Nigeria recorded a trade deficit of N7.37trillion in 2020, while its total trade stood at N32.42trillion, according to data obtained by the National Bureau of Statistics.
Analysis of the data, however, showed that in the fourth quarter of 2020, Nigeria’s total merchandise trade stood at N9.12trillion, an increase of +8.9percent when compared to third quarter of 2020, but a decline of -9.9percent when compared to Q4 2019.
The export component of trade stood at N3.19trillion in Q4 2020 representing an increase of +6.7percent when compared to Q3 2020 but a decline of -33percent when compared to Q3 2019.
Some analysts and market pundits believe that Nigeria’s high import dependency has become an albatross in a global environment, where nations have become increasingly aggressive in promoting exports. “Unfortunately for the country, it neither influences the price or the quantity sold of its principal export, crude oil, which accounts for over 80percent of its export and 90percent of its foreign exchange earnings”.
Nigeria’s relative global trade position is stacked against a strategic forward-facing dominance in any good or service, meaning that future earnings could be painfully small relative to development goals.
On the flip side, total imports stood at N5.92trillion in Q4 2020, an increase of +10.1percent when compared to Q3 2020 and an increase of +10.8percent when compared to Q4 2020. Imports accounted for 65percent and exports accounted for 35percent of total trade in 2020.
The trade data shows that the Nigerian economy is still primarily dependent on imports and is yet to deepen its value chains and diversify its export earnings away from crude oil. Analysts note that Nigeria’s consistent trade deficit results and its overdependence on oil expose its economy to external factors which continuously hurt it. For example, its high dependency on imports implies that it keeps losing domestic jobs that could have been created if such products were produced locally. Also, being import-dependent has made the economy vulnerable to inflation and other external factors.
Nigeria’s trade deficit in 2020 could be attributed to various factors such as the coronavirus pandemic, Nigeria’s Forex crisis, insecurity, ports congestion, and so on.
Nigeria’s trade numbers reveal the fragile state of the economy. Despite the government’s efforts at industrialization, and increasing non-oil exports, the economy still imports a high quantity of manufacturing, agricultural, and raw material goods.
Some of the government’s efforts include facilities and programs such as the Non-oil Export Stimulation Facility, Export development Funds, Zero oil plan by Nigeria Export Promotion Council.
Nigeria has been unable to utilize its huge arable land and the application of technology to making its agricultural produce more competitive hence the reason for the high import of agricultural produce.