysts warned that a further contraction in the US and Euro zone could result in a significant drop in the demand for oil, as those regions together account for 64.43 percent of Nigeria's total export value.
They warned that the overall effect would put a dent on Nigeria's export receipts and could result in major adjustments to the country's revenue, expenditure and growth. Nigeria's major trading partners remain Europe and the US.
However, these regions are currently experiencing slow growth and are in an economic recession. The US unemployment rate remained above eight percent in June, recording a slow job growth of 80,000 jobs. In Q1'12, the US GDP grew by only 1.9 percent, reflecting a weakening demand by Nigeria's top oil consumer.
Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, who raised the alarm said the problem is exacerbated by the fact that the campaign build-up towards the November election is expected to promote domestic industries and products, which will result in a decline in the US import level, saying categorically that a decline in importation will result in a possible decrease in the US demand for Nigerian exports. Speaking in a bio-monthly publication of the company, released a fortnight ago, Rewane said, "The euro zone is on the brink of a collapse with the possibility of some major economies defaulting on their budgetary targets. Spain, which is the destination for 7.86 percent of Nigeria's exports, is already in recession, while the Netherlands' economy, Nigeria's largest trading partner in the euro zone, has contracted by 1.3 percent (y-o-y) in the last three quarters."
Nigeria's Revenue Stream
This scenario, he warned could affect Nigeria's revenue, which is dominated by oil (which accounts for over 80 percent of total exports). An economic slowdown of any of Nigeria's trading partners will have serious negative consequences on Nigeria's terms of trade and economic performance. However, our view is that a modest output expansion in the US in Q3'12 will result in a steady performance in the Nigerian economy. This will guarantee continued growth in government revenue and spending, with positive implications for Nigeria's trade balance.
Similar fears were raised by a Lagos-based financial analyst, Mr. Kingsley Udofia, who said the turmoil in the US and Eurozone could cause upsets in Nigeria's export proceeds.
Recent statistics on Nigeria's crude oil export to the US are also scary. For instance, Nigeria's crude export to the US, which was over one million barrels per day (bpd) in December 2009, has declined to 352,000bpd, representing a loss of about 70 per cent of its oil exports to the country.
Citing recent data from the United States Energy Department, the Global Water and Energy Strategy Team (GWEST), a Washington-based consulting firm said in its latest report that Nigeria was the third-largest supplier of crude oil to the United States in 2010, with the US accounting for 43 per cent of Nigeria's exports. GWEST, which specialises in the geo-politics of strategic resources, noted that Nigeria was closely behind Canada and Mexico in oil export to the United States.
The report indicated that in September 2011, Nigeria's crude exports to the United States dropped to 580,000bpd, with the country assuming the sixth position, after Canada, Saudi Arabia, Mexico, Venezuela and Russia.
Nigeria's crude export to the United States further dwindled to 352,000bpd by February 2012, signaling a decline in trade between the two countries that dates back to 1961, when Texaco Overseas began operations in Nigeria.
Emerging Economies to the Rescue
In order to hedge the country's economy against the danger signal from its major trading partners, Rewane said Nigeria can enhance its trade ties with emerging economies such as China and India because despite the global economic contraction, these countries continue to show fast and stable growth. China is the world's second-largest economy growing, at 7.6% (Q2'12) while India, Nigeria's leading trade partner by country of destination, is growing at 5.3% (Q1'12).
According to the FDC boss, fostering trade with African countries is another avenue that needs to be explored to ensure a positive trade balance in Nigeria.
"Trading with neighbouring countries will minimise costs and will encourage bilateral agreements. For instance, importing palm oil from the Ivory Coast is both easier and faster than importing from Malaysia and Indonesia.
"Finally, encouraging production (for example, through the provision of tax incentives for local manufacturers) and stimulating domestic demand will reduce exposure to external shocks. In China for instance, the government has employed various measures to stimulate domestic demand and balance trade growth. Nigeria can take a cue from this," he said.
Nigeria's Balance of Trade
A breakdown of the Nigeria's balance of trade reveals that Nigeria's import bill stood at N1.65 trillion in Q1'12, representing a decline of 46.95% from Q1'11. The importation of motor vehicles, aircraft and associated parts contributed the most to total imports, characterising 35 percent of the total import value. Available data also shows that Nigeria's top five trading partners in Q1'12 were China, US, UK, Brazil and India. By region, Asia ranks first, constituting 37.4 percent of total imports (N617.7bn). Europe and the US constitute 32.5 percent and 23.9 percent respectively of Nigeria's total imports, while African countries contribute 3.6 percent.
