With COVID-19, Nigeria’s Balance of Trade Dwindles

For two consecutive quarters, Nigeria’s trade balance has been in the deficit. The largest economy in Africa recorded a trade deficit to the tune of about N139billion in first quarter of 2020 with imports component of trade at about N4.22trillion while export stood at about N4.08trillion. The National Bureau of Statistics has attributed the dismal performance to the negative impact of the COVID-19 pandemic on the nation’s economy. Bamidele Famoofo reports

The value of Nigeria’s total trade stood at about N8.31trillion in first quarter of 2020. It was about 18 percent lower than the value recorded in last quarter in 2019, but 0.80 per cent higher than the value recorded in first quarter of 2019.

The import component of this trade was valued at N4.22trillion or 50.8 per cent, while the export component totaled N4.08trillion, indicating 49.2 per cent of the total trade.

According to the NBS, a trade deficit of N138.98billion was recorded during the quarter, marking two consecutive quarters of negative balance of trade, as the value of imports surpassed exports.

“It is worth noting that the consecutive quarters of negative trade balances (and lower imports and exports) occurred against the backdrop of a global slowdown in economic activity as a result of the COVID-19 pandemic”, the statistics bureau pointed out.

The NBS further explained that the global health crisis resulted in several countries implementing varying degrees of restrictions with respect to international trade, travel and tourism. “When compared with the preceding quarter, the deficit in Q1 2020 represented an improvement by 76 percent. On a year –on-year basis however, the deficit was lower by 116.71 percent.”

Traditionally, crude oil, Nigeria’s dominant export, accounted for over 70 per cent of total exports in the review period, accounting for N2.95trillion. The value of crude oil export was 18.86 percent less than the value recorded in Q4, 2019 and 12.80 per cent lower than the value recorded in the corresponding quarter of 2019. Non-crude oil exports were valued at N1.148trillion representing 27.9 per cent of total exports during the period under review.

Total imports recorded a decline of 21.08 per cent in Q1, 2020 over the value recorded in Q4, 2019, but an increase of 13.99 per cent when compared with Q1, 2019.

The drop in the value of imports in Q1, 2020 can be attributed to decreases in the value of machinery and transport equipment (N1.75 trillion) which represents 35.5 percent less than (N2.71 trillion) recorded in Q4 2019.Chemicals and related products (N398.7billion) representing a decrease of 30.5 percent over (N573.98billion) recorded in Q4, 2019 and crude inedible materials (N43.5 billion) representing 22.2 percent less than (N55.9billion) recorded in Q4, 2019.

During the quarter, Nigeria imported goods mainly from Asia, which was valued at N1.97trillion or 46.6 percent. Other major imports originated from Europe, valued at N1.54trillion or 36.4 trillion while imports from America and Africa amounted to N580.2billion or 13.74 percent and N118.95billion or 2.82 percent respectively.

Import from Oceania stood at N21.6billion or 0.51 percent while goods valued at N28.3billion originated from ECOWAS.

Nigeria’s imports, by country of origin, shows goods were imported mainly from China (N1.11 trillion or 26.28 percent), Netherlands (N470.11billion or 11.14 percent), United States (N441.06 billion or 10.45 percent), India (N334.53 or 7.92 percent) and Belgium (N257.89 or 6.11 percent).

The value of total exports in Q1, 2020 stood at N4.08trillion. This indicates a decrease of 14.42 per cent relative to Q4, 2019 and 9.98 percent compared to the value recorded in Q1, 2019.

Exports by section revealed that mineral products accounted for the largest proportion of exports, amounting to N3.48 trillion or 85.2 percent. This was due to the crude oil component of this section. The next major section was vehicles, aircraft and parts which amounted to N406.3billion or 9.95 percent of total exports.

Analysis of Trade by Region

Analysis of trade by region revealed that Nigeria exported most products to Europe (N1.57trillion or 38.43 per cent of total exports), followed by Asia (N1.28.trillion or 31.28 per cent), Africa (N978.21billion or 23.96 per cent), America (N214.12billion or 5.24 per cent) and Oceania (N44.14billion or 1.08 per cent). Within Africa, goods worth N296.3 billion were exported to ECOWAS member states.

Exports by country of destination showed that Nigeria exported goods to India valued at (N637.5billion or 15.61 per cent), Spain (N402.9billion or 9.87 per cent), The Netherlands (N396.9billion or 9.72 per cent), South Africa (N319.5 billion or 7.82 per cent) and Cameroon (N301.8billion or 7.39 per cent).

