Nigeria extended its negative trade balance in the first half of 2021, as its trade deficit surged to N5.81 trillion in the period. This is according to the recently released foreign trade report by the National Bureau of Statistics (NBS).
The report showed that Nigeria exported total merchandise valued at N7.99 trillion in the review period, opposed to a total import value of N13.8 trillion, indicating a negative trade balance of -N5.81 trillion for half-year 2021.
This comes on the back of trends of declining trade deficits on a half-year recurrent basis, that is, N2.25 trillion in H1 2020 and N5.12 trillion in H2 2020. The 2021 H1 figures are by far the highest trade deficit recorded by Nigeria in any half-year period since 1981.
The massive trade deficit is a result of the significant increase in import value, which recorded a 22% growth in H1 2021 compared to N11.31 trillion recorded in the previous period and a 60.7% increase compared to N8.59 trillion in H1 2020.
Despite recent data indicating improved inter-border trade activities, it is increasingly becoming a major forex burden for the country as scarce forex is still being used to import merchandise, while earnings from exports continue to dwindle.
Nigeria’s leading imports
Nigeria imported Motor Spirit Ordinary (petrol) valued at N1.47 trillion between January and June 2021, followed by durum wheat with N583.02 billion in the same period. Nigeria imported used vehicles valued at N498.94 billion, other antibiotics (N480.98 billion), gas oil (N273.41 billion), and machines for reception (N261.73 billion). Others include motorcycles and cycles N213.3 billion, cane sugar (N204.91 billion), other herbicides (N145.51 billion), lubricating oils to be mixed with, N140.42 billion.
Nigeria's leading exports
Nigeria exported crude oil valued at N4.08 trillion in the second quarter of the year, taking the aggregate exports to N6.01 trillion in the half-year period, followed by liquefied natural gas with N887.2 billion, floating vessels N152.95 billion, other petroleum gases N121.28 billion, good fermented Nigerian cocoa beans with N86.99 billion. Others on the list include helicopters, sesame seeds, cashew nuts, urea, propane amongst others.
Nigeria’s continual foreign trade deficit continues to pile more pressure on the country’s exchange rate as negative trade dampens Nigeria’s current account position and the foreign reserves.
Despite, moves by the federal government and the Central Bank (CBN) to diversify the economy and create substitute export value for crude oil, it seems to have not reflected substantially in Nigeria’s international trade numbers.
A cursory look at the data showed that crude oil still accounted for 90% of Nigeria's export value in the first half of 2021, after multiple investments in other sectors of the economy to ensure local production, especially in the agricultural sector.
Nigeria's international trade deficit is a confirmation of Nigeria as a perennial net importer of goods and services with gross dependence on Oil export. However, a better international trade balance is the solution the country requires to solve the frustrating exchange rate regime and recurring depreciation of the Naira to other foreign currencies.
All efforts at restructuring the country's trade balance have proved abortive, though, the agro-industry and ongoing petrochemical industry initiatives hold a lot of potentials to strategically turn the tide for the country in the few years to come if a concerted effort is deployed to see the initiatives through.