• Tuesday, March 05, 2024
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BusinessDay

Indeed, imports are not bad

Indeed, imports are not bad

Importation, often misconstrued as detrimental, is akin to fire: an essential force requiring control for positive outcomes. Much like fire fuels cooking, carefully managed importation can propel production and become indispensable.

Countries around the world depend on imports and exports by air, sea and road routes in order to transport goods through their borders and into other countries. Healthy trade keeps economies booming (World Top Export- WTE).

Ironically, the top two most importer of goods globally are also the most exporter of goods, likewise the first and second largest economy in the world. While the United States is the world’s largest economy, China is the second-largest economy in the World.

However, a report by World Top Export in 2022, shows that China leads the list of the world’s largest exporter. Interestingly, of the top 10 leading exporting countries, 4 are from Asia, 5 from Europe and 1 from North America. (WTE, 2022)

Data from World Top Export (WTE) reveals the ranking; China-$3.59 trillion, United States-$2.06 trillion, Germany-$1.65 trillion, Netherland-$965 billion, Japan-$746 billion, South-Korea-$683 billion, Italy-$656 billion, Belgium-$632 billion, France-$617 billion, and Hong-Kong-$609 billion.

Thus, China’s major exported goods are electrical and other machinery, including computers and telecommunications equipment, apparel, Furniture, Textiles and major imported goods are electronics, including integrated circuits, Oil and mineral fuels, Optical and medical equipment, and other computer components.

Thus, China sells a lot of technology and diverse goods globally, making it powerful. People work a lot in making things like clothes and furniture. China also buys technology from other countries. Using energy and getting medical tools from outside shows China needs to think about its economy and relationships with other nations. Further implies that China importation is for production of goods that will be exported rather than basic consumption. BusinessDay report.

Ironically, the top two most importer of goods globally are also the most exporter of goods, likewise the first and second largest economy in the world.

In stark contrast, the United States is the world’s largest importer of goods, followed by China. Overall, out of the world’s 10 largest importers, 4 countries are in Europe, 4 are in Asia and 1 from North America and 1 from Central America-WTE, 2022.

Data from WTE further reveals the ranking; United states-$3.37 trillion, China-$2.71 trillion, Japan-$897 billion, United Kingdom-$823 billion, South-Korea $731 billion, Hong-Kong- $667 billion, Canada-$581 billion, Singapore-$475 billion, Turkey-$363 billion, and Vietnam-$359 billion.

United State major exported goods are capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment), organic chemicals, automobiles, medicines and major imported goods are industrial supplies, automobiles, clothing, medicines, furniture, toys, computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery.

The United States sends out a lot of important things like transistors, aeroplanes, computers, and medicines, making it strong. It also sells chemicals and cars. The U.S. buys things too, like supplies for industries, clothes, medicines, and machines. This shows how the U.S. works with other countries for various needs. This further implies United States importation is driving production majorly (BusinessDay report).

According to Visual capitalist report, Africa is the world’s second-largest continent, and much of the value of Africa’s exports are concentrated in natural resources like petroleum, gold, diamonds, natural gas, and coal. Agricultural commodities like tea, coffee, and cotton also find large markets overseas.

World Top Export shows the 5 biggest African exporting nations are South Africa, Algeria, Nigeria, Angola and Egypt. Collectively, that powerful cohort of African shippers generated over half (53.4%) of the continent’s overall exports by value. That percentage reflects a dilution in concentration compared to the 55.7% portion one year earlier in 2022.

Data from WTE reveals the 5 biggest African rankings in values; South-Africa-$123.6 billion, Algeria-$66.7, Nigeria-$63.3, Angola-$51.2 billion, and Egypt-$48.1 billion. Unfortunately, none of the top five biggest African exporting nations above are among the 5 fastest-gaining nations in Africa according to data from WTE.

The top gaining nations includes; Gambia- 595.5 percent, Congo- 370.3 percent, Central African Republic-103.1 percent, Equatorial Guinea-93.7 percent, Comoros-78.2 percent.

Here’s a chart for comparative analyses:

Chart: BusinessDay

This raises a concern among experts and professionals that, what could have happened to the likes of Africa’s largest economy, when world largest and second economies are thriving despite their import level?

Nigeria, the Africa largest economy in 2022, goods valued at a total of $53.61 billion U.S. dollars were imported into Nigeria, as shown in Statista data. However, data from WTE reveals that Nigeria is the third exporter of goods in Africa with a value of $63.3 billion.

The variance of the import values and export values shows a net export (trade surplus) of $9.69 billion, a positive impact on the national income of the country. BusinessDay analysis

In the same vein, Nigeria Bureau of Statistics (NBS) says Nigeria recorded a N3.5 trillion net export (trade surplus), between first quarter and third quarter of 2023. In 2023, Nigeria’s total export totaled N23.3 trillion and imports totaled N19.7 trillion which gives a net export (trade surplus) of N3.5 trillion.

The trade surplus of N3.5 trillion is a positive economic sign, indicating Nigeria’s resilience. It opens possibilities for increased investments and the potential to build reserves, showcasing the country’s ability to maintain a favourable economic balance.

Flow chart of Nigeria export and import from 2012-2022

Chart: BusinessDay source: World Top Export (WTE) & Statista-imports

Over the analysed period (2012-2022), the table shows fluctuating trade dynamics. Export values surpassed imports in most years, indicating a trade surplus. The substantial drop in both imports and exports in 2016 suggests economic challenges (such as exchange rate fluctuation from N199 to N305 is among the factors responsible, NBS). Despite variations, a general upward trend in trade is evident, reflecting economic growth and global market dynamics.

Despite the positive economic indicator of trade, unlike other countries, Nigeria is still besieged by a 27-year high inflation rate of 28.92 percent, which has plunged about 71 million Nigerians into extreme poverty, food insecurity, depreciation of the naira’s value, and a high cost of living.

According to a commentator, Nigeria’s challenge does not lie in imports but in the inability to boost exports without exchanging natural resources for money. The government needs to diversify the economy and employ a more sustainable approach for economic growth, emphasising value addition and export promotion.

An economist said until Nigeria’s importation promotes production rather than consumption, that is when the benefit of importation experience by advanced countries such as the United States and China will be enjoyed in Nigeria. According to him, imports are not bad, once it will aid production.