Nigeria, Africa’s largest economy, is lagging behind its peers on the continent as its struggles to ramp up exports.
Its total exports as a percentage of Gross Domestic Product in 2021 was 26 percent, the highest since 2011 when it was 32 percent. As of 2021, the country’s GDP stood at $440.7 billion, according to World Bank data.
However, some other African countries, although with smaller GDPs, such as Morocco, Angola, and Ghana, except South Africa, the second biggest economy on the continent, have been able to boost the contribution of exports to their GDP.
South Africa, with a GDP of $420 billion, has its exports at 31.1 percent, while Morocco, with a GDP of $132.7 billion, has its exports at 37.3. Ghana and Angola with smaller economies of $77.6 billion and $72.6 billion have their exports at 30 percent and 37.9 percent, respectively, according to the World Bank.
Muda Yusuf, CEO of Centre for Promotion of Private Enterprise, said Nigeria’s large economy should be an advantage to the country as its export component should be bigger. “Our export sector is still extremely weak,” he said.
The total trade in 2021 was N39.8 trillion, up 57.6 from N25.2 trillion in 2020. Exports rose by 43.8 percent to N18 trillion in 2021, less than imports, which were N19.5 trillion in 2021, up 70 percent from N11.5 trillion in the previous year, according to the National Bureau of Statistics.
This shows that Nigeria recorded a trade deficit of N1.9 trillion in 2021. However, in the first quarter of 2022, Nigeria recorded a trade surplus of N1.2 trillion as exports totalled N7.1 trillion while imports totalled N5.9 trillion.
According to Tajudeen Ibrahim, director, research and strategy at Chapel Hill Denham, Nigeria has to develop its power sector and infrastructures to encourage more production of goods that can be exported.
“If we work on power and our road network, it is likely that we gain momentum in terms of exports,” Ibrahim said. “Nigeria has to ensure that finished goods, which are value-added, have to be exported more rather than just raw materials.”
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He said there used to be tyre producers in the country who left due to the insufficient power supply despite Nigeria being a producer of rubber, which is a raw material for tyres, the finished product.
Yusuf said the country needs to solve the problem of oil theft, which is eating into oil production in the country, thereby limiting oil exports and the gains from the surging global oil price that the oil-producing country is supposed to take advantage of.
According to analysts, the insufficient export has led to Nigeria missing out on huge foreign exchange earnings which results in lower foreign exchange reserves and exchange rate instability.
“We are missing out on our foreign exchange earnings which are affecting our capacity to build our foreign reserves,” Yusuf said. “It is affecting our capacity to generate more employment.”
Tajudeen said this has also limited the country’s ability to attract more foreign talent.
“Nigerians would be more willing to work outside of the country where they utilise these raw materials to produce finished goods instead of staying back to work there,” he said. “If we also produce such goods, we would be able to attract more foreign talents into the country and also develop our local talents.”
