Nigeria’s trade balance worsened in the third quarter of 2021 as imports surged and the trade deficit hit N3.02 trillion, according to the latest foreign trade report by the National Bureau of Statistics (NBS).
The country exported goods worth N5.13 trillion in the period under review, 58.87 percent less than its total import value of N8.15 trillion, the highest third-quarter trade deficit in 11 years – 2010 to 2021.
The weaker trade balance came as the value of import earnings swelled by 17.3 percent quarter-on-quarter (q/q), while exports grew only 1.0 percent. The trade deficit in the reviewed period deteriorated 61.6 percent compared to the second quarter 2021 goods trade deficit of N1.9 trillion.
“The increase in import bills can be partly attributed to pressure on the naira, weaker by 3.4 percent q/q and 10.7 percent y/y to average N410.29/$1.00 in Q3:2021, compared to N396.25/$1.00 and N366.52/$1.00 in Q2:2021 and Q3:2020 respectively,” research analysts at Afrinvest said.
The trade deficit reported by Africa’s most populous nation within the period was despite the higher crude price recorded in 2021. Unlike 2019, a higher crude oil price this year may have failed to lift Nigeria’s almost two years trade deficit out of the negative due to stagnating oil production and the country’s increasing dependence on imported goods.
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“Despite these relatively high crude oil prices, the reason why trade will remain negative is that import continues to outpace our export,” Laolu Boboye, an economist at Cardinal Stones said.
For exports, lower earnings from crude oil sales (down 1.3 percent q/q to N4.0 trillion) muted a 10.3 percent increase in non-crude exports of 1.1trillion.
“The drag in crude oil exports can be linked to depressed output as total domestic crude oil and condensates production fell 5.7 percent q/q and 7.3 percent y/y to 1.6mbpd daily average in Q3:2021, amid ongoing repairs and maintenance at key oil facilities,” Afrinvest Research said.
A breakdown of the NBS report showed that crude oil share of exports earnings rose to 76.5 percent (N10.0 trillion) in 9 million:2021, from 74.2 percent (N6.9 trillion) in 9 million:2020, underpinned by stronger crude oil price (Brent) to $78.52/bbl as at end of Q3:2021, a year till date upswing of 18.5 percent.
In terms of region of trade direction, Asia was Nigeria’s largest import source with 49.9 percent (N11.0 trillion) while Europe accounted for 38.5 percent (N5.1 trillion) share of exports. Of the five regions of trade, Nigeria booked a trade deficit with Asia (N6.5 trillion), Europe (N2.5 trillion), America (N869.5 billion), and Oceania (N33.9 billion). Only trade with Africa (N1.0trillion) was a surplus.
As long as Nigeria is not self-sufficient in some key imports, Boboye said Africa’s largest economy will continue to “import more which would be outpacing exports.”
Efforts to diversify Nigeria’s economy are yet to materialise and reflect substantially in the country’s international trade numbers.
A cursory look at the data showed that crude oil still accounted for over 78 percent of Nigeria’s export value in the third quarter 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 food and beverage and premium motor spirit, otherwise known as petrol, used vehicles, antibiotics, gas oil and machines. Food and beverage gulped N1.26 trillion while petrol imports guzzled N1.05 trillion between July and September 2021.
Analysis of Nigeria’s foreign trade in goods statistics report by NBS for Q3-2021 revealed that the value of imported agricultural goods was 21.01 percent higher than the value recorded in Q2, 2021 and 56.74 percent higher than Q3 2020. Export agricultural goods export value in Q3, 2021 was 5.9 percent lower than Q2 2021 but 31.0 percent higher than Q3 2020.
The value of raw material imports was 9.08 percent more than Q2, 2021, and 29.06 percent more than the value in Q3 2020. Raw material exports value on the other hand increased by 135.2 percent in the period reviewed against the level in Q2 2021 and 1,241.1 percent higher than Q3 2020.
Solid minerals imports in Q3 2021 increased by 10.93 percent compared to Q2 2021 and 53.42 percent compared to Q3 2020. Solid minerals exports value in Q3 2021, increased by 22.7 percent compared to Q2 2021 and 222.8 percent compared to Q3 2020.
Manufactured goods import value was 13.98 percent higher in Q3 2021 than the level in Q2 2021 and 42.73 percent more than Q3 2020. Manufactured goods exports on the other hand were 39.4 percent more than the value in Q2 2021 and 121.6 percent higher than Q3 2020.