Meanwhile, Nigeria's balance of trade (BoT) increased significantly year-on-year (y-o-y) by almost 3000 percent to N3.32 trillion in Q1'12, as against the Q1'11's figure of N110.17 billion. The substantial y-o-y increase, according to the National Bureau of Statistics (NBS), was largely a result of a decline in the importation of mineral products in the first quarter of 2012.
However, on a quarterly basis, the BoT declined by 42.16 percent over the Q4'11 figure of N5.74trn, which is attributed to a drop in the exports of non-oil items. With regards to the total merchandise trade (i.e. the sum of exports and imports), Nigeria's trade value in Q1'12 rose y-o-y by 4.7% to N6.62 trillion, from the N6.32 trillion recorded in Q1'11, and declined by 22.4% in comparison to Q4'11.
The lower import bill is largely attributed to the decline in the importation of mineral products especially processed fuels and lubricants. This decline coincides with the probe into fuel subsidy payments, which has exposed the oil and gas sector to a lot of scrutiny.
In contrast to imports, Nigeria's exports rose by 54.4% to N4.97trn y-o-y in Q12. This rise was driven by both crude and non-crude oil exports. Europe is currently leading the pack, with respect to Nigeria's top five destination markets by region in Q1'12, purchasing 36.6% of total exports valued at N1.82 trillion. The US follows with 27.9%, Asia with 22.4% and Africa purchasing 10.8%. Nigeria's top five leading export trading partners by country are India, the US, the Netherlands, Spain and Brazil..
Copyright © 2012 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
Headlines Newsview all
18 year old cuts off father's head after he raped her in their Papua New Guinea village home
A teenage girl chopped her father's head clean off with a bush knife after he raped her in their home in the highlands of Papua ... Full story
Rapper jailed in Tunisia for calling police dogs in song
Tunis — The two-year prison sentence for a Tunisian rapper on June 13, 2013, for "insulting the police" in a song violates freedom of speech, ...
Peter Ndlovu wins in court
THE High Court has ordered Twalumba Holdings to pay former Highfield United player and coach Peter Ndlovu signing-on fees to the tune of US$55 000. Ndlovu ...
Man impregnates two grade 6 pupils, both aged 12
A MEMBER of the Neighbourhood Watch in Matshetshe area in the Gwanda district has allegedly impregnated two Grade Six pupils from a local school. The ...
Chinese 'Container Hospitals' Ready to Deploy in Africa
Mothers sit with their malnourished and dehydrated children in a ward at Banadir Hospital in the Somali capital Mogadishu. Africa's first 'container hospital', developed by Chinese ... Full story
Nollywood stars support Ogeh Cynthia at father's burial
The day really observed a mourning outlook, but superlatively turned to a festive one as Nollywood stakeholders and stars ceaselessly thronged into Ifite Nanka in ...
Kenyan MPs Have Agreed To Lower Their Salaries
Kenya's MPs have agreed to drop their annual salary by $45,000 ($28,700) to $75,000 following a public outcry, a government-appointed body has said. The MPs would ... Full story
Latest Blog
Mali suicide bomber vests workshop found
A workshop to make suicide bomber vests has been discovered in northern Mali, the French army has said. About 5,000kg of fertiliser intended to be used as explosive was also uncovered in Bourem, a town on the Niger River between Gao and Timbuktu. A sample suicide vest and 18 sewing machines were found and it appears local women were employed there, a...0 comments
Bulawayo panties ban causes panic
BULAWAYO City Council, Zimbabwe Republic Police and Zimra yesterday held a crisis meeting over the ban of the selling of second-hand undergarments at flea markets. Details of the closed-door meeting held at Town Block were sketchy last night, but it lasted for close to three hours. Bulawayo mayor Thaba Moyo confirmed the meeting, but said he could not comment as he was...0 comments
Cheating wife tries to stab hubby after being caught red-handed
A Harare man has dragged his wife to court claiming that she attempted to stab him with a knife after reportedly catching her red-handed canoodling with another man. Kandemiri Tamuka on Thursday brought his wife Tarisai Magore before the Harare Civil Court seeking a protection order, following the alleged stab attempt. The confrontation reportedly took place at their matrimonial home. Magore threatened...0 comments
Woman raped by two armed robbers as lover watches
AN 18-year-old woman from Glen Norah in Harare was raped by two armed robbers who were part of a gang that attacked them while walking at an open space with her boyfriend in the area last Sunday evening. National police spokesperson Chief Superintendent Paul Nyathi confirmed the incident. He said the pair was walking in an open space at around 5.45pm when...0 comments
Farting police officer leads to cannabis factory arrest
A cannabis factory was sniffed out by police after they wound down their car windows to escape the smell when one officer kept breaking wind. The team noticed a second strange scent as they sucked in the welcome fresh air, and tracked it to a house before enforcing the arm of the law, the Police Federation's magazine reported. 'They asked their colleague...0 comments
Reserve Bank of Zimbabwe governor Gideon Gono fired!
