Wherever you look – imports or exports, Nigeria is punching well below its weight.
BusinessDay’s report on Monday debunking the myth that Nigeria is import-dependent by analysing the country’s import-to-GDP ratio has generated widespread reactions from Nigerians who were already in the know and others who argued to the contrary.
A deeper analysis of Nigeria’s trade statistics reveals that not only does the country import too little as evidenced by its low import-to-GDP ratio in comparison to peer countries, it also exports a pittance, which leaves it with too little foreign exchange to comfortably afford imports.
Nigeria exported goods worth $47.23 billion in 2022, according to the World Bank, which is equivalent to 10.74 percent of the country’s Gross Domestic Product (GDP).
Morocco exported four times more goods as a percentage of its GDP, while South Africa exported three times more in the same period. Algeria, Egypt and Kenya had export-to-GDP ratios of 35.3 percent, 15.1 percent and 12.2 percent respectively in 2022.
Nigeria’s exports also pale in comparison to countries with similar-sized GDP.
Vietnam, with a GDP of $406.5 billion and a population of 99.5 million, exports almost nine times more than Nigeria with an export-to-GDP ratio of 94 percent.
The SouthEast Asian country’s largest exports are phones, while its biggest imports are integrated circuits, which are used in manufacturing the phones.
Malaysia and Thailand export seven and six times more respectively than Nigeria. Malaysia exported goods worth 77 percent of its GDP in 2022, while Thailand boasts an export-to-GDP ratio of 66 percent.
For Nigeria, “the focus should be export discipline, NOT import substitution,” said Akin Oyebode, commissioner of finance and economic development, Ekiti State.
“The problem is outside oil, we export painfully little,” Oyebode said on social media platform, X.
The world’s top importers are equally among the largest exporters of goods, a sign that a country’s level of imports is sometimes a sign of its economic productivity.
According to the World Bank, Hong Kong, Luxembourg, Malta, Singapore and Seychelles have the highest import-to-GDP ratios globally with 189.9 percent, 177.2 percent, 152.5 percent, 150.3 percent and 121.6 percent respectively.
On the flip side, these countries are also sizable exporters.
Hong Kong’s export as a percentage of GDP is 194 percent. Luxembourg is 211 percent, Malta is 165 percent, Singapore is 187 percent and Seychelles is 111.5 percent.
The countries with the biggest imports typically import inputs in order to add value and then export, as in Vietnam’s case. But in Nigeria’s case, it imports more finished goods, from petroleum products to cars, and exports mainly crude oil.
Analysts say the country’s trade policy has been misguided over the years with the focus on curbing imports/import substitution rather than boosting exports and are hoping BusinessDay’s latest revelation forces a change.
The country’s import substitution drive has done more harm than good and failed to relieve the pressure on the currency which explains why despite imports collapsing, the naira has continued to weaken.
“The reality is the more productive we get, the more we will have to import to keep that productivity going,” said Nonso Obikili, an economist.
“The challenge is that we don’t export much besides crude oil,” Obikili said on social media platform, X.
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