Nigeria’s $1.8 trillion trade deficit calls for local products export

Nigeria’s trade balance currently sits on a deficit of N1.8 trillion as at the second quarter of 2020, marking the third consecutive quarter of negative trade balance. This compares with trade in goods deficit of N421.3 billion recorded in Q1, 2020 and N579.06 billion recorded in Q4 2019.

Similarly, the value of Nigeria’s trade stood at N6.24 trillion in Q2, 2020 indicating a steep fall of 27.30 per cent in Q2, 2020 compared to Q1, 2020 and 27.46 per cent compared to Q2, 2019. However, the total year to date trade value plunged 11.96 per cent to N14.8 trillion compared to half-year 2019.

The statistics, as publicly announced by the nation’s official statistics bureau, shows that Nigeria’s trade value was largely influenced by a drop in commodity trades between the country and its international trade partners as a result of the global economic crisis which led to a decline in foreign trade-related activities across borders.

Read how China export rose to $237.6 billion in 7 months amidst COVID-19

In an ideal world, participation in international trade leads to swelling in national income, the investment level and also enhancement in the state of the country’s technical knowledge. Similarly, the increase in investment and progress in innovations, as well as technological advancements, will then lead to increased productivity and competitiveness, and in turn trigger a further increase in trade and in income.

Despite the foregoing, it is non-impressive to see that Nigeria’s participation in international trade in recent years has seen a decline in total trade values. However, with her current export component accounting for N2.21 trillion of the total trade, and indicating a steep fall of 45.64 per cent against the value recorded in Q1, 2020 on the back of the pandemic, it can be accepted that it is not a sufficient condition for economic development.

During the second quarter of 2020, Nigeria’s international trade involvement with the aim to earn foreign exchange from trade has the world’s most populous nation export mineral products which accounted for the largest portion of exports, amounting to N1.87 trillion or 84.35 per cent, mainly due to its crude oil component. This was followed by Vehicles, aircraft and parts at N221.2 billion and others.

Analysis of export by Region revealed that Nigeria exported most products to Europe (N976.5billion or 44%), followed by Asia (N734.1billion or 33.08%), Africa (N401.4billion or 18.1%), America (N105.8billion or 4.8%) and Oceania (N1.7billion or 0.08%). Within Africa, goods worth N149.3billion were exported to ECOWAS member states.  All regions recorded declines in the value of exported goods during the quarter, although China and Japan each recorded increased export activity

Exports by Country of destination showed that Nigeria exported goods to Spain valued at (N310.8billion or 14%), Netherlands (N243.7billion or 10.98%), China (N220.4billion or 9.9%), India (N195.6billion or 8.8%) and South Africa (N172.2 or 7.7%)

During the quarter, total trade in Agricultural goods stood at N493.7 billion, of which exported agricultural goods accounted for N78.1billion. Further analysis by economic region showed that most Agricultural goods were exported to Asia, Europe and America, and valued at N43.6 billion, N26.4 billion and N6.6 billion.

The key driver of agricultural products exports were Superior quality raw cocoa beans, Sesamum seeds, Cashew nuts, well-fermented cocoa beans and more. The main consumers of superior quality cocoa were The Netherlands (N9.3 billion), Indonesia (N3.7 billion) and United States (N2.4 billion). Other Agricultural exports were Sesamum seeds exported to Japan (N6.0 billion) and to China, worth N2.3 billion. Also, Cashew nuts were exported to Vietnam, worth N12 billion.

Export/Imports Products Classified by Sectors Q2, 2020

The value of manufactured goods traded in Q2, 2020 stood at N3.04 billion. Out of this, the export component accounted for N254.2 billion. The products that drove up manufactured export were light vessels, Fire floats, floating Cranes exported to Spain in the value worth N129 billion. There were also exports of vessels and other Floating structures to Cameroun (N32.8 billion), Equatorial Guinea (N36.9 billion) and Singapore (N7.5 billion). Similarly, Nigeria’s export trade on manufactured goods by Region showed that goods were exported mainly to Europe (N137.1 billion) and within Africa (N96.98 billion).

The value of total trade in solid mineral goods stood at N30.5 billion in Q2, 2020, comprising an import component of N28.97 billion and an export component of N1.6 billion. The major products exported under this sector were Cement clinkers, exported to Senegal, valued at N 0.44 billion. This was followed by Manganese ores and concentrates exported to China, worth N0.42 billion and Lead ores and concentrate exported also to China, and worth N 0.39 billion.

Read also: Gold seeing a rebound to $2,000 on the back of a weakening dollar

 

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