In recent years, Nigeria’s trade level has increased dramatically, rebounding rapidly from the devastating impact of the COVID-19 pandemic and other subsequent constraints. According to data issued by the National Bureau of Statistics (NBS), the trade surplus recorded in 2022 increased by 169 percent from the previous year, closing the gap considerably and bringing Nigeria’s yearly trade level near the positive threshold seen before the advent of COVID. In 2022, the nation’s goods trade surplus was N1.2 trillion, as reported by the NBS.
For the first time since the previous year, export bills of N26.8 trillion in 2020 outpaced import profits of N25.6 trillion (N2.23 trillion in 2019). In spite of this, the surplus in 2022 is 162% better than the goods trade deficit of N1.94 trillion in 2021. The value of Nigeria’s exports rose by 42% in 2022 to N26.8 trillion from N18.91 trillion in 2021, while the value of Nigeria’s overall goods trade rose to N52.4 trillion from N39.75 trillion.
Nigeria’s exports dropped from N19.19 trillion to N12.52 trillion.
The COVID-19 regulation, which restricts movement access worldwide, caused the country’s trade balance to plummet even more in the following year, causing it to drop from N5.37 trillion in 2018, when it was at its highest, to N2.23 trillion in 2019, when it was at its lowest. Consequently, Nigeria’s exports dropped by 35 percent, from N19.19 trillion to N12.52 trillion. Despite a similar decline in imports, the disparity in export figures induced by a reduction in oil prices was too high to be covered.
At the end of the year 2020, Nigeria’s trade balance, which had been in a position of surplus since the beginning of the year, swung into a deficit, totaling N178.26 billion. By 2021, this amount had ballooned to almost N2 trillion. A study in last week’s Cowry Weekly Financial Markets Review & Outlook (CWR) from experts, however, shows that the value of exports rose by N25.59 trillion while imports rose by just N25.59 trillion (23 percent higher than N20.84 trillion in 2021).
Gov’t maintained favorable trade balance despite challenges in the year.
During the fourth quarter, total trade dropped by 4.52% to N11.72 trillion from the third quarter’s N12.27 trillion as total exports outpaced total imports, according to the report. The government maintained a favorable trade balance despite the challenges faced during the year. Nevertheless, the difficulties have affected the market for consumer, intermediate, and investment products due to the falling value of the Naira, decreased demand for export commodities, and the effects of the Russia-Ukraine war.
According to the data included in the study, the value of other oil product imports was N1.9 trillion in Q4 2022. This is down 18.18 percent from the value recorded in the third quarter of 2022 (N2.3 trillion) but up 10.40 percent from the value recorded in the same quarter of 2021 (N1.7 trillion). China and Belgium were identified as Nigeria’s most significant trading partners in the assessment. Concurrently, high-quality cocoa beans and sesame seeds were the two most common agricultural exports to Spain and the Netherlands.
Total trade balance decline resulted from Naira devaluation strain.
Moreover, the analysis suggested that export promotion measures, particularly for non-oil exports, could improve Nigeria’s trade balance. The recent improvement in the trade balance shows that this is possible, provided FG establishes a favorable business climate to boost trade and exports. It also noted that the decline in Nigeria’s total trade balance resulted from the strain on the Naira from devaluation and increasing inflationary levels. The problem was exacerbated by the constraints encountered by world trade in 2022, which were the result of declining economies and supply chain bottlenecks across the world.