By Babajide Komolafe
Nigeria’s trade with other countries worsened in 2020, resulting in a trade deficit of N7.37 trillion for the year, following sharp declines in exports of crude oil, solid minerals and manufactured goods.
The huge trade deficit resents 317 percent decline when compared with the trade surplus of N2.32 trillion recorded in the 2019.
This dismal performance was occasioned by 10.3 per cent, year-on-year,y/y, decline in total foreign trade to N32.42 trillion in 2020, from N36.15 trillion in 2019.
The National Bureau of Statistics, NBS, disclosed this in its Foreign Trade Statistics for the fourth quarter of 2020 (Q4’2020).
According to the Bureau, the huge trade deficit recorded in 2020 was caused by 34.8 per cent decline in total exports to 12.52 trillion in 2020, due to decline of 35.7 per cent, 46.2 per cent, 53.7 per cent respectively in exports of crude oil, solid minerals and manufactured goods.
The impact of this decline was aggravated by 17.3 per cent y/y to N19.89 trillion in 2020.
The NBS report however showed that total foreign trade rose quarter-on-quarter, q/q, by 8.9 per cent to N9.12 trillion in Q4’2020.
The report stated: “In the fourth quarter of 2020, Nigeria’s total merchandise trade stood at N9.12 trillion, representing 8.9% over the level recorded in the third quarter of 2020 but was 9.9% lower when compared to the fourth quarter of 2019. “The value of trade in Q4 was the highest recorded over the past year. The export component of trade stood at N3.19 trillion, an increase of 6.7% over the preceding quarter but a drop of 33% over the previous year.
“Further, the share of exports in total trade declined to 35% in Q4 2020 from 47% a year earlier. On the other hand, total imports reached a record high at N5.93 trillion in Q4 2020, an increase of 10.1% over the preceding quarter, and 10.8% over the preceding year. Imports also accounted for 65% of total trade in Q4 2020, compared to 53% the previous year. “As the value of imports nearly doubled the value of exports, the trade deficit rose to its highest level and a fifth consecutive quarterly deficit at -N2,731.2 billion, an increase of 14.30% compared to the preceding quarter.
“On an annual basis, total trade was valued at N32.42 trillion billion in 2020, or 10.3% less than the value recorded in 2019. The value of total imports in 2020 stood at N19.89 trillion, or 17.3% higher than in 2019, while total exports was valued at N12.55 trillion, or 34.8% less than in 2019. The annual merchandise trade deficit in 2020 was recorded at N7.37 trillion.
“In Q4’2020, the value of imported Machinery stood at N2.019 trillion (or 34% of total imports) while Chemicals & related products recorded N1.385 trillion billion (or 24% of total imports) and Mineral fuels recorded N821.1 billion (13.9% of total imports). On an annual basis, total imports was valued at N19,898 billion in 2020, with Machinery and transport equipment accounting for 36.6%, Chemicals and related products, 18.2% and Mineral fuels, 15.3%.
“During the quarter, Nigeria imported goods mainly from Asia, valued at N2.847 trillion or 48.06% of total imports. This was followed by Europe at N2.163 trillion or 36.5%, America at N702.5 billion or 11.86%, Africa at N190.1 billion or 3.21% and Oceania at N22.3 billion or 0.38%. Imports from ECOWAS countries accounted for N22.5 billion, or 0.4% of the value of total imports. Similarly, on an annual basis, Asia also accounted for the largest imports to Nigeria, representing 49.3% of total imports, valued at N9.808 trillion in 2020. This was followed by Europe with imports valued at N 6.626 trillion, or 33.3% of total imports, and America, which recorded N2.635 trillion or 13.2% of total imports.
“By country of origin, imported goods originated mainly from China and was valued at N1.675 trillion, representing 28.3% of total imports. This was followed by India (N506 billion or 8.5 %), the United States (N408.6 or 7.57%), the Netherlands (N424.5billion, or 7.2%) and Denmark (N319.9billion, or 5.4%).
Exports by section in Q4’2020 revealed that Nigeria exported mainly mineral products, which amounted to 2.962 trillion, or 92.7% of total export value. The second largest component was Vehicles, Aircraft and parts, which was valued at N111.3 billion (or 3.48% of the value of total exports) and vegetable products worth N39.9 billion (or 1.25% of the value of total exports).
“In terms of regional trade, Nigeria exported most products to Asia, with goods valued at N1.158 trillion or 36% of total exports, Europe (N1.071 trillion, or 34%) and America (N376.4 billion, or 12%). The value of exports to Africa was N551.1 billion naira, out of which N144.8 billion worth of goods were exported to other ECOWAS countries.
“India remained the top export destination for Nigeria during the quarter under review. The top five export destinations were India, Spain, South Africa, the Netherlands and the U.S.A. with goods valued at N547.0 billion or 17.12 % of the value of total exports, N313.4 billion or 9.8 %, N256.7 billion or 8.03 %, N194.5 billion or 6.09 %, and N170.4 billion or 5.33% respectively. These five countries collectively accounted for 46.39% of the value of total exports in Q4 2020.”