• Thursday, April 25, 2024
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Despite AfCFTA, Nigeria’s African exports decline 25% in H1 2021

Netherlands tops Nigeria’s export destination in Q2

Nigeria’s exports to Africa fell by 25% in the first six months of 2021 compared to the same period last year, according to foreign trade data released recently by the National Bureau of Statistics (NBS). This decline in African exports sufficed despite the African Continental Free Trade Agreement (AfCFTA), which started in January 2021.

Analysis from NBS data released earlier in the week, revealed that exports to all regions excepting Africa increased in the period under review. Exports to Africa reduced from N1.38 trillion in H1 2020 to N1.03 trillion in the first half of 2021, implying a -25% reduction Y-o-Y. The country’s exports to the US increased by 109% from N163bn to N342bn; a similar trend occurred in Europe where total Nigerian exports rose from N2.55 trillion in the first half of 2020 to N2.82 trillion in H1 2021, amounting to a 10.4% rise in exports.

“When we export commodities to the rest of the world, we are also exporting jobs and the positive spillover effects such as learning that come with manufacturing are lost,” the Vice President, Yemi Osibanjo stated at a roundtable on Industrialization in Africa.

“It is important for African governments to provide a stable macroeconomic environment which avoids and smoothens out volatility in prices, sharp deteriorations in the current account and budget deficits and of course, rapid accumulation in debt burdens,” Osibanjo said.

“We must take policy actions to create an environment in which businesses can thrive. To start with, we must adopt the right type of macroeconomic and industrial policies,” Osibanjo added.

Analysts however have expressed optimism about the country’s trade prospects under the free trade agreement, expected to increase intra-African trade by 50% in 2022. Meanwhile, total merchandise trade, which stood at N12.03tr in Q2 2021, saw an increase of 88.71% Y-o-Y. The rise in trade merchandise came about because of sharp growth in exports, which soared by 26% Y-o-Y.

Read also: Why Nigeria needs new strategy to promote agro exports

Compared to the first three months of the year, Total trade increased by 23% from N9.75tr in Q1 2021 to N12.03tr in Q2 2021. Meanwhile, the country’s import bill rose by 1.45% from N6.85tr in Q1 2020 to N6.95tr in Q2 2020. The rise occurred as exports rose by 74.7% from 2.9tr in Q1 2021 to 5.07tr in Q22021.

An analysis of the trade data showed that while exports accounted for N6.95trn (57.78% of total trade), the complementary 42.22% valued at N6.95trn was contributed by imports bringing the trade deficit for the period to N1.87trn.

Nigeria had recorded a trade deficit of N3.94trn in Q1 2021, indicating a -52.5% reduction in trade deficit Q-o-Q. Together, imports rose year-on-year (Y-o-Y) by 60% from N8.59trn in H1 2020 (during the pandemic) to N13.8trn in H1 2021. Exports rose in the same period but by only 26%. Expectedly, the trade deficit rose year on year by 157% from N2.25trn in H1 2020 to N5.81trn in H1 2021 (highest half year trade deficit ever recorded).

Osibanjo stated that Nigeria’ manufacturers must strive to become competitive after clearly specified time periods so that they can withstand the ever-present danger of stiff competition from imports.

He added that the AfCFTA would need a strong manufacturing capacity to boost strong continental trade collaboration.

However, trade analysts have maintained that the trade agreement is a zero-sum game that creates winners and losers. The recently released NBS data on Nigeria’s reduced export to Africa has raised posers about how well prepared and positioned Nigeria is to take advantage of the Free trade agreement.

Nigeria’s agricultural sector offers exciting opportunities. However, the level of insecurity in and around the country has incredibly threatened growth in the industry and stifled investment that could have created jobs and wealth for many Nigerians. Nigeria has a comparative advantage in Rice, Yam, Cassava and Ginger. Currently, Nigeria is the second-largest producer of Ginger globally and the largest producer of yam in the world. Still, two-thirds of the produce rots away mainly due to the lack of modern facilities as well as policies for the free movement of people in the area.

Ms Thokozile Ruzvidzo, Director, Gender, Poverty and Social Policy Division, UNECA during the Africa Regional Review of the Implementation of the Global Compact for Migration conference said “AfCFTA cannot succeed if we do not look at the movement of people. We cannot only look at the movement of goods and services without looking at the movement of people.”

“Therefore, the Global Compact for Safe and Orderly Migration (GCM) is critical if AfCFTA is to succeed,” Ruzvidzo added.