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Nigeria Posts $3.68 Bn Balance of Payment Surplus in Q3 2021

Nigeria’s balance of payment account recorded a surplus of $3.68 billion at the end of September, 2021, the first surplus in 10 consecutive quarters, the Central Bank of Nigeria (CBN) report showed.

The report showed that Nigeria recorded its first current account surplus in almost three years, as the combination of an increase in net foreign trade balance, Diaspora remittances and decline in fund outflows resulted in a $3.68 billion net balance.

CBN

The current account balance recorded in Q3 2021, represents a significant increase compared to the $424.37 million deficit recorded in the preceding quarter and even a bigger rise compared with $3.62 billion deficit posted in the corresponding period of 2020.

The significant improvement in the country’s net balance of payment can be attributed to the increase recorded in its net foreign trade. The net goods account improved by 66.9 percent from $1.06 billion recorded in Q2 2021 to $1.77 billion in Q3 2021.

However, the positive trade account was due to the decline in capital outflows on goods and services as opposed to an increase in export earnings.

Notably, importation of non-oil products decreased by 17 percent from $9.31 billion to $7.73 billion.

Also, the net expenses on foreign services dropped to $2.51 billion in the review period compared to $4.67 billion recorded in the previous quarter.

The country’s expenses on foreign services declined significantly in Q3 2021, further elevating the country’s current account balance from a position of deficit to a surplus.

Nigerians spent a sum of $3.43 billion on foreign services in the review period, which is 38.1 percent lower than $5.55 billion recorded in the previous quarter.

In the same vein, despite the increase in travelling activities across the world, Nigerians’ spending on foreign business travels reduced by 62.8 percent to $57.11 million, representing a record low except for Q2 and Q3 2020 that was obviously affected by the lockdown measures in most countries of the world.

Similarly, expenses on foreign medical services declined by 68.6% to $84.82 million as opposed to $270.23 million recorded in the previous quarter.

In addition, foreign education expenses dropped by 43.7% from $717.83 million recorded in Q2 2021 to $403.93 million in Q3 2021. Meanwhile, education still accounts for a large portion of the expenses on foreign services, indicating the level of capital flight and thirst for foreign acquired degrees by Nigerians. The decline in some of these foreign services, which had engulfed a significant portion of FX available in the country, is now experiencing a downtrend further supporting the current account and serving as a relief for her exchange rate.

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