Nigeria’s top 10 agricultural export is estimated to have earned the country about N289.3 billion in one year (April 2019 – March 2020). This is according to data collected from various foreign trade reports, as compiled by the National Bureau of Statistics (NBS).

A cursory look at the data showed that Sesamum seeds and Cocoa remain Nigeria’s biggest agricultural exports, with the two products jointly accounting for over 60% of the entire agricultural exports in the country.

READ MORE: UPDATED: Nigeria’s foreign trade drops to N8.3 trillion, down by 18% in Q1 2020

Number Breakdown: Top ten Agricultural Exports in Nigeria

By operational definition, the NBS defined agricultural products as goods that come from the planting of crops and/or raring of animals. Here is the breakdown of Nigeria’s top agricultural exports and top destination countries.

• Sesamum seeds: Sesamum seeds, the tiny, oil-rich seeds, have been Nigeria’s agricultural export biggest earner for some years. During the period under review, Nigeria made the sum of N112.8 billion from the export of the products and this accounted for 38.9% of the top 10 agricultural products. Top destinations for the product include Japan, China, Turkey, India, and Vietnam.
• Cocoa Beans: Cocoa (Fermented, superior quality raw cocoa) exports is Nigeria’s second largest agricultural export. During the period under review, cocoa export was estimated to be N109.6 billion, accounting for 37.8% of the top agricultural exports. The top destinations for the product are Germany, Netherlands, Spain. Indonesia, Belgium, Malaysia, and Estonia.
• Cashew nuts (In shell and shelled): Cashew nuts are Nigeria’s 3rd biggest agricultural export product. In one year (March 2019 – March 2020), Nigeria generated a total sum of N38.2 billion from cashew nuts export. The top destinations are Vietnam, India, USA, Russia and the Netherlands.
• Frozen shrimps and prawns: Ranking 4th on the list, Frozen shrimps and prawns accounted for 3.4% of the biggest export in Nigeria, estimated to be N9.85 billion in the last one year. According to the breakdown, Netherlands, Belgium, France, Vietnam, and the USA are top destinations for the export of the products.
• Natural cocoa butter: Natural cocoa butter ranks as Nigeria’s 5th biggest agricultural export product within the period. Nigeria generated the sum of N7.69 billion as revenue proceed from the export of cocoa butter. Germany and Estonia are top destinations for the product
• Sesame oil and its fractions: Sesame oil, an edible vegetable oil derived from sesame seeds, ranks 6th on the list with an estimated export value of N3.1 billion
• Other agricultural products on the top 10 list include Cotton, Agro-food items, Other cut flowers & flower buds of kind suitable ornamental purposes and Ginger. During the period, a total sum of N2.53 billion was generated from Cotton export, Agro-food items (N1.97 billion), Cut flowers and flower buds (1.96 billion) and Ginger (N1.43 billion).

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Upshots: Nigeria’s Agric. export may experience the biggest contraction in 2020

As at the end of Q1 2020, Nigeria’s total foreign trade was estimated at N8.3 trillion, an 18% decline when compared to N10.12 trillion recorded in Q4 2019. The decline in foreign trade showed the earliest sign of the impact of COVID-19 pandemic that led to disruption in cross border trade.

READ ALSO: Nigeria’s trade balance hits recession low, records N579 billion deficit in Q4 2019

Despite the gradual easing of lockdown in major economies, restrictions imposed on cross border movements still subsist and this may demand for the goods and commodity prices in the short to medium term.

On the flip side, Nigeria’s cocoa-industry association recently cut its output estimate for the 2020 main crop by 18%, citing the spread of the fungal black pod disease caused by heavy rains in the country’s main growing areas.

Revenues of some of the major oil and gas companies quoted on the Nigerian Stock Exchange fell by about 38% in the second quarter of 2020 wiping out a whopping N84.7 billion from their topline revenues.

This is according to data compiled from the recently released results of the listed companies in the oil and gas sector. They include Mobile Oil (II), Ardova, Total, & Seplat, the only major oil and gas firms that have released their Q2 financials. Oando and Conoil, are yet to release their results. The data was compiled by Nairametrics Research.

Total, Mobil, and Ardova are oil marketing companies while Seplat is into upstream oil and gas production. They are also some of the biggest oil companies listed on the exchange and in Nigeria.

READ MORE: Nigerian hotels count revenue losses due to pandemic-induced plunge

The companies reported combined revenue of N135.6 billion in the second quarter of 2020 compared to N220.3 billion in the corresponding quarter of 2019. Revenue in Q1 was N219 billion. The Nigerian economy, particularly the oil and gas sector has been hit hard by the oil price crash and the COVID-19 pandemic and could be a major reason for the loss in revenues.

The companies also recorded a combined loss before tax of N16.6 billion compared to N38 billion in pretax profits reported in the same period in 2019. The second-quarter losses compound an already bad situation for these companies after reporting a loss before tax of N28.7 billion in the first quarter of 2020. These companies have now seen a combined N45.4 billion wiped out of their profits.

