Nigeria’s earnings from the non-oil sector had declined significantly in the second quarter of 2015 as manufacturing declined on the receding nature of the economy. Non-oil earnings had dropped from $1.02 billion in the first three months of the year to $576.97 million in the second quarter of the year.
Data from the second quarter economic report released by the Central Bank of Nigeria showed that the decline was a due to decline in the output by the manufacturing sector. In the first quarter of the year, the manufactured products had accounted for 53.8 per cent of the non-oil foreign exchange of the country.
However, this figure declined to 13.8 per cent in the second quarter, as earnings from manufactured products declined to $79.44 million in the second quarter from $546.38 million in the first quarter a decline of 85.5 per cent.
The decline in non-oil exports was also attributed to lower receipts from the food products and minerals export. From $46.22 million in the first quarter, earnings from food products dropped to $30.68 million while mineral earnings dropped to $185.51 million in the second quarter from $225.15 million.
Agriculture has been the major driver of the nation non-oil export earnings in the second quarter of 2016 according to the second quarter economic report as published by the Central Bank of Nigeria.
The percentage shares of agricultural, minerals, industrial, manufactured products, food products and transport sectors in the total non-oil export proceeds were 34.1 per cent, 32.2 per cent, 14.6 per cent, 13.8 per cent, 5.3 per cent and 0.02 per cent, respectively. Provisional data showed that total non-oil export earnings, at US$576.97 million, fell by 43.2 per cent, below the level in the preceding quarter.
Likewise, Nigeria’s trade deficit in the second quarter of the year declined as the value of exports rose on the back of a weaker currency as figures released by the National Bureau of Statistics showed that the country’s negative trade balance dropped by N154.8 billion to N195.5 billion.
The total value of merchandise trade in the second quarter stood at N3.942 trillion, 49 per cent above the first quarter figure of N2.645 trillion. The higher figure was due to increased value of exports which rose by 63.3 per cent or N725.6 billion as well as increased imports which rose by N570.8 billion or 38.1 per cent during the second quarter of the year.
As non-oil exports continue to rise with the diversification drive of the Buhari-led government, there has been an increasing need for more financing for the sector. The apex bank had observed that the non-oil export credit had been on the decline when compared to the total domestic credit to the private sector.
This is not unconnected to the general decline in banking sector credit as banks in reducing their exposure to non-performing loans had equally reduced granting credit facilities. This had prompted the CBN to establish a N500 billion Non-Oil Export Stimulation Facility (ESF) and N50 billion Export Rediscounting and Refinancing Facility (RRF).
The facilities according to the apex bank were established against the backdrop of the fast dwindling oil revenue and the need to urgently reposition the non-oil port sector to enhance its contribution to foreign exchange earnings of the nation.
The apex bank had recently released the guideline for accessing the facilities which it hopes would increase activity in the non-oil export sector and jumpstart the Nigerian economy that is moving towards a recession.
According to the CBN director of development finance, Mudashiru Olaitan, the implementation of the facilities will improve export financing, increase access of exporters to credit at single digit interest rate and opportunities for them to upscale and expand their businesses.
The guideline states that the RRF has a tenor of one year and six percent interest rate per annum and a transaction limit of N2 billion to N5 billion, while the ESF will be granted at a maximum of nine per cent interest rate per annum with a maximum lending limit of N5 billion per single obligor and a tenor of 10 years.
Olaitan noted that the facilities which will be disbursed in collaboration with the Nigerian Export Import Bank (NEXIM) will also diversify the non-oil baskets, attract new investments towards sustainable economic development and job creation.