Trade deficit

By Yinka Kolawole

Nigeria has topped the chart amongst African countries importing from China in 2021 with imported goods valued at $23 billion (about N9.6trillion) or 16 percent of total continent’s imports from China.

But the country did not feature on the top 5 African countries in exports to China in the same period, as it recorded only $3 billion (about N1.3trillion) exports in the year.

These are contained in the data obtained by Financial Vanguard from China’s Custom agency.

Data from the National Bureau of Statistics (NBS) also shows the bilateral trade deficit against Nigeria is widening in favour of China, with a steady increase in Nigeria’s importation from the Asian country from 2019 to 2021.

The NBS data shows that Nigeria imported N6.53 trillion worth of goods from China in 9 months, January to September 2021, which is 14.8 percent higher than the N5.69 trillion worth of goods imported from the country in the whole of 2020, and 51.2 percent above total imports from the Asian country in 2019 valued at N4.32 trillion.

With the nine months report already indicating significant outpacing of the preceding year’s full year figure it is projected that the full year 2021 figure would be about 40 per cent higher.

Details of the NBS data revealed that the N6.53 trillion imports from China in the nine months ended September 2021 represents 29.75 percent of Nigeria’s total imports from all over the world valued at N21.95 trillion within the period.

The value of goods imported from China in 2020 at N5.69 trillion was 29.1 percent of total imports from all over the world during the year (N19.55 trillion), but the full year percentage share of China imports in 2021 is expected to massively outpace 2020 level.

This shows that despite the hard biting COVID-19, the 2020 imports from China, as a percentage of total imports, far outpaced 2019 levels which was 25.5 percent of the total. The 2019 total imports from all over the world was N16.96 trillion.

Exports profile

However, further details of the NBS data for the nine months 2021 shows that exports from Nigeria to China was valued at N486.57 billion, N633.48 billion in full year 2020 and N595.99 billion in 2019, indicating huge export deficits during the period.

Going by the prorated quarterly export figures the 2021 full year export figure is projected at N648 billion, just about 2.0 percent increase in exports compared to about 40 percent increase in imports.

During the 30 month period spanning January 2019 to June 2021, Nigeria spent about N14.10 trillion on importations from China, representing more than 28 percent of total imports valued at N50.31 trillion into the country within the period.

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Other origins of imports behind China during the period are the United States at N4.77 trillion or 9.48 percent, India N4.72 trillion or 9.38 percent, and The Netherlands at N4.07 trillion or 8.09 percent of total imports.

African – China trade data

Meanwhile, the data from China’s customs agency shows that the top five African countries that imported the most goods from China in 2021 were Nigeria $23 billion or 16 percent, South Africa $21 billion or 14 percent, Egypt $18 billion or 12 percent, Ghana $8 billion or 5 percent, and Kenya $7 billion.

Their combined imports made up more than half of all imports of Chinese goods to Africa last year.

On the other hand, the top African exporters to China in 2021 were South Africa $33 billion or 31 percent of total exports to China from the continent, Angola $21 billion or 20 percent, the Democratic Republic of the Congo (DRC) $12 billion or 11 percent, Republic of Congo $5 billion or 5 percent and Zambia $4 billion or 4 percent.

Their combined exports accounted for 71 percent of all exports to China last year, with Nigeria not featuring among the continent’s top five exporters to China.

In terms of total trade volume (exports and imports), China’s top African trading partners in 2021 were South Africa at $54 billion representing 21 percent of all China-Africa trade, Nigeria $26 billion or 10 percent, Angola $23 billion or 9 percent, Egypt $19 billion or 8 percent, and DRC $14 billion or 6 percent.

The combined value of trade between China and these countries accounted for more than half of all China-Africa trade last year.

Africa’s main exports to China include minerals, metals, agricultural products, crude oil, and agricultural products.

Stakeholders react

Commenting balance of trade position of Nigeria with China, the Director General, Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, stated: “It is true that Nigerian import from China has significantly increased in the last decade displacing the West.

“The reasons can be attributed to: The Chinese Government putting in place international trade policies that deliberately fund Chinese exports to third world countries, making their goods readily available and cheaper. Exporting from Nigeria is a tough venture considering the bottlenecks in the processes. This must be addressed to compete favourably; and some loans granted by China to Nigeria and other African countries are tied to projects that are executed using Chinese materials. All of these raise the Chinese exports to Africa”.

On what Nigeria needs to do to redress the situation, Almona said: “Nigeria must improve on its export infrastructure to boost exports and seek for cheaper sources of loans that are tied to boosting productive capacities in the country. “Once we are able to produce more, and export processes are not cumbersome, Nigeria will record higher exports and lower imports towards balancing the trade between the two countries.”

Also reacting, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Centre for the Promotion of Private Enterprise (CPPE), an economic and business advocacy think tank, blamed weak production capacity, low competitiveness of Nigerian firms and unfavourable infrastructure environment for Nigeria’s deteriorating trade balance with China.

Director General, NACCIMA, Ambassador Ayo Olukanni, said: “This is another reminder of how import dependent our economy still is. It is not surprising that Nigeria emerged on top of the heap among top African importers from China. 

“This may be due to the fact that China is deeply involved in our infrastructure projects across the country such as the railway and airports and other projects which require a lot of importation of materials for these projects from China. 

“There are, of course, other components that make up the imports. What we must do now is to take steps to ensure that Nigeria is less import dependent.”

Also commenting, CEO of CPPE, Dr Muda Yusuf, stated: “International trade volume, value and direction are outcomes of business decisions. “Importers opt for imports from countries that offer the best deals. This explains why there is a high level of imports from China which has a strong competitive edge in manufactured products.   

“The same is true of exports. Exporters would focus on countries with good bargains for them as they seek to maximize returns on their investments. “Market access issues are also important considerations. These are the factors that shape the flow of trade at bilateral, regional, continental or global levels. These are also factors that determine balance of trade outcomes for Nigeria. 

“Balance of trade position is a function of imports and exports. Our recurring trade deficit speaks to the persistent weak production capacity and competitiveness of Nigerian firms. Export is very critical to remedy the situation.   

“But for that to happen, our production must be competitive regionally and globally. We therefore need to create the environment for the production of quality goods at a globally competitive price. There is no other way. 

“The infrastructure environment must support this aspiration. The policy and regulatory environment must align with this vision.”

Vanguard News Nigeria

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.