READ MORE: What banks might do to avoid getting crushed by Oil & Gas Loans

Why the revenue drop?

A closer look at the data reveals most of the losses came from the oil marketing firms Total and Mobil. Over N56 billion of the revenue loss was between Mobil and Total. Seplat and Ardova lost just over N5 billion respectively.

A cursory review of their results suggests the companies suffered from a drop in demand for refined products such as fuel, diesel, and lubricants. Nigerians were mostly on lockdown throughout April and May before reopening partially in June and July. However, the damage had been done as adherence to safety procedures meant fewer people were commuting impacting heavily on sales.

Seplat was also hit by dipping crude oil prices and weak demand for its crude. Nairametrics reported back in April that oil prices at some point fell to negative territory as demanded waned globally.

Despite the drops, the companies continued to incur overheads and operating expenses which they could not entirely avoid despite the lockdowns. Gross Margins for the quartet fell by 61% year on year putting the companies on the path to losses.

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Implication on the wider economy

A review of some of the results already seen by Nairametrics indicates nearly all sectors recorded revenue losses. This is also likely the same situation across the country as Nigeria awaits the second-quarter GDP numbers sometime this month.

Though oil and gas firms faced a twin dose of a fall in crude oil prices and the Covid-19 situation, all sectors except for oil and gas and Agriculture sectors recorded high revenue declines. The companies under review last reported a similar drop in revenues and loss before tax in 2016 when Nigeria entered a recession.

READ ALSO: Govt. rakes in N653 billion in June as exchange rate gain, taxes and oil sales boost revenues

The government is projecting a GDP contraction in excess of 3% and already reported a revenue shortfall of over 50% this year.

Fortunately, the companies still held a sizeable cash balance of N136.7 billion t the end of the quarter putting them in a position to weather the storm.

Nigeria generated a total sum of N327.1 billion revenue from Value Added Tax (VAT) in the second quarter of 2020, up by 0.81% when compared to N324.58 billion in Q1 2020. This is contained in the latest VAT report released by the National Bureau of Statistics (NBS).

Despite VAT remittance growing by 0.81% in the second quarter, critical sectors in the Nigerian economy such as manufacturing, hotel catering, trading, transport, oil, and construction recorded significant declines in VAT remittances during the period. Overall, twenty-one (21) of the twenty-eight (28) sectors recorded declines in VAT remittances in Q2 2020, a significant decline which may be largely attributed to the COVID-19 induced lockdown across the country during the period.

READ ALSO: Value of shares traded by top 10 stockbrokers up 133% despite COVID-19

VAT by sectors: Breaking down the numbers

• In Q2 2020, the biggest decline in VAT remittance was from hotel and catering service with a 45.5% drop in VAT remittance from N2.52 billion received in Q1 2020 to N1.36 billion at the end of Q2 2020.
• Also, the manufacturing sector recorded a 19% decline in VAT remittance from N37.3 billion in Q1 2020 to N30.2 billion. Expectedly, VAT earning from oil marketing plugged 18.8%, while oil production dropped by 7.4%.
• Other critical sectors that recorded declines in VAT earnings in Q2 2020 include Automobiles (-30%), Breweries (-27.3%), Construction (22.9%), Commercial and Trading (-19%), Agriculture and Plantation (-14.8%).

• Meanwhile, despite significant decline across critical sectors, the increase in VAT was largely driven by pioneering. In Q2 2020, Nigeria received 643.7% boost in pioneer VAT remittances, from N868.8 million in Q1 to N6.46 billion in Q2 2020. This represents the biggest growth in VAT remittances across all sectors in the period.

Revenue challenge threatens 2020 budget implementation

The decline in Value Added Tax across some key sectors in the Nigerian economy implies that uncertainty still surrounds the effective implementation of the 2020 budget.

READ ALSO: Top 10 Stockbrokers trade N391.9 billion in Q1 2020 despite bearish market

Recall that in the 2019 budget, Nigeria projected a total Value Added Tax revenue of N1.7 trillion as it anticipated higher tax revenues from vatable goods and services. Meanwhile, Value Added Tax collected during the year was N1, 188.85 (billions) compared to a budget of N1,703.89 billion, thereby representing a negative variance of N515 billion or 30%.

Again, in the recently approved 2020 revised budget, the FG once again estimated total Value Added Tax revenue of N2.03 trillion. However, in H1 2020, the total Value Added Tax generated by Nigerian is estimated at N651.7 billion, represents 32.1% of target met.

READ ALSO: Nigeria’s records 6.1 percent tax to GDP as tax base for VAT rise to N23.7 trillion

COVID-19 pandemic has dealt the world economy a huge blow, characterized by travel restriction, supply chain disruption and weak oil prices. Nigeria on the other hand has not been spared by the economic downturn with revenue expected to decline further amid recession fears.