Nigeria’s Current Account position is projected to record a higher surplus of $6.96 billion this year, a macroeconomic report by the Central Bank of Nigeria (CBN) research department has shown.
The current account balance of payments is a record of Nigeria’s international transactions with the rest of the world.
This year’s current account position will be higher than $5.31 billion recorded last year. The surge in current account balances will be driven by sustained trade surplus from robust export performance and increased diaspora remittances.
According to the report, the OPEC+ crude oil supply cuts, ongoing Middle East tensions, and anticipated rise in domestic crude oil and gas production, are likely to boost export earnings.
Additionally, the commencement of the Dangote Refinery is expected to increase export receipts and reduce petroleum product imports.
“Import in 2024 is expected to decrease to $46.11 billion from $49.68 billion in 2023, primarily, due to a decline in oil imports. The continued implementation of the Petroleum Industry Act 2021 (PIA), and operations of the Dangote and Port Harcourt refineries, are anticipated to reduce oil imports. However, a slight increase in non-oil imports is expected, due to anticipated improvement in global and domestic economic conditions,” the apex bank said.
According to the report, export is projected to rise to $55.21 billion in 2024, from $54.53 billion in 2023, arising from the sustained growth in oil and non-oil exports.
“Anticipated increase in domestic crude oil production owing to enhanced security of oil installations, is expected to boost export receipts. The improvement in export would be reinforced by the operations of the Dangote refinery and potential oil price increase amid geo-political tensions and OPEC+ supply cuts,” it added.
In the non-oil sector, high global commodity prices and government initiatives (such as the “Export 774” Programme) to diversify the export base, will further enhance total export.
Also, higher receipts from the export of key commodities, including urea, fertiliser, sesame seeds, cocoa beans, hibiscus flower, and cashew nuts, are expected to drive non-oil export.
The deficit in the services account is expected to narrow, slightly, to $12.85 billion from $12.92 billion, as higher cost and weaker naira could suppress spending, especially on business, transportation, and travel services.
The report said that in the primary income account, the deficit is projected to widen to US$9.36 billion from US$8.46 billion in 2023. This outcome is based on the anticipated increase in repatriation returns on investment by foreign investors.
Additionally, the outlook for diaspora remittances indicates a marginal increase to $19.42 billion from $19.17 billion in 2023.
This is on account of expected improvement in global economic conditions and reforms in the foreign exchange market that allow International Money Transfer Operators (IMTOs) to pay beneficiaries at market determined exchange rates.
Similarly, the ongoing efforts by the Bank to improve efficiency, transparency and confidence in the foreign exchange market is expected to boost remittances through formal channels.
The financial account is expected to maintain a higher net borrowing position at $6.41 billion, compared with $6.39 billion in 2023. This projection is based on a higher net incurrence of financial liabilities, totaling $13.08 billion, from $5.14 billion in 2023.
“The higher liabilities are attributed to expected increase in external borrowings, through euro bonds and multilateral loans, and higher portfolio inflows. On the asset side, residents are likely to increase investments abroad leading to a rise in the acquisition of financial assets,” it said.