The sword of Damocles is all but hovering above the head, of Reserve Bank of Zimbabwe (RBZ) governor, Gideon Gono, following disclosures this week by insiders at the bank that the central banker has been fired from the Joint Operations Command (JOC). Gono has reportedly become become "panic stricken" following the decision to "drop him", from JOC, a shadowy military command...0 comments
Cheating Mberengwa couple forced to walk naked for 1 hour
Residents at a Mberengwa squatter camp had a free treat when two adulterers who were allegedly caught in action - busy as rabbits - were tied both hands and feet before being paraded naked in a display of shame. The woman, Nicky Phiri, was allegedly caught by her in-laws pants down with Andrew Moyo, who is suspected to be her lover....0 comments
Traditional healer allegedly cures 150 people of HIV/AIDS
Traditional healer Samuel Chikurupati Mushonga, 73, claims he has cured over 150 people of HIV/AIDS since December 2012. Mushonga, popularly known as Dr Muzenda, from Nyamadzawo village in Dema in Seke, Chitungwiza, says most of his clients are couples. He plans to take his 'divine concoction' to the laboratory to have it tested and certified as the official cure for HIV/AIDS....0 comments
Pastor arrested over 'miracle' gold
A United Family International Church (UFIC) pastor was on Thursday hauled before the courts after allegedly being found in possession of nine grammes of supposed 'miracle' gold. The bullion, which is worth US$429,26, was recovered wrapped in a Zimbabwe bearer's cheque bill, which is now out of circulation. Magistrate Don Ndirowei remanded Pastor James Mwarira (25), a pastor at Prophet Makandiwa's UFI...0 comments
Tenant gets ill after seeing landlord's big snake wrapped around her kids
In a spine chilling incident that left Nkulumane 10 residents in Bulawayo shocked, a woman allegedly opened up and told residents that her mother-in-law owns a snake which she bathes before using the same water to wash her grandchildren. The matter came to light when one of the tenants came across the snake in the house and called the landlord's daughter-in-law...0 comments
Girls High School Student Sets Dormitory On Fire
A number of pupils were reportedly injured when a Form Three pupil at Bulawayo's Eveline Girls High School allegedly set a dormitory on fire. The pupil (name withheld) allegedly set Langdon Hostel on fire twice on Sunday afternoon. Pupils at the school said the girl who torched the hostel had earlier on the day swore that someone was going to die. She...0 comments
Man tries to sell his wife for the second time in Nakuru
A man shocked residents of Nakuru town yesterday after taking his wife to the market claiming he wanted to sell her. The man attempted to auction the wife last year claiming that she was dirty and poor in the kitchen but did not get a buyer forcing him to take her back home. Sources revealed that the man tied the wife like...0 comments
Eyeball licking romance causing a surge in eye infections
We've all heard about people doing strange things for love, but Japanese students are taking love-induced madness to a whole new level - and putting their health at risk in the process. The latest craze sweeping through Japan is ‘oculolinctus’ – eyeball licking as an expression of affection between young lovers. However, it has led to a surge in cases of eye...0 comments
Over 700 Ghanaian peacekeepers honoured in Liberia
