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Nigeria’s Annual Trade Volume Rises to Near Pre-Covid Level

The 169 per cent year-on-year increase in trade surplus recorded by the federal government for 2022 has almost put Nigeria’s annual trade volume at the positive threshold of the pre-COVID years, data by the National Bureau of Statistics (NBS) has indicated.

According to the NBS data, Nigeria recorded a N1.2 trillion goods trade surplus in 2022, as export bills (N26.8 trillion) outweighed import earnings (N25.6 trillion) for the first time since the preceding year (N2.23 trillion in 2019).

Nonetheless, the 2022 surplus represents a 162 per cent improvement over the N1.94 trillion goods trade deficit in 2021.

The report also showed that Nigeria’s total merchandise trade in 2022 increased to N52.4 trillion from N39.75 trillion in 2021, while total export value grew by 42 per cent to N26.8 trillion from N18.91 trillion in 2021.

The country’s trade balance was N5.37 trillion in 2018 but fell to N2.23 trillion in 2019.

The following year, global trade volume fell as the economy grappled with limiting the movement of people.

Nigeria’s exports were reduced by 35 per cent, falling from N19.19 trillion to N12.52 trillion.

Imports also fell significantly, but not enough to compensate for the large gap in export figures caused by falling crude prices.

Nigeria’s previously positive trade balance turned negative at the end of the year, leaving a deficit of N178.26 billion, which ballooned to nearly N2 trillion by 2021.

However, in a report contained in the Cowry Weekly Financial Markets Review & Outlook (CWR), which was released on Friday, analysts noted that the increase in total exports was greater than the increase in total import value, which stood at N25.59 trillion (23 per cent higher than N20.84 trillion in 2021).

According to the report, total trade fell by 4.52 per cent in the fourth quarter to N11.72 trillion, compared to N12.27 trillion in the third quarter of 2022, as total exports exceeded total imports.

“An analysis of the data filed shows that Nigeria exported mainly ‘mineral products’ which amounted to N5.7trillion, or 89.11 per cent of total export value; this was followed by “vehicles, aircraft, and parts thereof; vessels, etc.’, which were valued at N199.29 billion, or 3.13 per cent of the value of total exports, and “products of the chemical and allied industries,” worth N169.27 billion, or 2.66 per cent of the value of total exports. Meanwhile, export value during the quarter was dominated by crude oil exports (N4.9 trillion), which accounted for 77 per cent of total exports.

“Non-crude oil exports stood at N1.5 trillion, or 22.76 per cent of total exports, of which non-oil products contributed N732.24 billion, representing 11.51 per cent of total exports.

The report noted that: “For the import values, which declined 15.5 per cent in Q4 to N5.4 trillion, there were mineral fuels (N1.9 trillion), imported machinery and transport equipment (N1.3 trillion), and chemicals and related products” (N694.68 billion).”

“The value of imported manufactured goods in the quarter under review stood at N2.5 trillion, a decrease of 14.11% compared to the value recorded in Q3 2022 (N2.9 trillion). The report said that this value also declined by -18.43 per cent compared to the value recorded in Q4 of 2021 (N3 trillion).”

According to the report, the positive trade balance was recorded during the period despite the weaker Naira (9.09 per cent year-on-year to N461.50 in 2022), weaker demand for export commodities, the effects of Russia’s invasion of Ukraine in 2022, which translated to weaker trade flows among nations, and the continued high import costs as companies were hard hit.

It noted that demand for consumer, intermediate, and investment goods fell sharply across the board due to these outcomes.

The report explained that the value of other oil product imports in the fourth quarter of 2022 was N1.9 trillion, a decrease of 18.18 per cent from the value recorded in the third quarter of 2022 (N2.3 trillion), but an increase of 10.40 per cent from the value recorded in the same quarter of 2021. (N1.7 trillion).

In the review, Nigeria’s major trading partners were China and Belgium, according to the report.

At the same time, exports went to Spain and the Netherlands, with superior-quality cocoa beans and sesame seeds being the two main agricultural products traded.

“We note that Nigeria’s trade balance can be further improved through policies aimed at export promotion, especially for non-oil exports. This can be achieved if FG creates an enabling business environment to improve trade and exports, just as seen in the recent rise in the trade balance,” the report said.

It also stated that the pressure on the Naira as a result of depreciation, rising inflationary levels, and headwinds faced by global trade in 2022 as a result of slowing economies and supply chain congestion globally have resulted in the shrinkage recorded in Nigeria’s total trade balance.

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