Dangote Fuel: More dollars flowing into Nigeria, according to new CBN forecast

• Nigeria's current account is expected to record a larger surplus of $6.96 billion this year, according to CBN data
• The current account balance will be higher this year than last year's figure of $5.31 billion.
• According to the report, OPEC+ production cuts are likely to lead to higher export earnings.

Legit.ng journalist Zainab Iwayemi has over three years of experience covering business, technology and capital markets.

Nigeria's current account is expected to record a larger surplus of $6.96 billion this year, according to a macroeconomic analysis by the research department of the Central Bank of Nigeria (CBN).

Nigeria's foreign trade with the rest of the world is recorded in the current account.

The current account balance will exceed last year's figure of $5.31 billion this year. Increased remittances from the diaspora and a sustained trade surplus due to strong exports will fuel the current account boom.

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According to the study, higher export earnings are expected due to production cuts by OPEC+, ongoing tensions in the Middle East and the expected increase in local gas and crude oil production.

Dangote refinery to boost exports

In addition, the opening of the Dangote refinery is expected to increase export earnings and reduce imports of petroleum products.

“Imports are expected to decline from $49.68 billion in 2023 to $46.11 billion in 2024, mainly due to a decline in oil imports. The continued implementation of the Petroleum Industry Act 2021 (PIA) and the operation of the refineries in Dangote and Port Harcourt are expected to reduce oil imports. However, non-oil imports are expected to increase slightly due to the expected improvement in global and domestic economic conditions,” the central bank said.

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The analysis assumes that the continued expansion of both oil and non-oil exports will lead to an increase in exports from $54.53 billion in 2023 to $55.21 billion in 2024.

“The expected increase in domestic crude oil production due to improved security of oil facilities is expected to boost export earnings. The improvement in exports would be reinforced by the operation of the Dangote refinery and a possible rise in oil prices amid geopolitical tensions and OPEC+ supply cuts,” it added.

The Nation newspaper reported that high global commodity prices and government programs to expand the export base (such as the Export 774 program) will lead to an increase in total non-oil exports.

In addition, non-oil exports are expected to be boosted by increasing earnings from exports of essential commodities such as urea, fertilizers, sesame seeds, cocoa beans, hibiscus flowers and cashew nuts.

The deficit in the services account is expected to narrow slightly from $12.92 billion to $12.85 billion due to increased costs and the devaluation of the naira. This could lead to a reduction in spending, particularly in travel, transport and business services.

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According to the study, the primary income account deficit is expected to increase from $8.46 billion to $9.36 billion in 2023. This result is based on the expected increase in returns on foreign investors' investments after repatriation.

In addition, projections for diaspora remittances suggest a slight increase from USD 19.17 billion to USD 19.42 billion in 2023.

This is because reforms have been implemented in the foreign exchange market, allowing International Money Transfer Operators (IMTOs) to pay their recipients at market-determined exchange rates, and improvements in the global economy are expected.

Dangote refinery talks about the colour of petrol

Legit.ng reported that the Dangote refinery has finally fulfilled its promise to supply gasoline to the Nigerian market.

The 650,000 bpd capacity refinery delivered the gasoline to the Nigerian market on Tuesday, September 3, 2024, amid high expectations among Nigerians who suffered acute shortages last month.

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The commissioning of Dangote is a milestone for Africa's largest oil producer, which has not produced gasoline for the past 28 years.

Source: Legit.ng