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Improved financial inflows raise current account surplus by 47%

By on May 26, 2014

The Central Bank of Nigeria (CBN) has disclosed that improved financial inflows (home remittances) from Nigerian in Diaspora raised the profile of current account surplus in the fourth quarter of 2013 to $5.38 billion, a 47.5 per cent and 9.3 per cent higher than the $3.65 billion and $4.93 billion recorded in Q3 2013 and Q4 2012, respectively.
The CBN explained that the development was largely traceable to the lower investment income repatriations as well as improved financial inflows (home remittances) from Nigerians in Diaspora.
The figures were contained in the apex bank’s Economic Report for the fourth quarter of last year.
The report however stated that aggregate exports of goods declined by 3.6 per cent and accounted for by the oil and gas component during the year under review.

Similarly, non-oil exports increased by 21.3 per cent in Q4 2013 above the level in Q3 2013. The CBN said the improved performance of the non-oil exports may not be unconnected with the current policy emphasis on the promotion of non-oil commodity exports particularly output from commercial agriculture. Similarly, aggregate imports declined by 7.2 per cent.

The report added that out-payments in the services account increased by 9.9 per cent when compared with the level recorded in Q3 2013 while the deficit in the income account improved from $6.96 billion in Q3 2013 to $5.47 billion in Q4 2013.

The apex bank disclosed that current transfers surplus, which was driven largely by remittances from Nigerians in Diaspora, widened by 1.7 and 11.1 per cent to $6.06 billion in Q4 2013 when compared with the respective levels recorded in Q4 2012 and Q3 2013.

The report which also dwell on capital and financial accounts within the period under review said transactions in the capital and financial account resulted in a net asset of $0.80 billion in Q4 2013 compared with a net liability of $7.06 billion in Q3 2013. The development was said to have been driven by higher foreign currency deposits and outward direct investment of $0.95 billion in Q4 2013 compared with $0.21 billion in Q3 2013. The growth in outward direct investment was attributable to the expansion of Nigerian banks in the sub-region. Outward portfolio investment declined by 59.7 per cent to $0.87 billion but rose above the level in the corresponding quarter of 2012 by 25.0 per cent. Both inward direct and portfolio investments increased by 16.1 and 26.6 per cent, respectively resulting in a huge net liability of $6.14 billion in Q4 2013. The development was attributed to the predictable macroeconomic environment and sustained higher return on investment. However, owing to the continued pressure in the foreign exchange market, the reserve assets depleted by 2.9 per cent. Nigeria’s external debt which was $8.26 billion in Q3 2013 rose to $8.82 billion at end Q4 2013.
In a related development, the apex bank said aggregate foreign capital inflow for the period under review increased by 24.3 percent as it increased to $4.94 billion in Q4 2013, from $3.97 billion in Q3 2013 owing to an increase in both direct and portfolio investment inflows. The report stated that direct investment and portfolio investment inflows increased by 16.1 and 26.6 per cent from $0.86 billion and $3.11 billion in Q3 2013 to $1 billion and $3.94 billion, respectively.

“Portfolio investment inflow remained dominant and accounted for 79.7 per cent of total foreign inflows while direct investment inflows accounted for 20.3 per cent of the total. The higher inflow of foreign capital in Q4 2013 was a welcome development which should be sustained through macroeconomic stability and enhanced investment environment including good corporate governance,” the CBN report stated.

Also, the CBN has put the aggregate demand for foreign exchange by the authorised dealers comprised of Retail Dias and bureau de change in the fourth quarter of last year at $12.09 billion as against $9.69 billion demanded in Q3 2013.
The figure is a 24.8 per cent increase.

According to the breakdown of the figures which was contained in a publication, External Sector Development Report, release on the apex bank’s website, a total of $10.56 billion was demanded at the rDAS compared with $8.17 billion in the preceding period, an increase of 29.4 per cent. Similarly, demand by the BDC operators marginally increased, by 0.2 per cent, from $1.52 billion in Q3 2013 to $1.53 billion in the review period.
The CBN put the total amount supplied in Q4 2013 stood at $8.60 billion compared with $9.26 billion in Q3 2013.
Of the total amount supplied, $7.08 billion was to the rDAS and $1.53 billion to the BDC operators as against $7.73 billion and $1.52 billion, respectively, in Q3 2013.

 

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