Foreign trade deficit hits N7.37tn: Can Nigeria achieve balance of trade?

Nigeria in 2020 was listed as one of the countries with poor export performance. The United Nations Conference on Trade and Development UNCTAD last month, February 10 released a report on countries that recorded poor exports. They include Colombia, Saudi Arabia, and Venezuela among others.

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The National Bureau of Statistics on Monday released figures of Nigeria’s foreign trade deficit in 2020 summing up to N7.37tn. Total trade in 2020 was N32.42tn. NBS also revealed that the value of trade in the fourth quarter of 2020 was the highest recorded in years.

“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 N2.73tn, an increase of 14.30 percent compared to the preceding quarter”, NBS stated. It should be noted that this is the highest figure recorded since 2017.

Countries such as China, Switzerland, Taiwan, Turkey, Uganda, and Vietnam recorded better performance with growth in export trade. East Asian countries recorded the highest success in 2020.

NBS figures also show that foreign trade statistics for Q3 2020 had Asian countries on the top list of Nigerian trade partners. “During the quarter, Nigeria imported goods mainly from Asia, valued at N2.59tn”, the report reads. 31.41 percent of total goods imported into Nigeria are from China.

Nigerian goods traded with other West African countries have also been ranked the least among the country’s global trade partners.

These reports have shown that Nigeria is yet to achieve a trade balance which is a major cause for concern especially with the commencement of AfCFTA (African Continental Free Trade Area). There is the possibility that Nigeria will be lagging in her exportation proceeds thereby causing more havoc to the limping economy. The trade balance is maintaining an equilibrium between the value of goods exported and the value of goods imported to the country.

Manufacturing industries in Nigeria continue to lose ground in the market space as the high importation of goods suppresses local demands. Oil remains Nigeria’s major export with agriculture and a few others at the bottom.

The Nigerian Institute of Animal Science on Tuesday, February 23, 2021, pleaded with the Federal Government to stop maize and soybean exportation due to the scarcity of the commodities in the country coupled with a price increase.

Prof. Eustance Iyayi, Registrar and Chief Executive Officer, NIAL, disclosed that the poultry sector was affected by the scarcity of maize and soybean. Iyayi said the shortage of these commodities was resulting from continued export, covid-19 pandemic which disrupted the International supply chain, prevalent insecurity in North-East such as farmers/ herders conflict and flood in some parts of the country.

The surge in the prices has led to an increase in finished feed by over 75 percent. Nigeria’s current maize yield per hectare is about one or two tonnes which is a very small amount. According to Iyayi, the country ought to be producing about seven and ten tonnes per hectare to be sufficient for both humans and animals.

“This has led to the closure of small and medium-sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity”, the Executive officer added. This reveals production is insufficient for the country and exportation.

Mr. Gbenga Eyiolawi, Chief Executive Officer of Titan Farms praised the government’s ban on the importation of rice as farmers in the country have been provided more opportunity in the market space. It should however be noted that farmers have not been able to sufficiently produce enough to meet local demands.

The country is yet to attain food sufficiency. Exportation will continue to wane as Nigeria is yet to produce enough to meet local consumption.

The Lagos Chamber of Commerce and Industry, LCCI urged the Central Bank of Nigeria to review its repatriation of export proceed policy to attract more exports. The chamber also suggested the unification of the exchange rates in the different foreign exchange markets in the country as lack of access to forex has contributed a major challenge.

The chamber revealed that naira depreciation had also affected inflation, sales, and profit margins “because it is not in all cases that investors are able to transfer the increases in costs to their customers.”

The CBN at the beginning of the year directed banks to bar all exporters with unrepatriated export proceeds from accessing all banking services.

LCCI also lamented the challenges faced within an out movement from the ports stating that port operations at Apapa and Tincan continue to deteriorate creating a challenge for importers, exporters, traders, and manufacturers. The myriad of processes that comes with cargo clearing at the port coupled with extortions is impeding productivity.

“Outside the ports, manufacturers and other importers face serious challenges in conveying their cargo from ports to warehouses due to multiple checkpoints and traffic gridlock,” Mrs. Toki Mabogunje, President, LCCI stated. An enabling environment for production, as well as policy creation that will encourage manufacturers urgently, needs to be prioritized.

In alliance with the Federal Government’s initiative to diversify the nation’s economy, Onion Producers and Marketers Association of Nigeria inaugurated documented onion exports through Illela land border in Sokoto State.

The Federal Government has also revealed the intention to ban the importation of fish in the next two years stating that fish importers should rather consider farming and local production.

Sabo Nanono, Minister of Agriculture and Rural Development stated that the total demand for fish annually stood at 3.6 million tonnes with local production less than half at 1.1 million tonnes. The remaining 2.5 million tonnes is then imported into the country.

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This is also a call for agricultural revolution as Nigeria urgently needs to expand and stabilize its economy. Agriculture will go a long way in bringing balance to import and export trade. This should go side by side with setting up a processing and packaging facility to make for ease of exportation and also create job opportunities. Food processing should be a part of the agricultural industry. Almost consumable products tend to attract more customers.

Segun Awolowo, Managing Director and Chief Executive Officer, Nigeria Export Promotion Council expressed optimism stating that Nigeria possesses a better advantage compared to other African countries in the export of services. The director added that over the years, agricultural development has been suspended as the country totally relied on oil for revenue.

The Federal Government has initiated policies to help achieve local products such as the ‘zero oil plan’ which involves the development of 22 non-oil products for export. Another initiative by the government is ‘one state one product’.

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This is to involve all the 36 states and Federal Capital Territory in the development of natural and agricultural resources. If the policies are well nurtured and not discarded over time, Nigeria will able to reverse the trade deficit culture we’ve been acquainted with over the years.

Peace Omenka

I'm a news reporter/ researcher. My major expertise is developing feature stories around trending issues.

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