The Special Representative of the Secretary-General, Karin Landgren, awarded United Nations Peacekeeping Medals to more than 700 Ghanaian peacekeepers for their outstanding service as part of the United Nations Mission in Liberia (UNMIL). “Since deploying its first troops to UNMIL in 2003, Ghana has remained a strong, reliable and dedicated partner in Liberia’s peace, stability and development,” the UN envoy said...0 comments
Man calls the police to complain the prostitute he had hired was too ugly
A UK MAN allegedly called the police to complain that a prostitute he had hired was too UGLY after meeting her outside a hotel. The caller told West Midlands Police he wanted "to report her for breaching the Sale of Goods Act". But an officer in the call centre at Solihull, Birmingham, responded by telling the man the woman had not committed...0 comments
Liberian Government has spent US$55.3 millions on buying very expensive vehicles
Ten years after the war ended in Liberia, the country's educational and health sectors are still lagging far behaind from acceptable standards, but the government is spending millions of dollars to purchase vehicles for the comfort of its officials rather than investing in relavant sectors that would benefit the whole population. Latest report released by the Liberia Institute of Public Integrity...0 comments
ShowBiz
Zimbabwe's Pokello gets advice from Makosi
ZIMBABWE'S Big Brother Africa The Chase housemate, Pokello Nare, who has been taunted as being boring, has received advice from an unlikely source. Controversial Big Brother ... Full story
Sport news
Zimbabwe may have to field two goalkeepers
Zimbabwe may have to field two goalkeepers in their 2014 Fifa World Cup qualifier against Guinea in Conakry on Sunday! Cash woes within the Zimbabwe Football ... Full story
World
Kim Kardashian gives birth to baby girl a month early!
Kim Kardashian gave birth to her first child on Saturday - a month ahead of her due date. Mail Online exclusively revealed that the 32-year-old had ... Full story
Today's Latest News
- £60,000-a-year surveyor led secret life as leader of prolific graffiti gang which defaced hundreds of trains and buildings
- The amazing flying bicycle that means traffic jams, parking fines and road rage could be things of the past
- MUKHISA KITUYI REVEALS how some KIKUYU forces wanted him out – KIBAKI was angered
- POLICEMEN can now form or join TRADE UNIONS to push for their rights - Court declares.
- Runaway teacher 'had sex with pupil eight times a night' as she tells jury: He only took me away because he feared I would kill myself
- Will.i.am rages at music label over The Voice's 'flop' Leanne Mitchell
- G8 summit: Putin under new pressure on Syria as Cameron leads seven world powers in bid to get Russian agreement that brutal regime needs to be toppled
- Switching to Radio 2, drinking sherry and feeding birds: The top 50 signs that you're getting old
- Teachers say they have NO OPTION but TO STRIKE and ask Kenyans to blame the Government
- Kylie Minogue shows off her famous derriere in see-through black mini-dress
- REVEALED: What really caused wrangles in UHURU KENYATTA’s party, TNA
- The asylum bid that could cost us more than £40m: Julian Assange is prepared to hide in Ecuador's London embassy for NINE YEARS
- UHURU warns Senators /Governors against dividing Kenyans through devolution.
- MOURINHO puts Chelsea players on toes.
