In its first administrative steps, the new government of the federation has declared the removal of the country’s controversial subsidy on fuel. Welfare advocates have defended it, but it has also come under heavy fire for its macroeconomic and budgetary lapses. For instance, subsidy costs, which totalled over N10 trillion between 2006 and 2019, consumed N4.39 trillion ($9.7 billion) in 2022 alone and nearly N3.36 trillion ($7.5 billion) in the first half of 2023, have been a contributing factor in budget deficits in recent years.
June 25, 2023
Nigeria Economic Update (Issue 21)
Related
Nigeria Economic Update (Issue 51)
Recently released data by the National
Bureau of Statistics (NBS) shows that there was significant increase in Nigerias
total merchandise trade for 2016Q3. Basically, the total merchandise trade
increased (quarter-on-quarter) by 16.29 percent to N4, 722 billion in 2016Q3;owing to 29.1 percent increase in exports and 6.2 percent rise in imports. Oil
exports increased by 31 percent to N1, 943 billion, while non-oil exports
increased by 20.5 percent to N440 billion. However, on the aggregate, Nigeria
recorded yet another trade deficit of N104 billion, indicating continuous
higher imports relative to exports. Overall, though there is improvement in the
performance of non-oil sector, however, this is insufficient to effectively
complement the loss in oil trade sustained since the beginning of oil price
crash. This suggests that diversification into non-oil sector may not be able
to rescue the economy in the short term. However, while the diversification
efforts should be sustained, eliminating hurdles in oil production may be
instrumental to higher exports, especially as oil price increase is gaining
momentum.