• Friday, April 12, 2024
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Three charts show Nigeria is not import-dependent

Three charts show Nigeria is not import-dependent

Nigeria imports far less than it should be doing, yet the oil-producing nation of 200 million people can’t seem to shake off the tag of an import-dependent country.

While the country’s import to GDP ratio of 11.8 percent, a measure of how much a country imports relative to its economic size, suggests it is nowhere near being considered import-dependent, many Nigerians, including policymakers, are convinced otherwise.

Nigeria will have to import nearly two times what it currently does to measure up with the level of imports by Egypt and almost three times more to match up to South Africa. While South Africa and Egypt import 31.5 and 21.9 worth of their GDP respectively, Nigeria imports only 11.8 percent, according to data from the World Bank.

That’s not all. For a country that is supposedly import-dependent, Nigeria’s import numbers compare poorly against some of the world’s most import-dependent nations.

According to the World Bank, Hong Kong, Luxembourg, Malta, Singapore and Seychelles have the highest import to GDP ratios with 189.9 percent, 177.2 percent, 152.5 percent, 150.3 percent and 121.6 percent respectively.

Nigeria is importing at least 10 times less than each one.

But these countries have high exports to show for their high imports as a percentage of GDP. 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.

This is an indication that the world’s supposedly most import-dependent countries are typically high exporting nations. Singapore does not produce oil but is one of the largest refiners of crude oil which means it has to import every drop of the oil it refines for exports.

Nigeria is also not a prolific importer when compared with countries with similar GDP sizes.

The average of nine countries with GDP ranging from $400-$450 billion as of 2022 was 47.9 percent, four times higher than Nigeria’s import to GDP ratio.

The nine countries are Vietnam, Malaysia, Thailand, Denmark, Philippines, South Africa, Iran, Egypt and Bangladesh.

Vietnam imports 91.7 percent of its GDP, the highest of the nine, while Bangladesh imports 20.9 percent.

“Our (Nigeria’s) imports as a percentage of Gross Domestic Product (GDP) is nowhere near the level of peer economies and certainly not enough to say we are import-dependent,” said a respected economist and former member of the Monetary Policy Committee of the Central Bank of Nigeria (CBN).

Imports of refined petroleum products, staples, cars and smartphones form the bulk of imports into Nigeria, according to the United Nations.

Nigeria, one of Africa’s top oil producers, ironically imports refined petroleum products but a mega refinery, owned by the country’s richest man – Aliko Dangote – began refining crude last week and is expected to reduce the country’s imports.

The country’s imports have soared in the last half a decade, rising from N13.17 trillion in 2018 to N22.28 trillion in 2022, overcoming the COVID-19 setback in that period, according to data from the National Bureau of Statistics.

The nation’s total trade amounted to N31.70 trillion in 2018, comprising N13.17 trillion imports and N18.53 trillion exports, with a trade surplus of N5.37 trillion. In 2019, Nigeria’s total trade amounted to N36.15 trillion, made up of N16.96 trillion imports and N19.19 trillion exports, with a trade surplus of N2.23 trillion.

But things took a terrible turn in 2020 due to the COVID-19 lockdown. Total trade fell to N25.22 trillion, consisting of N12.70 trillion imports and N12.52 trillion exports, resulting in a trade deficit of N178.26 billion. In 2021, total trade recovered as it rose to N39.8 trillion, comprising N20.84 trillion imports and N18.91 trillion exports, leaving a smaller trade deficit of N1.94 trillion.

In 2022, Nigeria’s trade swung back into surplus after total trade value hit N49.42 trillion, with total imports at N22.28 trillion.

The misconception that Nigeria imports too much has sometimes distracted policymakers, making them focus unnecessarily on curbing imports to relieve currency pressures.

“The actual focus should be on how to boost exports,” Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, said.

Nigeria has abandoned an unpopular currency ban on importers of some 43 items that was introduced by the former CBN Governor Godwin Emefiele. But it took Nigeria eight years to see the damage that did to the economy.

“Policies aimed at curbing imports into Nigeria are misguided, as the level of imports into an economy reflects the level of productivity of that economy,” said Bongo Adi, an economics professor at the Lagos Business School, Pan-Atlantic University.

“Nigeria is not import-dependent as widely preconceived, not when our import to GDP is one of the lowest in the world,” Adi added.