During the quarter, total trade in Agricultural goods stood at N387.7billion (or 4.67 per cent of the overall trade), of which exported agricultural goods accounted for N126.3billion.

Analysis by economic region showed that most agricultural goods were exported to Asia and Europe, valued at N66.9billion or 52.98 per cent and N52.7billion or 41.68 per cent respectively. The key drivers of agricultural products exports were Sesame seeds whether or not broken (N49.1billion), Good fermented Nigerian cocoa beans (N35.2billion) and superior quality cocoa beans (N16.8billion). Sesame seeds worth N9.8billion, N9.5 billion and N9.3billion were exported to Japan, Turkey and China respectively, while good fermented cocoa beans were exported mainly to The Netherlands (valued at N16.5billion) and Germany (valued at N6.6billion).

Superior raw cocoa beans were also exported mainly to The Netherlands at a value of N11.2billion. In terms of imports, Nigeria imported Agricultural goods worth N261.4billion in Q1, 2020. Sectorial imports by region, showed that the country imported most agricultural goods from Europe (N125.2billion or 47.9 percent), America (N85.2billion or 32.6 per cent) and Asia (N40billion or 15.3 per cent). The major products imported during the quarter were durum wheat (not in seeds). This was imported from the United States, Latvia, Canada and Argentina valued at N25.9 billion, N22.6billion, N15.2 billion and N13.98billion. Further, Durum wheat (seed) was imported from the United States (valued at N8.95billion), Russia (N5.9billion) and Lithuania (N5.5billion).

The total trade in solid mineral goods stood at N22.98 billion in Q1, 2020, comprising an import component of N21.4 billion and export component of N1.6billion. The major products exported under this sector were Zinc ores and concentrates exported to China (valued at N0.7billion) and Belgium (N0.3billion). This was followed by lead ores and concentrates exported to China, worth N0.4billion.

In terms of imports, plasters of calcined gypsum was mainly imported from Turkey in the value worth N2.3 billion, other, including crude salt was imported from Brazil, worth N3.0 billion. Denatured salt was imported from Namibia, worth N2.6billion and gypsum from Spain (N2.9billion) and Turkey (N1.4billion).

In terms of the trade relationship with regions of the world, solid minerals was imported from all regions: Asia (N6.2billion), Africa (N5.1billion), Europe (N4.5billion), America (N4.2billion) and Oceania (N1.4billion).

The value of manufactured goods trade in Q1, 2020 stood at N3, 105.7billion or 37.40 per cent. Of this, the export component accounted for N444.5 billion. The products that drove up manufactured exports were

Vessels and other floating Structures exported to Cameroon, and Equatorial Guinea, worth N300.7billion and N57.9billion respectively. Helicopters of an unladen weight were exported to Ghana, worth N33.2billion. Export trade on manufactured goods by region showed that manufactured goods were mainly exported within the continent of Africa (N414.4billion), to Europe (N14.7billion) and Asia (N13.8 billion).

On the other hand, manufactured imports stood at N2, 661.3billion. The main drivers were Used Vehicles imported from the United States, worth N123.7billion. Used vehicles were also imported from Italy (at N5.8billion) and Belgium (worth N4.4billion.). Other imported manufactured goods include motorcycles from India (N93.97billion) and China (N44.8billion). During Q1, 2020, unused postage was imported from the United Arab Emirates (N65.4billion), and the United States (N65.3billion), while automatic rifles and carbines worth N51.97billion were imported from China. Import trade by region showed that manufactured goods were mainly imported from Asia (N1,683.9 billion), Europe (N489.9 billion) and America (N413.2billion).

The value of total trade in raw material stood at N341.1billion. The import component was valued at N307.3billion while the export component stood at N33.8billion. During the quarter, Urea worth N10.5billion and N5.4 billion were exported to Brazil and Uruguay. Technically specified natural rubber, worth N1.0 billion, was exported to Spain. Leather further prepared after tanning, valued at N2.2billion was also exported to Spain.

In terms of imports, cane sugar meant for sugar refinery worth N 44.3 billion was imported from Brazil, Milk preparation worth N7.4 billion from Ireland, N3.8 billion from Malaysia and N2.2billion from Australia was also imported. Other products were mixtures of odoriferous substances worth N9.5billion from Ireland and N2.0billion from Swaziland. Mixed alkylbenzenes worth N11.4 billion was imported from Spain and other glutamic acid worth N3.3billion were imported from China.