- Flashing the flesh: Kate Moss bares plenty of skin as she makes head turning arrival at Charlotte Tilbury hosted party at Selfridges
- REVEALED!! Why Tarrus Riley and Alpha Blondy did not show up for their concert
- Here we go again... Big Brother bosses forced to deal with another race row after Jemima Slade offends Gina Rio
- UHURU KENYATTA’s daughter, NGINA, joins ANTI-JIGGER Campaign (Video)
- DENNIS OLIECH man handles photographer…….Demarco’s concert
- British prosecutor to charge central Libor suspect: source
- Mediamax’s C.E.O. GRANTON SAMBOJA calls it QUITS
- Poached anchors at K24 to get a PAY CUT……..not PRODUCTIVE
- Smile that says he's on the mend: Prince Philip strides out... in his surgical stockings
- The alarming decline of housing affordability
- Britain's foreign aid madness: Cuts at home, but we STILL hand out more than every other G8 country
- Citizen TV’s EVELYN WAMBUI underwent surgery…….well wishes from DAILY POST
- K24’s troubles ……blocK Red Cross Spokeswoman from INTERVIEW
- Bombardier, Embraer in air-to-air combat for the single-aisle space
- RUMOR!! Citizen TV’s EVELYNE WAMBUI, WILLYS RABURU among others for K24
- 11 dead in attack on school, soldiers
- 11 dead in attack on school, soldiers
- A new song for Welshman Ncube - Video
- KTN’s JOE AGEYO calls it quits and heads to Citizen TV
- Guinea 'cannot hold elections on June 30': official
- Ian Brady: Mumbling Brady's contempt for his victims: Moors murderer says slaughter of five children was 'petty' and claims he is no worse than a politician as he is seen in public for first time in decades
- Guinea 'cannot hold elections on June 30': official
- CONFESSION!! Women engaging in S*X with DOGS in Nairobi’s GIGIRI area
- DAILY DRAMA: I'm scared to sign papers after photocopy fling
- Alberta regulator falls short on disclosure
- Justin Rose told: Yoda man to win US Open
- Joe Kinnear: I’ll quiz Alan Pardew on targets and get ‘em
- Phil Mickelson devastated at 6th US Open runner-up finish
- Luis Suarez must put in transfer request if he wants to quit Liverpool
- John Obi Mikel wanted by Galatasaray
- Isco race led by Man City
- Peter Odemwingie on Crystal Palace list after his QPR farce
- Mark Webber slams the loss of Formula One fun
- Ashley Cole Anton Ferdinand race row stand-off
- Andy Murray roars: Bring on Rafa Nadal at Wimbledon
- Justin Rose: I won US Open with tunnel vision work of art
Comment on: Nigeria: Slow Growth in U.S, Eurozone Threatens Country's Exports
Rate this article
MOST POPULAR ON AFRICANSEER
Displaying
1 - 5
Displaying
1 - 5
Breaking News
£60,000-a-year surveyor led secret life as leader of prolific graffiti gang which defaced hundreds of trains and buildings
Kristian Holmes, 32, caused £250,000 of damage to trains and buildings The father-of-two sprayed 'VAMP' tag across rail network and even abroadOne of his accomplices ...
The amazing flying bicycle that means traffic jams, parking fines and road rage could be things of the past
John Foden and Yannick Read have created a bike that turns into an aircraftParavelo uses a fan to travel at up to 15mph on land ...
Runaway teacher 'had sex with pupil eight times a night' as she tells jury: He only took me away because he feared I would kill myself
Teacher Jeremy Forrest, 30, accused of abducting schoolgirl, then 15 Schoolgirl said they had sex up to eight times a night and in his carGirl ...
G8 summit: Putin under new pressure on Syria as Cameron leads seven world powers in bid to get Russian agreement that brutal regime needs to be toppled
Prime Minister spearheaded efforts to persuade RussiaConflict risks overshadowing two-day G8 summit in Northern IrelandUS President Barack Obama is ready to provide weaponsVladimir Putin warns ...
Switching to Radio 2, drinking sherry and feeding birds: The top 50 signs that you're getting old
Survey reveals physical and attitudinal changes that mean you're ageingMore older people are challenging the 'pipe and slippers' stereotype By Daily Mail Reporter PUBLISHED: 11:49 GMT, 17 ...
The asylum bid that could cost us more than £40m: Julian Assange is prepared to hide in Ecuador's London embassy for NINE YEARS
William Hague and his Ecuadorian counterpart failed to reach agreement on Assange's future as he marks first anniversary of stay at embassy this weekHe will ...
Smile that says he's on the mend: Prince Philip strides out... in his surgical stockings
Duke had exploratory operation and has been progressing well Was allowed to leave three days earlier than expected and is off to WindsorThe Duke will ...
Britain's foreign aid madness: Cuts at home, but we STILL hand out more than every other G8 country
Between 2011 and 2012 several countries reined in foreign aid budgetsBut cash-strapped Britain didn't and spends 0.56% of national incomeBritain's aid make us the 'soft ...
11 dead in attack on school, soldiers
Suspected Islamist extremists have attacked a secondary school and military checkpoint in Nigeria's northeast, leaving 11 people dead including seven students, the military said Monday. ...
Guinea 'cannot hold elections on June 30': official
An official from Guinea's election commission said Monday that polls set for June 30 were no longer "in the programme" following weeks of deadly protests ...
