Nigeria records highest ever half-year trade deficit as imports surge

Nigeria’s trade balance took a turn for worse in the first half of 2021 as imports surged and the trade deficit hit N5.81 trillion, according to the foreign trade report by the National Bureau of Statistics (NBS).

Nigeria exported goods worth N7.99 trillion in the review period, opposed to a total import value of N13.8 trillion, indicating a trade balance of -N5.81 trillion between January and June 2021, the highest since the NBS started collating data.

The widening trade deficit is a result of the significant increase in import value, which recorded a 22% growth in H1 2021 compared to N11.31 trillion recorded in the previous period and a 60.7% increase compared to N8.59 trillion in H1 2020.

Despite recent data indicating improved inter-border trade activities, it is increasingly becoming a major forex burden for the country as scarce forex is still being used to import merchandise, while earnings from exports continue to dwindle.

Nigeria’s continual foreign trade deficit continues to pile more pressure on the country’s exchange rate as negative trade dampens Nigeria’s current account position and the foreign reserves.

Read also: Total trade in goods up N12.02 trn in Q2 – NBS

Efforts to diversify the economy is yet to materialise and reflect substantially in Nigeria’s international trade numbers.

A cursory look at the data showed that crude oil still accounted for 90 percent of Nigeria’s export value in the first half of 2021, after multiple investments in other sectors of the economy to ensure local production, especially in the agricultural sector.

Nigeria’s top imports were Motor spirit, otherwise known as petrol, durum wheat, used vehicles, antibiotics, gas oil and machines. Petrol imports gulped N1.47 trillion between January and June 2021, followed by durum wheat with N583.02 billion; used vehicles valued at N498.94 billion, other antibiotics (N480.98 billion), gas oil (N273.41 billion), and machines for reception (N261.73 billion).

Others include motorcycles and cycles N213.3 billion, cane sugar (N204.91 billion), other herbicides (N145.51 billion) and lubricating oils at N140.42 billion.

Nigeria exported crude oil valued at N4.08 trillion in the second quarter of the year, taking the aggregate exports to N6.01 trillion in the half-year period, followed by liquefied natural gas with N887.2 billion, floating vessels N152.95 billion, other petroleum gases N121.28 billion, good fermented Nigerian cocoa beans with N86.99 billion.

Others on the list include helicopters, sesamum seeds, cashew nuts, urea, propane amongst others.