April 22, 2021

Nigeria’s trade deficit rises 49% to $2.5bn

A map of Nigeria

*Capital importation drops 31%


By Elizabeth Adegbesan

The nation’s trade deficit rose month-on-month by 49 percent to $2.5 billion in January from $1.69 billion in December last year even as foreign trade stood at $8.14 billion during the period.

Also capital importation dropped by 31 percent to $380 million in January from $550 million in December 2020.

However, aggregate external trade improved marginally by 3.2 per cent during the period.

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These were contained in the Central Bank of Nigeria, CBN, Economic Report for January, 2021 where the apex bank stated: “The expected positive effect of the re-opening of Nigeria’s land borders on trading activities was evident, despite the adverse effects of the second wave of the COVID-19 pandemic Data on aggregate external trade at $8.14 billion, showed a month-on-month increase of 3.2 per cent, from $7.89 billion recorded in December 2020.

“When compared with the corresponding period of 2020, it indicated a 27.5 per cent decline. Aggregate exports declined by 9.2 per cent to $2.81 billion in the review period, compared with $3.10 billion in December 2020, due, largely, to decline in crude oil and gas export receipts.

“Merchandise imports, however, increased to $5.33 billion in January 2021, from $4.79 billion in December 2020, as domestic demand improved in the review period.

“A higher trade deficit of $2.51 billion was recorded in January 2021, relative to $1.69 billion in December 2020.”

The CBN report further stated: “A disaggregation of capital importation by type of investment showed that inflow of other investments (OI) accounted for the largest share at $0.29 billion, and represented 75.5 per cent of the total, followed by foreign direct investment (FDI) inflow of  $0.06 billion, which accounted for 16.4 per cent. Foreign portfolio investment (FPI) inflow, at $0.01 billion, constituted 8.1 per cent of the total.

“When compared with the $0.44 billion, $0.09 and $0.02 billion for OI FDI and FPI, respectively, in the previous period, it indicated a decline of 34.1 per cent, 33.3 per cent and 50.0 per cent, respectively.”