Nigeria records first trade deficit in 4yrs as COVID-19 hurts exports
For the first time in four years, Nigeria’s trade position was negative in 2020 as the pandemic crushed oil demand and sent the revenues of oil-exporting countries tumbling.
Africa’s largest oil producer posted a N7 trillion trade deficit in 2020, with exports falling as much as 35 percent, according to data published, Tuesday by the National Bureau of Statistics.
That compares to a surplus of N2.23 trillion recorded in 2019, with imports outweighing the county’s value of export.
A trade deficit occurs when a country’s imports exceed its exports during a given time period.
When that happens, the said country is denied the gains of foreign exchange which comes from the exports of commodities to other trading countries.
The huge trade deficit largely explains why Nigeria’s naira ran into troubled waters last year as Africa’s most populous nation was starved of the needed foreign exchange that would have helped in the accretion of the external reserves, and give monetary authorities the legroom to defend the naira from falling against the dollar.
Nigeria’s trade balance stood at N32.4 trillion with imports rising 17.32 percent to N19.9 trillion in 2020 from the N16.96 trillion in 2019, while exports fell 34.75 percent to N12.5 trillion from N19.2 trillion in 2019.
The last time the country witnessed a deficit in its trade was in 2016, when a collapse in the oil market and a restiveness back home in the Niger Delta region, slowed the growth of oil exports, the country’s biggest export commodity.
At that time, Nigeria recorded a deficit of N290 billion.
In 2020, the deficit hit N7 trillion with both Nigeria’s oil and non-oil exports affected.
Crude oil exports fell to N9.4 trillion from N14.7 trillion in 2019, while Nigeria’s non-oil exports fell to N1.4 trillion from N2.52 trillion in 2019.