…As invisible sector gulps over 34% in 3 months
By Omodele Adigun
Certainly, this is not the best of times for business in the country as foreign exchange (forex) inflow has tumbled by over 67% to mere $14.68billion, just as the invisible sector of the economy took the lion share of its allocation in just three months.
Statistics obtained from the website of the Central Bank of Nigeria (CBN) shows that total forex inflows in 18 months amounted to $224billion, while the outflows stood at $76billion. The invisible sector, however, came tops on the utilisation chart by accounting for $2.08billion to beat Agriculture- the primary sector-to a distant 7th position with paltry $49.94million.
The invisible or service sector consists of the “soft” parts of the economy, that is, activities where people offer their knowledge and time to improve productivity, performance, potential, and sustainability, which is termed as affective labour. The basic characteristic of this sector is the production of services instead of end products. Services (also known as intangible goods) include attention, advice, access, experience, and discussion.
According to the data, during the first six months of 2014, 2015 and 2016, the nation got $157.2billion, $52.12billion and $14.68billion, in that order, as inflows, while the outflows for the same period stood at $76billion, comprising $27.16billion in 2014; $21.84billion in 2015 and $14.35billion in 2016.
As for the forex utilisation, the apex bank, in its Economic Report for the Second Quarter of 2016, states that sectoral utilisation shows that “the invisible sector accounted for 34.1per cent, which formed the bulk of total forex disbursed in the second quarter of 2016, followed by the industrial sub-sector, 22.5 per cent. The contributions of other sectors in a descending order included: minerals and oil sub-sector, 23.3 per cent, manufactured products, 11.3 per cent; food products, 6.3 per cent; transport sector, 1.7 per cent and agricultural products, 0.8 per cent.” This implies that the amount allocated and utilised by each of the sectors, out of the $6.09 billion outflow from the central bank, stands as follows: invisible sector, $2.06billion; industrial, $1.37billion; minerals & oil sub-sector, $1.42billion; manufactured products, $688.17million; food products,$383.67millio;transport sector, $103.53million and agricultural products,$49.94million.
Giving reasons for the downward trend in forex inflows, the apex bank explains:
“Provisional data showed that foreign exchange inflow and ouflow through the CBN in the second quarter of 2016 were US$5.89 billion and US$6.09 billion respectively. This resulted in a net outflow of US$0.20 billion, compared with the net outflow of US$0.54 billion in the preceding quarter. Relative to the level at the end of the preceding quarter, inflow increased by 49.3 per cent, but was a decline of 15.6 per cent, compared with the level at the end of the corresponding period of 2015. The development, relative to the preceding quarter was due to the increase in both oil and non-oil receipts. Similarly, outflow rose by 35.7 per cent above the level in the preceding quarter, but was 25.7 per cent lower than the level at the end of the corresponding period of 2015. The development, relative to the preceding quarter, was driven mainly by interbank sales, swaps and 3rd party MDA transfer.
”Provisonal data on aggregate foreign exchange inflow into the economy indicated that total inflow was US$15.33 billion.This represented an increase of 3.7 per cent above the level at the end of the preceding quarter but, showed a decline of 35.3 per cent relative to the level at the end of the corresponding period of 2015. The development was driven by increase in oil and non-oil receipts. Oil sector receipts, which accounted for 20.5 per cent of the total, stood at US$3.15 billion, compared with US$2.48 billion and US$3.65billion, recorded in the first quarter of 2016 and the corresponding period of 2015 respectively.
“Non-oil public sector inflow, at US$2.74 billion (17.9 per cent of the total), rose by 87.7 per cent, above the level at the end of the preceding quarter. It, however, indicated a decline of 17.5 per cent from the level at the end of the corresponding period of 2015. Autonomous inflow, which accounted for 61.per cent of the total, fell by 13.0 per cent compared with the level in the preceding quarter of 2016.
“At US$6.60 billion, aggregate foreign exchange outflow from the economy rose by 29.4 per cent, above the level in the preceding quarter, but showed a decline of 19.5 per cent, from the level at the end of the corresponding period of 2015.
The development, relative to the first quarter was attributed to the increase in outflow through the CBN.
Thus, foreign exchange flows through the economy resulted in a net inflow of US$8.73 billion in the review quarter, compared with US$9.69 billion and US$15.51 billion in the first quarter of 2016 and the corresponding period of 2015 respectively.”
In its Economic Report for half year of 2015, the central bank states that foreign exchange inflow into the economy declined by 36.0 and 31.2 per cent to US$52.12
billion against the respective levels in the first and second halves of 2014. “Total foreign exchange outflow from the economy declined by 19.6 and 24.9 per cent to US$21.84 billion, from the levels at end-June and end-December 2014, respectively.”