Given the reality of the continuing pandemic, a decline in Nigeria’s total trade is not unexpected. But, a 27% drop in trade between the first and second quarters of 2020?
- Nigeria’s total trade value fell by 27.30% between the first and second quarters of 2020;
- A large portion of Nigeria’s import bill went towards payment for used vehicles;
- Importation of durum wheat accounted for 4% of total import in Q2 2020;
- Seventy per cent of Nigeria’s export in Q2 2020 was from petroleum oils and oils obtained from bituminous minerals and crude;
- On a general note, Nigeria needs to reduce import dependence and reposition itself to deliver more export commodities.
Nigeria’s unbalanced foreign trade
Nigeria’s import has continued to dominate export. Import was almost twice the size of export at the end of Q2, 2020. And while our only exportable commodity remained oil, we imported a lot. Vehicles, motorcycles, and agricultural products accounted for a sizable share of Nigeria’s import bill. Overall, foreign trade and goods statistics (Q2 2020) have revealed the need for Nigeria to develop measures to reduce import dependence while delivering more export commodities.
Between the first and second quarters of 2020, the total value of trade in Nigeria fell by 27.30%. Compared to the total trade in Q2, 2019, we observe a decline of 27.46% in total trade for Q2, 2020, per the National Bureau of Statistics, NBS’ foreign trade and goods report. And the reason, unbalanced trade, precisely exports which dived in the second quarter.
The report further revealed that total export was 45.64% lower in Q2, 2020 than Q1,2020. Also, agricultural goods export dropped by 38.2% between Q1 and Q2, 2020. In contrast, the value of imported agricultural goods rose by 59.01% for the second quarter. But the value of total imports dropped by 10.69% in the same period.
Import trade composition
About 5% of Nigeria’s total import for Q2, 2020 was from used vehicles. This importation of vehicles was valued at ₦198bn. Next to this in importation is durum wheat with an import value of ₦161bn. For those unaware, durum wheat is a variety of spring wheat that’s typically ground into semolina and used to make pasta. This agricultural commodity sat on 4% of total imports in Q2, 2020. Imported motorcycles and cycles made another 2.3% of total imports. This is followed by motor spirit ordinary (2.7%) and herbicides (1.5%). Additionally, other agricultural products such as milk and cream in powder, cane sugar, mackerel fish, and milk and cream powder in packings of 25kg or more occupied 1.3%, 1.1%, 0.8%, and 0.8% of the total import. Also, paper and paperboard made it to the top 15 import items and was about 0.8% of the total import value.
Export trade composition
Petroleum oils and oils obtained from bituminous minerals and crude accounted for 70% of Nigeria’s export in Q2, 2020. Liquified natural gas followed with 12.5%. Other petroleum gases contributed 3.5% of Nigeria’s export in Q2, 2020. Superior quality raw cocoa beans contributed 0.8% of export while good fermented cocoa contributed another 0.5% to the export. Sesamum seeds and cashew nuts contributed about 0.7% each, respectively. Further, shelled cashew nuts added about 0.2% to the total export value for the quarter.
Other revelations
The statistics have also shown that 31% of the total import for Q2, 2020 was from China. A total of about ₦1.3 trillion was spent on importation of products from China in the quarter. Next to this is the United States and India. While the United States accounted for 11% of the import, India represented 8% of the import value for the quarter. Netherlands (5%) and Germany (4%) were other ranking import sources for the second quarter of 2020. On the other hand, Spain, Netherland, China, India, and South Africa were Nigeria’s highest-ranking export destination for Q2, 2020. However, most of the export was from Nigeria’s crude.
Probing the statistics
The contrast between importation and exportation combined with the shortfall in total trade is alarming; compelling reasons that ought to prompt an action from the government. Nigeria should particularly pay attention to the ratio of importation to exportation; it’s uneven. Whereas export cumulated to about ₦2.2tn for Q2, 2020, import nearly double the size and was over ₦4tn.
Thus, Nigeria should develop measures to reduce import dependence while positioning the country to deliver more export products. Considering the relatively high imports of processed agricultural products, Nigeria should invest more in boosting its agricultural sector. To this effect, relevant stakeholders should see to the development of processing facilities and refineries.
Moreover, the country should consider developing its forest resource wealth; this would reduce the importation of paper and other forest products into the country. Being an Agro-bedrock, the government ought to utilise agricultural commodities such as cocoa, sesame, and cashew nuts to boost export earnings. Away from agriculture, diversification for revenue generation should not leave out mining and manufacturing. Perhaps Nigeria could reduce her high import numbers for vehicles and motorcycles if her manufacturing industry were functional.