By Emmanuel Elebeke
Nigeria’s trade account turned negative in the first quarter after exports fell by almost half, the National Bureau of Statistics said yesterday, as lower prices for crude oil slashed government revenues and caused the economy to contract.
The economy faces its worst economic crisis in years, as the value of exports, mostly crude, plunged 52 per cent to N1.27 trillion in the three months to March from a year ago.
Much of the hard currency the nation needs to finance imports evaporated.
With limited manufacturing capacity, Nigeria imports most of what it consumes.
First-quarter imports dropped 15.8 per cent to N1.45 trillion, NBS said, pushing the trade account into the red for the period.
The balance of trade for the first quarter was -N184.1 billion, down from +N937.4 billion in the same period a year earlier.
“The total value of Nigeria’s merchandise trade at the end of Q1 stood at N2.72 trillion. This development arose due to a sharp decline in both imports and exports,” the statistics office said.
Exports fell 34.6 per cent by March from the last quarter and imports declined 7.8 per cent. The decline in crude oil exports, which accounted for 64.7 percent of total domestic exports, hit the economy the most, as it shrank by 0.36 per cent in the first quarter, compared with 3.96 per cent growth last year.
The dollar restrictions have also caused inflation to spike. This month, the statistics office said, annual inflation climbed close to a six-year high of 13.7 per cent in April.
The Central Bank of Nigeria last week introduced a flexible currency regime designed to improve exports, local manufacturing and stave off a recession.
However, the bank is yet to clarify how the new policy would work, spooking foreign and local investors, who have long worried about getting caught in the middle of a currency devaluation.
On the other hand, the Nigeria Stock Exchange, NSE, posted its biggest daily decline in 16 months on Monday.
Nigeria exports mainly to Asia and Europe. Imports were dominated by machinery, petrol, chemicals and related products from Asia, Europe and Americas. Imports within Africa grew by 5.7 percent.